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California Cannabis Industry and Social Equity Programs

Social equity in California, each city has their own program therefore, consistency is hard to find. The one thing remaining consistent statewide: cannabis social equity in California is failing.

“For the most part, the policies have been ineffective in expediting the actualization of the program's promises.”

- Karim Webb

It’s not just California though; social equity in many states across this country are simply- not working for those that it should be working for.

A Google search of California social equity programs will result in headlines like:

  • “California’s pot social equity programs leave many depleted.”
  • “California’s marijuana social equity programs not meeting goals.”
  • “A farce of social equity, California is failing its black cannabis businesses.”

Recently, the Governor’s Office of Business and Economic Development updated their fiscal year grant recipients for the Cannabis Equity Grants Program for Local Jurisdictions. In that update, a press release was shared which announced that:

The Governor’s Office of Business and Economic Development (GO-Biz) announced $35 million in grant funding through the Cannabis Equity Grants Program for Local Jurisdictions. The purpose of the program is to advance economic justice for populations and communities harmed by cannabis prohibition by providing support to local jurisdictions as they promote equity and eliminate barriers to entry in the regulated cannabis industry for their equity program applicants and licensees.”  

In January of this year, news broke that the Department of Cannabis Justice in California awarded nearly $100 million to 17 municipalities and counties to support local marijuana businesses and help develop the market. MjBizDaily states:

The funding is intended to alleviate a bureaucratic logjam that has left thousands of marijuana companies with temporary, or so-called “provisional,” business licenses.”

To get more insight into California’s social equity program, I went to Karim Webb: entrepreneurial activist, spokesperson,business man, and CEO of 4thMVMT; a Los Angeles based firm that vets, trains, facilitates funding, and partners with individuals from underserved communities to own and operate competitive retail businesses. 

Karim Webb

Q & A with Karim Webb About California’s Social Equity Programs

What are 3 great things and 3 not so great provisions associated with the city/state Social Equity Programs in various cities in California?

“The three good things are; first, the intentionality of the program in general. Just having a policy that creates and sets aside licensing for people from communities that cannabis-related arrests have disproportionately impacted; that seems fair to me. It has the potential to repair some of the harm created by over-policing and unfair punishment around cannabis. 

Second, it created awareness. These licensees began a conversation in communities around the reality of the disproportionate impact of the war on drugs. And around the cannabis-related punishment policy, which is a meaningful conversation to have. 

And third is the genuine potential for the restorative realities of successful business ownership. There's a possibility that exists in people making more money than they would've otherwise. Their kids will be able to go to competitive schools. They'll have access to resources that would improve their health outcomes in ways that otherwise wouldn't happen. It will give them capital to reinvest or invest in their communities, allowing them to take responsibility for the outcomes in their communities.

All three of these things are positive. 

Then on the not-great side, for the most part, the policies have been ineffective in expediting the actualization of the program's promises; that's number one. Number two is getting someone licensed in the challenging cannabis space. It's difficult because access to capital is few and far between. And it's still federally illegal. Another issue in California is the robust unregulated market. It gives the licensed businesses a competitive disadvantage because of the significantly high taxes in the regulated market. 

Number three, there are multiple programs. Meaning there's no one way to go about doing it, which is an issue. LA has one program, San Francisco has another. Some cities have opted out, others opted in but have yet to do anything, like Culver City and Santa Monica. It's just a disparate rollout of different policies around the state that creates a lot of confusion and a lack of consistency.”

Does each city in California have a program? If so, which city has the best one in your opinion? 

“Each city doesn't have a program; in fact, a few cities do. I don't think any of them are worth replicating because, by and large, they haven't produced competitive and successful businesses. There are just a few exceptions. L.A hasn't gotten it right; Oakland certainly hasn't gotten it right. San Francisco is probably the closest to doing something impactful at this point. We're going to have to continue to see. They will have to continue to tweak policies to keep moving the ball down the road towards fairness as it relates to parity and the equitable percentage of the market share in the cannabis space in California.”

What's your opinion on the announcement of the $100 million grant?

“I think the hundred million dollar grant is excellent. I commend policymakers who have advocated to make that happen. It allows our state budget to prioritize resources to assist these businesses, which are disadvantaged enterprises. Any money is better than no money, so we are grateful. At the same time, the cost to stand up a competitive cannabis retail business realistically is north of $1 million. 

So with $100 million, 100 retail businesses can have some assistance to help them be competitive. It will help circumvent the current state of affairs related to institutional capital and investment into cannabis in California for sure. It's great, but I wonder how much of those dollars will make a dent in terms of overall impact and long-term results. We are certainly glad that it's here; we just need more.”

How has the social equity program helped your business?

“We wouldn't have a business if not for social equity programs. Our company was born specifically to address the opportunity around social equity licenses. We designed a business that would work within the framework in Los Angeles and be flexible enough to work in other social equity frameworks throughout California and the country.”

Rumor has it that California social equity programs are loaded with corruption- do you agree?

“I can't speak to what's happening in municipalities outside of Los Angeles. I can tell you that I don't believe that there's corruption in L.A at all. I think the scrutiny has fallen on policymakers amongst the City Council in Los Angeles because that is where the social equity policy derives from.” 

Do you agree with this statement from CCIA Executive Director, Lindsay Robinson (why/why not): 

'It is vitally important to check on the health and success of local equity programs. Most of them seem to be struggling to fulfill their mission, which leaves social equity applicants out in the cold.'

“Yes, I agree wholeheartedly! These programs must be successful, and we must tweak the policies to ensure that happens. The policymakers, by and large, are not business people, so the policy doesn't always match up with the market reality. Even though somebody is granted the opportunity to do business via a 'license,' people still have to stand up these businesses within the rules. And then be capitalized enough to go out and compete. There are a lot of prohibitive elements in the policy that have made it more difficult. And they were not necessary for social equity licensees to withstand if they're to compete at a high level.”

In Closing

It appears that L.A has access, hope, and room for improvement. In regards to other municipalities in California, work is needed. We would love to hear from California below: what's working, what’s not working, and how can California social equity programs improve?

About Veronica Castillo

Veronica Castillo is a writer from Miami, with a pre-Cannabis background in insurance and human resources. She advocates, writes about, and educates on the topic of cannabis and hemp for overall life. Currently, she is a resident of the road exploring all thing’s cannabis and hemp in the United States, with plans to travel abroad in exploration of cannabis and hemp culture in other countries.


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