New rash of California marijuana robberies threaten survival of businesses

A spate of violent robberies targeting marijuana businesses in the San Francisco Bay Area last month have thrown into question the survival of several small businesses, with the combined losses of those operators estimated to be at least $5 million.

The crimes ranged from break-ins that resulted in minor damage to, in some instances, wild gunfights between criminals and security guards, according to media reports and sources.

At least one person was shot, and a scandal has emerged over San Francisco police officers apparently looking on while burglars made off with cannabis products from a store they’d broken into.

The prime takeaway from the most recent rash of thefts and vandalizations, insiders said, is the fragility of the companies targeted and the fact that they’re targeted with disturbing regularity by criminals looking to make an easy buck.

“Cannabis businesses are being robbed year-round, but no one is talking about it,” said Tucky Blunt, the owner of Oakland cannabis shop Blunts and Moore, which was one of the businesses hit last month.

“I was safer, and had more money, (selling) on the street, illegally.”

Blunt said his shop fared much better than 1½ years ago during the nationwide protests that followed the death of George Floyd. Then, Blunt’s business was ransacked for hours, and he lost around $700,000.

Blunt said the 2020 attack resulted in a “total loss.” But this time his shop only suffered relatively minor damage that’ll cost perhaps $25,000 to fix.

But, he added, he’s one of the lucky ones.

“I know 25 or so businesses that got hit … and out of all those, the percentage I know that told me that they may not be able to reopen is about 50%,” Blunt said. “That’s scary.”

Multiple sources told MJBizDaily they fear that the recovery process for many of the 25 or so companies victimized in November remains up in the air.

The sources also said the robberies could spell the end for many businesses. Moreover, they don’t see an immediate end to the trend because the underlying causes aren’t easily solved.

“Any loss, any blow, is a death blow potentially at this point,” said Nara Dahlbacka, a California consultant who works with several cannabis companies.

“There are a lot of businesses that are on the edge right now.”

Difficult questions

Blunt’s store is one of several cannabis companies that criminals targeted at least twice, in 2020 and again last month. He reckoned his shop has been targeted by vandals or burglars 10 times since opening in 2018.

Which raises the questions: How much targeting by gangs can small businesses withstand? And how hard is it for them to recover?

“A lot of these folks are not open and won’t be open for a while, because they can’t bounce back from these things,” said Amber Senter, the co-founder and chair of Oakland nonprofit Supernova Women, which held a news conference Nov. 29 to bring attention to the robberies.

Senter pointed out that not only is insurance coverage difficult – if not impossible – to obtain to cover losses that are typically sustained during robberies or ransackings, but many of the companies targeted are small social equity operators that are by definition “low income.”

“They don’t have the runway and the extra capital and the war chest of cash to come back from something like this,” said Senter, who was one of the November burglary victims: Vandals broke into EquityWorks! Incubator, which houses several small social equity marijuana companies.

A case in point: Keith Stephenson was a victim of the protests, lootings and robberies after Floyd’s death in Minneapolis in 2020.

Stephenson’s cannabis shop, Purple Heart Patient Center in Oakland, hasn’t reopened since looters gutted it, but he said he’s finally on track to reopen within a few months.

Stephenson said even if marijuana companies do file successful insurance claims, they’re often dropped by their insurers – or their premiums skyrocket.

“There’s a catch,” Stephenson said, adding it cost him “mid-six figures” to get to a point where he’s almost ready to reopen.

“I’ve had to take my resources – not the business, but my (personal) resources – to make this happen,” he said.

And even if insurance claims are successful, that often doesn’t help small businesses, including many of the social equity-owned companies that were targeted in November, said Raeven Duckett-Robinson, the owner of Oakland-based Community Gardens.

“Most of us are living and working hand to mouth. We don’t have a lot of reserves in the bank to recoup losses or wait for an insurance claim,” said Duckett-Robinson, whose company was among those vandalized.

“Even if you do get the insurance money, it’s not going to be next week.”

Solutions elusive

Senter said she hopes both city authorities and the California Legislature will seriously consider tax breaks for marijuana businesses – in part to give small operators, such as those targeted, some financial aid to put toward bolstering their security.

Senter noted that San Francisco this week passed an ordinance again delaying a cannabis business tax. She said Oakland could do something similar, a move that might already be in the works thanks to a City Council member.

But Senter also questioned proposals made by Oakland authorities.

For example, Senter said some police officers advised business owners such as Blunt to recruit armed security guards and post them on the roofs of their companies to shoot at potential looters.

Oakland Police Chief LeRonne Armstrong contradicted that position during a news conference this week and said businesses should not direct guards to fire guns at possible criminals, Dahlbacka said.

Senter added: “We didn’t get into this (business) to shoot people.”

She also said the reaction from Oakland police has been to increase the police presence in the city’s “green zone.”

That could include deploying SWAT teams, a move Senter opposes because, she said, it would add more guns and increase the potential for violence.

One option that could help vulnerable operators is passage of the federal SAFE Banking Act, which has a chance of getting through Congress this session.

If so, that would open up financial services to marijuana businesses.

Not only would passage of the SAFE Act give many cash-heavy companies a place to safely store their funds, but it also could give devastated operators a financial lifeline through small-business loans.

It also could provide less of an incentive for criminals who believe cannabis companies are hoarding cash, which Blunt said is a common misunderstanding by those outside the industry, including in criminal circles.

“People think we’re sitting on millions and millions of dollars,” Blunt said. “We don’t have that.”

Blunt said that if the SAFE Act were to become law, attempted break-ins at businesses like his would plummet “tenfold or cut it at least 30%.”

Senter was less optimistic that the SAFE Act would prove a solution to the crime epidemics plaguing California’s marijuana industry, in part because an increasing number of cannabis companies already have bank accounts.

She also said criminals have learned that legal, lab-tested cannabis products bring high prices on the underground market.

“People still have cash, but it’s not like it was three or four years ago,” Senter said.

“But now, they’re coming in and they’re stealing branded product, because that has tremendous value.”

John Schroyer can be reached at john.schroyer@mjbizdaily.com.