Which California city might show the way forward for cannabis social equity in the state?

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California marijuana

Some marijuana industry watchers are keeping a close eye on Sacramento, California, as a possible example that other municipalities in the state could follow as they look to expand or develop new social equity plans.

California cities, including Sacramento, have struggled to fulfill the ideals behind social equity even as marijuana businesses in the state also wrestle with a slew of other business challenges surrounding licensing issues, high taxation and the persistent strength of the illicit market.

However, momentum around social equity has appeared more recently in the state’s capital city that involves cannabis industry licensing opportunities, business guidance and funding specifically aimed at involving more minority communities as well as people disadvantaged by the war on drugs.

“I think that Sacramento is positioned to lead the rest of the state by learning from some of the early adopters’ mistakes,” said Jackie McGowan, a Sacramento-based marijuana industry consultant.

The city’s plans could potentially avoid many of the headwinds experienced by well-intentioned social equity programs in other California cities, such as Los Angeles and Oakland.

Perhaps most notably, Sacramento is aiming to grant up to 10 of its next dispensary licenses to equity applicants. The city has not yet determined the exact number of licenses it will award overall, and a vote is not expected in the Sacramento City Council until late March at the earliest.

CORE commitment

Sacramento officials are basing their social equity licensing commitment around the CORE program set up in August 2018. The program, known officially as the Cannabis Opportunity and Reinvestment Program, helps guide and fund social equity individuals who can qualify if they have a previous drug-related arrest or live in low-income areas.

The eventual goal is to have 50% of the city’s licenses granted to social equity applicants, said Malaki Seku Amen, president and CEO of the Sacramento-based California Urban Partnership, which has a mission to build economic security in communities of color. Seku Amen was the lead designer of the CORE program.

Currently, none of Sacramento’s 30 dispensary licenses are run by minorities, Seku Amen said.

“It is our expectation that the city will fulfill that goal (of 50%) across the supply chain,” Seku Amen told Marijuana Business Daily. “It is also our expectation that social equity applicants will be the exclusive owners of these next new licenses.”

“Exclusive owners” is an important distinction because some evidence has surfaced of non-minorities playing dominant roles in social equity licenses in other cities as opposed to agreed-upon partnerships, for example.

The granting of those next 10 licenses is predicated on a commitment that they must be graduates of the CORE program, said Brenda Davis, CORE program director at the Greater Sacramento League, which helps run the initiative.

“The positivity spiraling out from the successes of a legal entrepreneur in our communities is the opposite of the negative spiraling you can see if someone gets arrested in the illicit market,” she said.

“Doing this legally doesn’t just build wealth for an individual, it does so for a family and the community.”

From illicit to licensed

A key focus of social equity in any state, not just California, is to bring more operators into the legal fold who might have previously existed only in the underground market.

For example, more than 50% of the approximately 100 illegal delivery services and storefronts in California’s fifth-largest city, Fresno, are run by minorities, said McGowan.

Rather than regulate a new industry by opening it up to outsiders, it’s better to use those already familiar with the local market.

“I’d be in favor of amnesty, and then we can preserve income and wealth in those areas that currently exist,” McGowan said.

To be sure, it remains a long road ahead, said California Urban Partnership’s Amen, who described Sacramento Mayor Darrell Steinberg as a “friend of equity.”

“There was absolutely no focus on social equity before the CORE program,” Amen said. “There has been a five-year delay in ramping up this program, but I tend to be cautiously optimistic.

“We will be satisfied when equity is real.”

Nick Thomas can be reached at nickt@mjbizdaily.com