After selling weed on the streets of Oakland since he was 16, Alphonso Blunt was arrested and booked in 2005 for felony marijuana possession.
Now, at age 38, Blunt just became the first person in the nation to open a licensed cannabis store with help from his citys social equity program. Such programs aim to level the playing field for people who were hardest hit during the countrys war on drugs, giving such people first dibs at marijuana permits, waiving city fees and offering business support services.
“Im an ex-felon with a club, legally selling weed,” Blunt recently told KPIX News as he stood, beaming, out front of his Blunts+Moore shop in Oakland.
“To be the first of my kind to do it, it means everything to me.”
For supporters of social equity programs — including Californias incoming governor — Blunts is a much-needed, and rare, success story.
Nearly a year after the state launched a legal recreational cannabis market, programs that promote equity in the industry are only slowly gaining in popularity. There are approved social-equity programs in Los Angeles, Long Beach, Sacramento, Oakland and San Francisco. Outside of California, Massachusetts runs a statewide social equity program, and other cities and states are considering something similar.
But the programs that already exist are plagued by complaints that theyre not moving quickly enough, or offering enough support, to provide much help for disenfranchised residents trying to crack an increasingly competitive cannabis industry.
“The concept of these programs is totally admirable. But the problem with all of them is execution,” said Hilary Bricken, a Los Angeles-based attorney who represents social equity applicants.
“Theres no money to fund what they need to fill in the guts.”
Some help is coming. Thanks to a bill approved this fall, California is getting ready to hand out $10 million in grant money to cities or counties that have social equity cannabis programs.
But the slow and rocky roll-out of these programs has left some folks wondering if the social justice message loudly touted by Gov.-Elect (and then Lt. Gov.) Gavin Newsom and others leading up to the 2016 vote on legalization through Proposition 64 was just lip service. In October, the problems prompted one San Francisco Chronicle columnist to declare Oaklands social equity experiment “dead.”
Even social equity supporters, who speak passionately about the goal of helping people and communities unfairly targeted for drug prosecution, acknowledge they need more resources even as they point out its too early to give up.
“To say a program is dead in the first eight months of the program is not a fair assessment,” said Nicole Elliott, who oversees San Franciscos cannabis market.
“We are all hopeful itll work. And were obviously putting a lot of blood, sweat and tears into the program.”
Far from throwing in the towel, social equity backers say they remain hopeful that the policies theyre testing now will carry beyond the cannabis sector, giving governments a model for how to help all industries be more equitable.
“This is a part of our evolution,” said Cat Packer, a former drug policy reform advocate who now runs the Los Angeles Department of Cannabis Regulation.
“This is a democratic experiment of sorts that can shed light on how we handle and tackle many other issues.”
Righting a wrong
While data shows that people of all races use and sell marijuana at similar rates, crime statistics show that people of color have long been far more likely than whites to be arrested and charged with felonies related to cannabis.
A Los Angeles study, for example, showed that black people accounted for 9.6 percent of the citys population from 2000 to 2017, but 40 percent of all cannabis-related arrests. A similar study in San Francisco showed black residents were 10 times more likely to experience felony drug arrests in 2016 than residents of other races.
“Its super important that folks who have been disproportionately harmed by the war on drugs have some opportunity to thrive in this industry,” said Rodney Holcombe, staff attorney for the advocacy group Drug Policy Alliance. “Its important that it not be built on the backs of folks who suffered the most under prohibition.”
Prop. 64 lets people with past cannabis convictions petition to have their records retroactively changed to reflect new rules. And in September, Gov. Jerry Brown signed a bill that requires the state to proactively identify and process everyone who qualifies to have a record cleared or downgraded.
Holcombe welcomes those changes, but says they dont erase the extra burdens that come with criminal records. Getting a job, or housing, is hard for people convicted of felonies, leading to higher poverty rates, poor health care and other problems. As a result, Holcombe said low-income and minority residents in heavily policed communities have an even tougher time getting access to capital, training and other resources — all of which can be essential to getting into the legal side of the cannabis business.
Without focused efforts to help close those gaps, Holcombe said research shows that the legal cannabis industry continues to be dominated by white men.
A 2017 poll by industry publication Marijuana Business Daily, for example, found that just 4 percent of cannabis business owners and founders were black, though they make up more than 13 percent of the population.
Thats where social equity programs are supposed to come in.
How these programs work
Social equity programs in the jurisdictions that so far have them all in some way make it easier for residents whove struggled with poverty, cannabis-related arrests or aggressive policing for cannabis in their neighborhoods to get into the cannabis industry. But the specific plans are complex, with leaders tweaking the benefits and qualifying the conditions to align with their communitys demographics and resources.
“This is a testing ground to see what best practices work,” said Julian Cañete, president of the California Hispanic Chambers of Commerce, which supports social equity programs.
Oakland started the trend in 2016 when, after months of studying arrest rates by race and neighborhood, it approved the first social equity program.
Under Oaklands plan, at least half of all cannabis business permits issued in the city must go to people who qualify as social equity applicants. Those entrepreneurs dont have to pay city permit fees. Also, the the city is rolling out a no-interest loan program to help qualified owners with start-up costs.
To qualify, applicants must make 80 percent or less of the citys 2016 average medium income, which was $80,400 for a household of four. They also must have either been convicted of a cannabis crime in Oakland or have lived at least 10 of the last 20 years in one of 21 police beats found to have disproportionately high numbers of cannabis-related arrests.
In January, following a lottery, Oakland awarded preliminary equity dispensary licenses to four business owners. But to date, Blunt is the only one to open his doors, with the others still struggling to secure property and full permits.
San Francisco expanded the pool of potential social equity applicants by letting residents apply who meet at least three of six criteria, including having family members whove been arrested for marijuana or being evicted from housing.
Since May, when San Francisco started accepting social equity petitions, the city has verified 222 applicants and received permit applications for 106 different locations, Elliot said. No candidates have yet been approved.
In Los Angeles, where licensing is slowly being phased in, the city must approve two social equity shop owners for each general retail store it approves. Other industry sectors, such as cultivation, must have one social equity license for every traditional license.
Los Angeles also created “tiers” of social equity applicants, with the first licenses and extra help going to would-be entrepreneurs who are both low-income and majority owners of their business. They also have to have either a prior cannabis conviction or lived in an “aggressively policed” neighborhood for at least five years.
The city is now processing licenses for existing cannabis cultivators, manufacturers and distributors who fall into one of its social equity tiers. Packers said roughly 600 people applied under this phase, and that all of those applications are being processed.
The social equity program in Long Beach (like the one in Massachusetts) is accepting but still reviewing applications.
Sacramento isnt yet at that stage. The city is getting ready to award a contract to a third-party vendor to run its social-equity program. The citys cannabis czar, Joe Devlin, said they dont have the experience or resources to run the program in-house.
“Everything with cannabis is difficult, and its all so new,” Devlin said.
“I think were all just trying to do our best to get this right.”
Rocky rollout raises concerns
While more than a third of Californias 482 cities and 58 counties permit some form of commercial cannabis activity, only five cities have social equity programs.
Bricken said more cities havent come on board — even with the $10 million in grant money on the line — because theyre afraid of getting it wrong. She noted there are no tested models to copy or learn from.
“Its wildly complicated,” she said.
Particular concern has been raised over so-called “incubator” social-equity programs in Oakland, San Francisco and Los Angeles, where traditional marijuana businesses might get early access to licenses if they offer free rent or support services to qualified candidates. Those rules have sparked reports of predatory behavior, both from outside companies and from legitimate social equity candidates who admit that theyre willing to sell their status to the highest bidder.
Thats capitalism, Bricken said, even if its not in keeping with the spirit of these programs.
“In some ways it incentivizes very bad behavior,” she said.
Indeed, Packer said a majority of the 600 applications submitted in Los Angeles so far were not from social equity applicants themselves, but from incubators who hoping to jump the licensing line.
Until recently, Los Angeles hadnt even budgeted funds toward helping its social equity candidates.
Two-thirds of the 600 program applicants now under review had already paid their $11,806 license fees before the city councils move, in late November, to allocate $250,000 toward deferring fees for some qualified business owners, Packer said. That money clearly wont be enough to cover fee deferrals for all 200 remaining applicants, and it wont put a dent in the much bigger number of applicants the city expects during the spring application period for new retail shops.
Packer is requesting $4.5 million for the program in the coming fiscal year, including $2 million toward fee deferrals and $2.5 million to help pay for technical assistance for candidates, such as legal or accounting services.
In San Francisco, aside from waived permit fees, Elliott said they have just $90,000 approved to help social equity candidates with legal services.
She did just get the OK to bring on two new staff members to help review applications. Still, under the current system, social equity candidates shouldnt expect to open their doors within weeks or even months after submitting applications.
“Part of the challenge is dispelling this myth that you will get a permit quickly,” Elliott said.
Getting a business license and clearance to operate in San Francisco has never been a speedy undertaking, no matter the industry, she said. Prior to Prop. 64, medical marijuana dispensary owners sometimes needed two years to get through the citys permit process.
Some of that bureaucracy, she noted, is good, because it includes checks on things like fire safety and environmental impact. But Elliott hopes the new attention on the citys cannabis program will push all city departments to look at how they can streamline permitting for all business owners, with a renewed focus on equity.
“Its really about breaking down those barriers that have been built over decades to make this an easier process, quite frankly, for everyone,” Elliott said.