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Small cannabis clones are seen in a display case at SDRC, a San Diego-based dispensary, Nov. 1, 2019.
Andrew Bowen
Small cannabis clones are seen in a display case at SDRC, a San Diego-based dispensary, Nov. 1, 2019.

San Diego Missing Out On Revenues From Pot Legalization

This is part one in a five-part series. Click here to read the other four parts.

When California voters legalized recreational marijuana in 2016, they did so with the promise of new social and environmental programs — funded by cannabis tax dollars — that would help communities hit hardest by the "War on Drugs."

But two years into the state's legal cannabis market, those programs are just barely getting off the ground and San Diego County is seeing much less of that money than the state’s other large metro areas. Cannabis industry insiders say the region’s elected leaders are partly to blame.

In September, state officials announced the winners of the California Community Reinvestment Grants, a program created by Proposition 64, the ballot measure that legalized adult-use marijuana. The program funds services such as job placement assistance and substance use disorder treatment in communities throughout the state that have been most harmed by decades of high incarceration rates for low-level drug offenses.

It's meant to help people like David Mancada, a formerly homeless man whose addiction to meth led him to get arrested more than a dozen times in one year. Since entering into a treatment program through the nonprofit Family Health Centers of San Diego, he now has housing and is working as a chef at a Kensington restaurant.

Mancada said it was the intense hand-holding and logistical support from Family Health Centers that has helped him stay sober. They started by making sure he had a ride directly from jail to their clinic, where they swiftly got him enrolled in their system.

"It’s like they knew what I needed and they already had it in place for them to make all these appointments," he said. "There's no way I would have picked up the phone at the time and been like, 'I need to make an appointment.' I'm not going to stay on hold."

San Diego Missing Out On Revenues From Pot Legalization

RELATED: High Hopes: California’s Pot Experiment

Family Health Centers, which runs operates a network of health clinics geared toward low-income patients, will be able to do more of that treatment work thanks to $300,000 awarded through the California Community Reinvestment Grants program. Two new staffers, funded for two years, will work to connect other people exiting the prison or jail system with health care and social services.

Aily Nguyen, supervisor for Family Health Centers' substance use disorder treatment program, said addicts leaving incarceration are extremely vulnerable to relapse.

"You come out and you have no support system," Nguyen said. "The funding for these programs (is) extremely important because that's the time you jump into a client's life and say, 'Hey, we can offer this for you, this is what we can do for you.'"

The Family Health Centers grant was part of $1.25 million in cannabis tax revenue that is coming to San Diego County through the program. Two nonprofits in Vista were also awarded grants.

But San Diego’s total pales in comparison to other large counties.

Alameda County, which has half the population of San Diego County, is receiving $4.78 million. Sacramento County, which has less than half of San Diego County's population, is receiving $2.19 million. Los Angeles County is receiving $11.53 million — about three times the amount of money per capita as San Diego.

Kaitlin Lewis, spokesperson for the Governor's Office of Business and Economic Development, which administered the grant program, said an applicant's location factored into its score only in the sense that communities most impacted by past drug policies were prioritized.

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"Applications were evaluated based on the applicant's organizational capacity, priority populations and community, proposal description and goals, evaluation plan, and its proposed budget," Lewis said. She added that officials held a workshop in San Diego earlier this year to gather feedback on and raise awareness of the program.

A big reason why San Diego County received a relatively small sum is it didn't submit nearly as many applications as the counties that reaped the most from the program.

The county's Public Health Services Department did not apply for the grant, even though it was eligible. Spokesperson Sarah Sweeney said the agency chose not to apply because of restrictions on how the grant money could be spent, but that the county may apply for the grant program in future years.

Dallin Young, political director for the Association of Cannabis Professionals, said local elected officials should take some of the blame for the county's lackluster performance.

"We haven't seen quite the leadership that we need throughout the county to really inform the nonprofit groups that are doing the work that that grant program would facilitate," he said.

Young added that other programs funded by cannabis tax dollars have been delayed because revenues have been falling far short of projections. This, he said, is largely due to the fact that dozens of California cities have banned retail cannabis shops, and by doing so pushed consumers to the black market. Up to 80 percent of California's cannabis retailers are unlicensed and untaxed, according to industry estimates.

In the city of San Diego, cannabis entrepreneurs have long complained of excessively strict land use regulations for dispensaries. They must be at least 1,000 feet from schools, churches, parks and other dispensaries, and only four are allowed per City Council district.

Customers line up at SDRC, one of fewer than 20 licensed cannabis dispensaries in San Diego, Nov. 1, 2019.
Andrew Bowen
Customers line up at SDRC, one of fewer than 20 licensed cannabis dispensaries in San Diego, Nov. 1, 2019.

Still, talk of even the slightest relaxation of cannabis regulations frequently mobilizes a host of detractors at public meetings. More than a dozen people showed up to a city of San Diego Planning Commission meeting in October to oppose a small change to the method for measuring the 1,000-foot separation requirement.

City Councilman Chris Ward, who has been a leading voice on cannabis issues, said he has not seen much political will among his colleagues to change the rules governing cannabis retail, but that he was open to discussing such changes in 2020.

Young insisted the majority of San Diegans would support allowing more legal cannabis dispensaries in the city. Doing so, he said, would bring in more revenue from the city's own cannabis business tax, and it would help fund state social programs, too.

"I think it's very prudent for our local governments to take out the moral judgment about whether or not cannabis is right or wrong, good or bad, and focus on the benefits that could be gained from this type of revenue that the state is going to be giving to these communities," Young said.

Mancada, whose path to addiction started with smoking marijuana at a young age, agreed. He said the fact that the legal cannabis industry is funding services to help people overcome addiction is "a beautiful thing."

"Once people get into recovery and they get stabilized, they're less likely to be offenses caused to get them incarcerated," he said. "The funding should be there."

When California voters legalized recreational marijuana in 2016, they did so with the promise of new social and environmental programs funded by cannabis tax dollars. That promise remains largely unfulfilled in San Diego.

I cover local government — a broad beat that includes housing, homelessness and infrastructure. I'm especially interested in the intersections of land use, transportation and climate change.