San Diego Wants To Infuse Social Equity In The Cannabis Industry
Speaker 1: (00:00)
When Californians voted to legalize the recreational use of marijuana back in 2016, there was also an effort to undo some of the damage done by the war on drugs. Communities of color were disproportionately affected by arrest, send jail sentences for illegal marijuana sales and the new law held the promise that the legal California marijuana industry would be created with a social equity component, helping members of previously targeted communities to establish legal cannabis businesses, but wild, both San Diego city and county officials say they are committed to establishing a cannabis social equity program. Those plans are still not in place. Johnny May voice of San Diego reporter, Jackie Bryant, and Jackie, welcome to the show.
Speaker 2: (00:48)
Thank you. I'm excited to be here. What's
Speaker 1: (00:50)
The aim of social equity in the cannabis business. Is it simply to get more people of color, to own cannabis businesses?
Speaker 2: (00:58)
That's definitely part of it. Um, communities of color throughout, you know, the United States have been disproportionately targeted by the war on drugs that includes arrest rates for possession and use for sales. Um, really any all aspect of it. You can pretty much bet that nonwhite people have gotten nailed for it harder than anybody else. It's also an effort to address the unlicensed or black market because a lot of the people growing and selling weed in the days before legalization were also, you know, disproportionately jailed. And those include, you know, farmers here in San Diego county up in Humboldt who have been operating on the margins illegally for many years. So it's an address to basically bring into parody those with capital and access to making money in this market. And those who were really honestly doing business, even though it wasn't legal and to kind of bring those two forces together.
Speaker 1: (01:49)
Now since 2017 marijuana sales and distribution have been banned in San Diego's unincorporated areas, but that's expected to change soon. Isn't it?
Speaker 2: (02:00)
It isn't, it isn't earlier this January when the, um, county board of supervisors voted to, you know, to start the process to lift that ban. The idea was that by October, they were going to and using very vague language the whole time. The idea was that they were really going to start this to get this emotion during the board meeting in October, that's still happening, but they've kind of rolled it back a little bit and softened the timeline. Um, you know, bringing in industry from the shadows into the light is an extremely complicated process in California, which is where we've grown the weed historically forever. It's even more complicated than anywhere else because we had such a robust and significant illegal market. So yes, we, the board has told me and clarified after, you know, we talked last week for, for this story that they will be voting to expand the operations of the five dispensary's and Ramona and alcohol hone areas, uh, that are now currently operational kind of in a great area, legally speaking in the unincorporated areas. And then once they square away those existing five entities, then they're going to continue to move to, um, lift that ban and bring cultivation, manufacturing, and sales to the unincorporated area.
Speaker 1: (03:15)
Will the new countywide ordinance have a social equity component?
Speaker 2: (03:19)
Yes, it will. The details of that are still being hammered out and they've hired a consultant. The county has to bring that in and get that up to speed. They have many different, um, industry watchdog advisors weighing in on that process. So it will, and it's intended to, you know, give special opportunities and legs up and mentoring programs to, you know, people in community of color, as well as people who have, you know, citations have run into the law with previous cannabis citations.
Speaker 1: (03:47)
What about the city of San Diego? Where is the city in establishing a cannabis social equity program?
Speaker 2: (03:53)
So currently in the very early stages of city, you know, just formulated it's cannabis business division. And so as part of that, they will be, I can't say for sure, but it seems to be in tandem with the county. I know that they're talking and working together and also consulting with other cities,
Speaker 1: (04:09)
You know, consulting with other cities. That's a point because even though both the city and county have not been prompt in putting together a social equity plan, you write that may actually be helpful because San Diego can learn from the mistakes of other cities. What kind of mistakes are those?
Speaker 2: (04:26)
Yeah. You know, obviously in theory, social equity is a, is a great and necessary idea, but in practice, like many things it's much harder to implement and it, the truth is, is it just hasn't gone well in other places? I mean, that's, you know, what happens when you, again, infuse something very bureaucratic into something that was once free wheeling and, and mostly illegal. So some of the mistakes that have happened have binged again, bureaucratic errors, you know, and COVID obviously did not help things. So a lot of, you know, understaffed equity divisions with different municipalities, cannabis divisions, um, lots of paperwork, a lot of qualifications, just a lot of red tape. That's been really hard and has been halting the process and, and halting people. We're trying to benefit from this to get their businesses online. Um, some of the other things are that in certain areas, it's not super difficult to qualify for equity status, to get some of these benefits in these programs.
Speaker 2: (05:20)
And so what a lot of business people will do is you'll have, let's give an example, a white, you know, wealthy, well capitalized businessman who owns a cannabis company. And he'll find someone who qualifies for equity, bring them on as a business partner. And now suddenly you have an equity business. That's not really how this is supposed to work, right? So that's one of the main problems. Um, and, and there are different ways in different cities and counties and states of taking advantage of the situation. And we found that unfortunately, that has happened in many places. So knowing that from off the top, the county and the city can hopefully put safeguards in place to mitigate of those opportunities to take advantage.
Speaker 1: (06:00)
Now you spoke with the head of San Diego's cannabis stakeholder group who told you that cannabis discussions have to stop focusing on land, use regulations and start focusing on community. What do they say is needed in a cannabis social equity program?
Speaker 2: (06:16)
So, yeah, you know, I think everyone obviously recognizes that land use is extremely important. Cannabis is an agricultural product, but she is right. The conversation frequently starts there and it ignores the humans involved in this process. I mean, it's, it's no different from any other discussion of labor. It's always about the business and the framework and the workers for some reason, even though they're the most important thing come last. So I think, you know what, I'm missing Julian, along with other people in her group want, they want mentorship programs. They want opportunities for, you know, to get, uh, equity operators in front of people with capital, but really what these people need is money. And, and that's a big criticism of these programs, you know, that I forgot to mention earlier is that they're really nice in theory. And it's nice to give people help in training, but they need money. Everyone needs money to run a business. And so I think that improving that pipeline and getting equity operators in front of the right people is going to be a focus of these programs, you know, hopefully from the top.
Speaker 1: (07:15)
Yeah. You have an event coming up to spotlight the work on social equity and cannabis. Tell us about that.
Speaker 2: (07:21)
I do. So, um, voice of San Diego has me moderating a panels for them tomorrow at 5:30 PM. Nathan Fletcher will be there. And Andrea St. Julian, um, who, you know, is the head of the San Diego's cannabis stakeholder groups. She will also be there. The reason why I wanted to have this panel honestly, was to keep everybody accountable and to let people know that we're watching. And this is a really important thing to have in this industry. And we haven't done a good job on it, frankly. It's kind of incredible that the eighth biggest city in the country, the second biggest cannabis market, you know, I mean the largest legal cannabis market in the world doesn't really have an equity program.
Speaker 1: (07:55)
I've been speaking with the voice of San Diego reporter, Jackie Bryant, Jackie. Thank you.
Speaker 2: (07:59)
Thank you so much.
When California legalized cannabis for adult use in 2016, many supporters acknowledged that the War on Drugs had disproportionately impacted communities of color around the state. It was, in fact, one of the selling points of Proposition 64, which went into effect more than a year later.
On the belief that the ballot initiative didn’t go far enough, though, social equity programs started springing up across the state in recent years to give special privileges to Black, Brown and low-income people who had been arrested and thrown in jail for nonviolent cannabis-related offenses and thereby barred from taking part in the new industry.
One survey, conducted in 2017 by Marijuana Business Daily, found that about 80 percent of the founders and owners of cannabis businesses at the time were White.
Neither the city nor the county of San Diego has a social equity program on the books and officials for both say they’re working to create one. By their own admission, they’re late to the game.
But that’s not necessarily a bad thing, considering that other municipalities in California have tried and failed to correct the injustices they previously identified. In some places, social equity programs have been portrayed as harmful to the same people they were supposed to help.
Prop. 64 allowed local governments to maintain control when legalization went into effect. To date, adult cannabis sales are legal in the city of San Diego and others, like Vista and La Mesa, but sales, distribution, manufacturing and cultivation continue to be banned in the unincorporated areas of the county.
That is slated to change next year when the county’s Board of Supervisors considers the full scope of a countywide cannabis ordinance that got the green light this past January in a 4-1 vote. The details of what that will look like in practice are still being hammered out, but there is an expectation that there will be a social equity provision in the ordinance. Next month, the county is expected to vote on whether to expand operations at five existing cannabis businesses in unincorporated areas.
Officials have invited the San Diego County Cannabis Stakeholder Group to help in the process of developing a countywide cannabis social equity program. The facilitator of that group, appellate court attorney Andrea St. Julian, said the ordinance needs to make repairing the damage brought by the War on Drugs the front and center issue in a discussion that traditionally starts with land use regulations.
“When you start to formulate cannabis ordinances and regulations, you really have to start with social equity concerns,” St. Julian said. “And then, you have to consider also the concerns of the cannabis businesses, concerns of cannabis users and of course, the concerns and needs of the community as a whole. So redirecting government officials, and how they think about how to craft cannabis, a cannabis ordinance is really important.”
Andrea St. Julian, co-chair of San Diegans for Justice, appears at a press conference addressing the city’s proposed ordinance establishing the Commission on Police Practices in June. / Photo by Adriana Heldiz
The make-ups of these programs look different depending on where they are implemented, but typically they involve giving expedited licensing, tax breaks or other incentives to businesses run by people of color, particularly those who might have become criminalized thanks to previous cannabis dealings when things were less legal. Local governments have also instituted internship, job apprenticeship and mentorship programs as forays into providing social equity in the cannabis industry.
Entire communities, including towns in Humboldt County, for example, are mostly made up of growers and sellers who operated in what is sometimes referred to as the “traditional market” — the illegal or unlicensed market that pre-dates legalization and persists to this day. Those communities have received additional social equity funding from the state to help offset the exorbitant costs of running a legal cannabis business in California.
The distribution of these funds, like legalization itself, amounts to an admission by the state that the War on Drugs was in many ways wrong. These programs have concrete monetary benefits, yes, but the symbolic meaning is also important to people who were targeted by the government for trafficking a good they believe should always have been legal. The current path of legalization suggests they may have been right all along.
In theory, San Diego County is an ideal place for social equity programs because the region houses two communities that could directly benefit — a significant cache of traditional market growers and sellers from the pre-legal days, and communities of color in East County and South Bay.
Emily Wier, deputy director of public policy for County Supervisor Nathan Fletcher, said officials plan to bring in an outside expert to help create the county’s social equity program, which will be led by the county’s Office of Equity and Racial Justice.
Wier also said the county has issued a request for proposal for services related to the social equity program and they expect the consultant to be selected soon. The county will also soon review five existing legal dispensaries in the unincorporated areas to ensure they are included in future mentorship and internship opportunities that will be run with county support, she said.
While the inclusion of social equity programs has been considered essential by many cannabis industry stakeholders, as well as those shaping policy around the industry, they have not always been successful when implemented.
In Los Angeles, the city’s social equity program rollout has been sluggish and mired in bureaucracy, hurting the exact people it was intended to help. Lack of adequate staffing and funding ground the so-called program to a halt, stalling business owners’ ability to effectively run their businesses.
Others accuse the program of turning people of color and those with arrest records into targets for predatory investors with more flush access to capital so they can further game the system and essentially cut the line. In those instances, all that’s needed is for one applicant in the business to meet the social equity criteria and the whole business qualifies. As a result, programs may inadvertently direct resources to people and businesses who otherwise would not meet those standards.
Another common criticism of equity programs is that many don’t do enough to address the high cost of licensing required to become a legal cannabis business, which is one of the biggest barriers to access in the cannabis industry, period, let alone for those impacted by the War on Drugs. Mentorship and internship programs are helpful, but they don’t provide instant capital. Without that, many would-be cannabis business owners wouldn’t have the funding to start their own venture.
San Diego is in the unusual position of implementing a cannabis program later than other major population areas in California, despite being one of the largest metropolitan areas in the country.
“The county has the benefit of being late to the game,” Wier said. “We can learn from other jurisdictions that have had a more phased-in approach to cannabis policy, which didn’t exist for many of the entities that were earlier adopters of cannabis policy. We also can draft a much more comprehensive and effective program if we prioritize social equity from the start of the ordinance development program.”
Fletcher, the chair of the Board of Supervisors, has identified racial justice and equity as a priority, and cannabis policy, in particular, was part of his “Framework for the Future.”
The county’s Office of Equity and Racial Justice has also been in communication with the City of San Diego, which is also trying to implement an equity program, though cannabis sales, manufacturing, and cultivation have been legal within the city since January 2018.
Sammi Ma, the city’s Cannabis Business Division project manager, said a lengthy bureaucratic process has delayed the city’s creation of an equity program, even though it legalized cannabis sales, manufacturing and cultivation in years ago.
“Senate Bill 1294 established the California Cannabis Equity Act of 2018,” she said. “In the spring of 2019, just a year later, the State’s Department of Cannabis Control (formerly the Bureau of Cannabis Control) launched the social equity grant to support local jurisdictions. At the time, the Development Services Department Cannabis Business Division (CBD) was not yet established. Once the CBD was formed in November 2020, it prioritized applying for the State’s equity grant, which was awarded four months later in March.”
Ma added that the program has not yet been developed, but that the city is conducting an equity assessment that “will provide a data-driven analysis of the historical impacts that the criminalization of cannabis has had within the city, assess potential opportunities and constraints in the current regulatory framework, ultimately providing policy recommendations to assure equity and diversity in the emerging city of San Diego regulated cannabis industry.”
At the same time, the county says it’s still doing its homework, consulting with other jurisdictions, including Los Angeles, San Francisco and the city of San Diego, to find out what worked and what didn’t in their own programs. One of the takeaways, Wier said, is that a social equity program needs to be up and running prior to giving out commercial licenses and the larger ordinance going live.
“We are currently on track to do just that,” she said.
In the meantime, industry watchdogs like St. Julian are watching.
“It’s still too early to tell,” she said, of whether the county is on the right track. She’s encouraged by the county’s statements so far but concerned that none of the concrete actions have been laid out. St. Julian said she hopes the county’s “actions will be in line with their rhetoric.”
Correction: an earlier version of this story misspelled the name of Supervisor Nathan Fletcher’s deputy director of public policy and misstated the scope of the cannabis ordinance coming up for a vote next month at the Board of Supervisors. The county’s wider cannabis ordinances, and social equity program, are expected to come up for discussion next year.
Interested in hearing more on this topic? Voice of San Diego is hosting a panel discussion on Sept. 28 about the challenges and pathways of operating a social equity program in San Diego’s cannabis industry.
Jackie Bryant will moderate. The panelists are Anthony and Loriel Alegrete, the founders of 40 Tons; County Board of Supervisors chair Nathan Fletcher; attorney Andrea St. Julian; and Violeta Wyrick, the chief equity and external affairs officer at Catalyst Cannabis Co.