Grow, Gift, Repair

Update on Oakland in Equity

“I do think there is more that we can do,” said Councilwoman Nikki Fortunato Bas, who wants the city to direct all of its marijuana tax revenue to the equity program. “The investment in this industry, I think, could be targeted to stem the displacement of Oakland’s black community, as well as to provide real opportunities for folks who have been involved in the criminal justice system.”

Lanese Martin, a member of the city’s Cannabis Regulatory Commission, said the council should split the money among supporting the existing program, job training and housing grants. Jobs and housing must be prioritized, Martin said, because “that is the easiest way to get someone stable.”

“You could take that money and tack it to the drug-war issue that you created,” said Martin, who is co-executive director of Hood Incubator, an organization that aims to increase the participation of minorities in the legal cannabis industry. “Opportunities to create businesses is not community reinvestment. A program designed to help people start businesses pretty much completely misses the mark.”

City officials have acknowledged the program struggles to give its intended beneficiaries the support they need.

“These equity applicants by definition are extremely small businesses so they face the same challenges that any small business would face, and then on top of that, they face all the challenges that any cannabis business faces in the first year of cannabis legalization,” Greg Minor, assistant to the city administrator, told the council’s Finance Committee in April. “There is a tremendous need for programs.”

For the fiscal year 2017-18, Oakland received $971,153 in sales taxes and $7.4 million in business taxes from the cannabis industry. The initial $3.4 million was used to provide assistance and loans to equity applicants. The rest of the tax revenue went to the general fund, and that’s the money Bas hopes to divert back to the equity program.

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On Tuesday, the City Council voted to lower the business tax for recreational cannabis enterprises that make less than $500,000 per year, from 10% down to 0.12%. Oakland has one of the highest business tax rates in the state, said Councilman Dan Kalb, who introduced the resolution.

Part of the reason to lower the tax, council members said, is to give equity businesses a chance to survive. In June, the council will consider a second measure that would address the tax for bigger cannabis businesses.

Jessie Grundy, owner of Green Peakz, an equity distribution business in Oakland, applied for a $100,000 loan in November and received his first $25,000 installment in January. He opened his business a month later, nearly a year after receiving his cannabis license.

“Until the funding came, I couldn’t really do anything,” Grundy said. “I’m just a one-man team out of Oakland, but you would never know it because I was able to get the funding to play with the big boys. If you don’t have the money to play with the big brands in this business, you’re going to get eaten up by the competition.”

In addition to access to capital, Minor said, equity applicants have expressed a need for job training programs. California passed a law last year that allows cities with cannabis equity programs to apply for one-time funds. Minor said Oakland will apply for those funds once the application process is launched.

Blunt says Oakland needs to go further than just making permits accessible to equity applicants.

“You give a poor person with no money a license, what am I going to do with the license?” Blunt said. “Where am I going to go find a building? Educate those same people, who you give licenses to, educate them how not to sign their life away” to lenders.