Alphonso Blunt stood outside a warehouse near 66th Avenue and San Leandro Street in Oakland and gazed with satisfaction at the Coliseum across the street. Behind him, a steady stream of customers walked through the glass doors of the warehouse and into his marijuana dispensary.
Nearly a year earlier, he had received his license to sell marijuana. After months of searching for financing and a building for his business, Blunt opened the doors to Blunts+Moore on Nov. 29, the first and still the only equity-owned cannabis dispensary operating in Oakland.
“It was life-changing for me to be able to sell cannabis legally across from the Coliseum,” said Blunt, who co-owns the business with his partner, Brittany Moore. “I pinch myself daily.”
Blunt, who had a felony marijuana possession conviction nearly a decade ago, is an example of a business success story out of Oakland’s cannabis equity program. Created in 2017, the program requires half of all cannabis permits to go to applicants who were prosecuted for marijuana-related crimes or were harmed by the broad impacts of the drug war. It also provides low-interest loans and other limited assistance to participants.
The program was touted for being one of the first in the country to attempt to repair damage that befell minority communities, and other cities, including Los Angeles, followed Oakland’s lead. Though the equity program is still in its early days, critics say it is not living up to its promise.
People striving to break into the industry complain of long wait times after filing an application for a city permit. Some can’t find the financial backing needed to start their businesses while others simply don’t have the experience to run a small enterprise.
The city has approved four equity and four non-equity dispensaries — and one of each has opened. It has granted 21 permits for other equity cannabis businesses and the same number for non-equity businesses. There are far more applicants than licenses available because the city limits the number of cannabis ventures. More than 800 equity businesses had applied as of March.
The city does not track what happens after applicants receive permits, and can’t say how many of the permitted non-dispensary businesses, either equity or not, are operating.
Similarly, San Francisco has seen a slow rollout of its own equity program. Four equity applicants currently have operating businesses in San Francisco, said Bill Barnes, a spokesman for the city administrator’s office. Two hundred and seventy-five equity applicants are going through the application process.
Despite its challenges, proponents say the program is crucial to Oakland’s cannabis industry. Advocates and City Council members say they are committed to finding solutions to ensure its success. Ideas range from job training workshops to providing housing assistance grants for equity applicants.
Oakland’s cannabis equity program
The city’s cannabis equity program required at least half of all cannabis permits to go to equity applicants. Equity applicants must be city residents earning less than 80% of the average city income, have lived in a specified high-crime zone for at least 10 of the past 20 years, or have been convicted of a cannabis crime in Oakland after Nov. 5, 1996.
The equity program supplies applicants with loans that range from $5,000 to $100,000 per applicant. As of April, nearly $1 million of the initial tax revenue has been allocated for loan applicants. The program also offers technical assistance to help applicants with the startup process.
As of May, there are 50 new cannabis businesses since the equity program launched — 25 are equity businesses — that have been approved by all city departments, including the fire, police and planning departments.
Eight medical cannabis dispensaries were running before recreational sales were legalized; eight more have been approved, including four equity dispensaries.
The city selected four other dispensary applicants through a competitive scoring process that gave weight to businesses that committed to incubating equity applicants. Of those four, one of the businesses is now open: ECO Cannabis.
All of the dispensaries are authorized to sell medical and recreational cannabis.
“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.
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.