By Robert J. Hansen | Special To The OBSERVER
Leaders from across the state came to the Capitol on March 13 to tell senators about the progress and challenges of cannabis regulation at the Senate Committee on Business, Professions and Economic Development hearing.
Equity and inclusion within the regulated market were among the many issues discussed at the hearing.
Among the many speakers was Eugene Hillsman, deputy director of equity and inclusion for the Department of Cannabis Control, who shared how the state has invested in cannabis equity.
Through the Cannabis Equity Act, authored by Sen. Steven Bradford, the state has invested approximately $100 million in community investment to provide equity programs at the local level, Hillsman said.
Hillsman said another $30 million was allocated for licensing and fee waivers in 2021.
Sen. Bradford said there are barriers to entry that only people of color face when trying to come into the cannabis industry, which is 85% white-male dominated.
“Why aren’t they facing the same obstacles as these social equity applicants are facing?” Sen. Bradford said.
He said a friend who sold cannabis to pay for law school gave up on getting into the industry after seeking a license for five years.
“We’ve created too many barriers,” Bradford said.
Kika Keith, president of the Social Equity Owners and Workers Association and owner of Gorilla RX Wellness, told the committee about the disparities that exist between cannabis ownership and the African American community.
Keith, Los Angeles’ first Black woman to own a dispensary, said the four most pressing problems for equity in the cannabis industry are the lack of an independent statewide social equity definition, access to capital, provisional license deadlines and the need for tax relief.
“I implore the committee to recognize the need to acknowledge the historical injustices of the war on drugs, which was built on the foundation of internationally racist enforcement policy,” Keith said.
In Los Angeles, Black people are 8% of the population but 40% of the marijuana arrests and in Sacramento from 2012 to 2016, Black people made up 43% of arrests while only 15% of the population, Keith said.
“The collateral damage of the war on Black and Brown people is reprehensible and has broken apart families and communities,” Keith said.
More than $50 million in grant funds have been allocated to local jurisdictions under the Cannabis Equity Act, yet data and operator testimonies indicate that operators are not seeing timely disbursement of the funds down to programs.
No statewide database tracks the success of these programs and some counties have little data available, according to the Social Equity Owners and Workers Association.
“It’s crucial that we prioritize social equity and ensure that those who have been disproportionately impacted by the war on drugs have the opportunity to both participate in and benefit from the massive cannabis industry,” continued Keith.
She said the lack of an independent statewide social equity definition that clearly defines disproportionately impacted communities has meant that the majority of state-funded equity resources have not reached their intended recipients.
“It is not a coincidence that jurisdictions with the least amount of state dollars allocated, per capita, are jurisdictions with the highest Black population,” Keith said. “We were sold a dream, but the reality has fallen short.”
Keith told senators to use existing data to determine what disproportionately impacted communities are.
Sen. Lola Smallwood-Cuevas said jurisdictions have to see this as a way of correcting the social devastation and carnage that came as a result of the war on drugs and that the state has a tremendous leadership role.
“Let’s be real, there are some localities that may not want to look at race as a factor; they may not want to prioritize in a way that addresses the disparity,” Smallwood-Cuevas said.
It took Keith 1,340 days to get through licensing.
The most problematic part of the process was the need to have a property to apply for a license, Keith said.
“We were set up for predatory investors with no established equity share guidelines in the regulations, no access to banking, no access to grant and fee deferrals that were promised,” Keith said. “We were thrown to the wolves with no legal assistance or oversight of sharecropper agreements.”
She said the Los Angeles City Council acquiesced to the well-capitalized existing medical marijuana lobbying efforts, allocating the $10 million intended for the equity program to enforcement.
“Once again, social equity is deprioritized all while we are still paying rent on empty buildings,” Keith said.
Keith paid $14,000 per month for her location in Los Angeles and over $350,000 for a vacant building waiting for her license.
More than $22 million was given to the city of Los Angeles for grant assistance, yet zero has been spent. Sacramento received almost $6 million and has spent a mere $10,800.
“Our solution is simple: obtain data to understand which communities were most impacted by the drug war and prioritize these jurisdictions for funding,” Keith said.
She also said the state should streamline grants and funding directly to recipients and that there is an urgent need for social equity operators to have access to provisional licensing for up to five years, allowing the business to be operational and earn revenue while working to fulfill the requirements of a full annual license.
“We are exhausted from fighting for an advantage that was supposed to be ours,” Keith said. “The senator asks why it hasn’t worked because we’re not set up for success.”
Keith said her story is not an exception but rather the reality of Black and Brown small cannabis business owners across the state.