San Diego officials are proposing a cannabis equity program that would make it easier for people of color to break into the lucrative business with start-up loans, fee waivers, help finding business sites and other incentives.
The program, which will be presented to the City Council next month, would also help people expunge cannabis criminal convictions from their records.
The dozen equity proposals come in response to recent studies showing people of color have suffered a disproportionate share of cannabis arrests in San Diego and Whites own an outsized share of local cannabis businesses.
“We’re no longer talking in abstractions,” said Kim Desmond, who leads the city’s Office of Race and Equity. “It’s an industry that is riddled with racial disparities.”
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The arrest study shows that Black and Latino people have experienced 50 percent of total cannabis arrests since 2015, despite representing only 29 percent of the city’s population. Local law enforcement agencies couldn’t provide records from before 2015, city officials said.
The ownership study, which covered the entire county rather than just the city, shows 68 percent of cannabis business license holders are White, even though Whites make up 44 percent of the overall population.
Latinos, who make up 34 percent of the overall population, hold only 14 percent of cannabis business licenses. Black people fare better, making up 5.6 percent of the county population and controlling 7 percent of cannabis licenses.
The study also estimates that 87 percent of cannabis license holders in the county are men and 13 percent are women.
The studies and the new equity proposals will make San Diego eligible to join nearly all of California’s other large cities in establishing a state-subsidized cannabis equity program.
Since the state began allowing equity programs in 2018, Long Beach, Los Angeles, Oakland, Palm Springs, Sacramento and San Francisco have established them. Humboldt, Lake and Mendocino counties also have programs, which are funded by state cannabis taxes.
Mayor Todd Gloria has prioritized such a program since taking over in 2020 for Mayor Kevin Faulconer, whose administration did not support what was characterized as preferential treatment in the cannabis industry.
While some city officials and community leaders have expressed frustration about the delay, it could help San Diego learn from mistakes made in other cities, where equity programs have either had a limited impact or done damage by leaving some participants with large debts.
But the delay has limited the program’s short-term potential because most of the city’s permits for cannabis outlets and production facilities have already been issued, shrinking the opportunities left for people of color.
“We are in catch-up position all across the country when it comes to social equity,” said Roz McCarthy, founder of the Orlando-based Minorities for Medical Marijuana. “We’re too late to get the numbers to match up with overall demographics, but we can tip the scale.”
Another factor limiting the program’s potential is that it addresses only the legal cannabis market, which city officials estimate makes up only 20 percent of the overall market. Most of the illegal market operates through delivery services, officials said.
San Diego’s recent analysis, combined with community forums hosted by city officials, determined that the biggest hurdles facing people of color are lack of capital to break into the cannabis industry and a lack of training and networking opportunities.
Other hurdles it identified include problems finding suitable sites, complex government regulations and struggles obtaining financing because banks can’t work with cannabis businesses under federal law.
“These are significant challenges for any person attempting to obtain a license, but they are even more pronounced for low-income individuals who have a personal or family history with the criminal justice system,” the report says.
An element of the city’s proposed equity program is helping people expunge any criminal records from cannabis convictions.
Last year, a Superior Court judge reduced felony cannabis convictions to misdemeanor convictions for approximately 26,000 people in San Diego County. In addition, about 1,000 people with misdemeanor cannabis convictions had their cases completely dismissed.
But city officials said the court system has been slow to update individual records, stressing that it remains the responsibility of people who were convicted to ensure that their individual record is addressed.
Planning Commissioner Ted Miyahara praised this element of the proposal when it was presented to the commission last week.
“A criminal conviction can be a real big roadblock in life, and I think we need to recognize that,” he said.
Bruce Mayberry, chief executive of the San Diego Central Black Chamber of Commerce, said the devastating impact of previous cannabis convictions should be a call to action for the city to boost Black participation in the local cannabis industry.
“If you look at the number of African-Americans that were incarcerated and had their lives turned upside down when cannabis was illegal, and now you look at the number of African-Americans that are benefitting from cannabis now that it’s legal, you can make an argument that another crime is being committed,” Mayberry said.
The city’s proposal would establish eligibility criteria for an equity program that would help participants find sites, get financing and be mentored by members of the cannabis industry.
The proposal includes creating a revolving loan fund that would be started with $5 million in city cannabis tax revenue. San Diego collected more than $24 million in cannabis tax revenue during the fiscal year that ended June 30.
Two of the eligibility criteria are mandatory:
- having been convicted of a cannabis crime, or having had a family member convicted of a cannabis crime, after Jan. 1, 1994, within the San Diego city limits.
- being a current or former resident, for at least five cumulative years between 1980 and 2016, of Barrio Logan, Linda Vista, southeastern San Diego, Encanto, Golden Hill, North Park, City Heights, the College Area or San Ysidro.
Applicants must also meet two of these four criteria:
- Have a household income below 80 percent of the area median income
- Lost housing in San Diego through eviction, foreclosure or subsidy cancellation after 1994
- Attended school in the San Diego Unified School District for at least five years between 1971 and 2016
- Placed in the foster care system at any time between 1971 and 2016
Armando King, a leader of the local Black community, praised the proposed equity program.
“This is a form of reparations,” he said. “This is a form of righting the wrongs of the failed war on drugs.”
Councilmember Raul Campillo also praised it.
“I believe it addresses many of the barriers that exist for those who are unable to enter the legal cannabis market,” he said.
McCarthy, the national advocate for cannabis equity, said San Diego should focus on educating people who might be eligible and making sure no one who should be ineligible games the system.
She also suggested San Diego could create an incentive program that would encourage the owners of cannabis businesses to buy supplies they need, such as boxes, from minority-owned companies.
The cannabis equity proposal is scheduled for a Sept. 20 City Council hearing. It must be approved by late October to meet a state deadline for the next round of cannabis equity funding, which is expected to be $2 million.
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