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Social Equity in the Marijuana Economy

Do a google search for “equity” and “marijuana” and you are likely come up with numerous hits for private equity investing opportunities, and other ways Wall Street can cash into this newly legalized market.

But progressives have another type of equity in mind: social equity. How can we ensure that what will likely be a booming business benefits local people and economies, particularly communities who have been disproportionately hurt by the “war on drugs”?

Many cities in California are looking to Oakland for its innovative cannabis Equity Permit Program. Informed by recommendations from the Department of Race and Equity, during the first phase of cannabis permitting, half of Oakland’s permits will be reserved for residents who were convicted on marijuana-related charges before 1997. Residents with mean incomes under 80 percent who have lived for 10 years in select parts of East Oakland, West Oakland, and Fruitvale – areas with high concentrations of marijuana arrests – also qualify under the program. Finally, entrepreneurs who incubate equity applicants through providing free rent (for example), can also get priority. After the city collects $3.4 million in business taxes from the cannabis sector, the City will start a second permitting phase in which it will offer assistance such as no-interest loans to equity applicants.

In Richmond, city staff will be seeking Council direction on drafting regulations for recreational cannabis businesses. Richmond currently allows unlimited medical cannabis cultivation and manufacturing, but only a limited number of dispensaries. The regulations are quite extensive, with all cannabis businesses taxed at 5 percent, and will continue next year for both medical and other uses.

In the past two months, the Richmond Planning Commission approved medical cannabis cultivation conditional use permits at two locations. One, on the site of the old Tradeway Carpet building and complex on Carlson Blvd, will house five separate grow operations. The Pullman Neighborhood Council (under Naomi William's leadership) asked for additional conditions for the safety and beautification of the neighborhood, and the Planning Commission included them all in the Conditional Use Permit. The main addition is a requirement of each operator to pay $5,000 per year ($25,000 total) into a fund that they will administer and disburse based on recommendations of the neighborhood council.

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