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Cannabis Equity Programs: Updates from Oakland and San Francisco

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As most everyone now knows California’s statewide licensing and regulatory regime for medical and adult-use cannabis businesses took effect on January 1st of this year. However what readers of our Canna Law Blog know is that every jurisdiction is free to decide whether to regulate or prohibit cannabis businesses within their border. It’s the state’s deference to cities and counties that make our California Cannabis Countdown series so popular. Not only are local jurisdictions regulating what types of cannabis businesses they’ll allow, but also WHO is eligible for a cannabis license.

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Oakland and San Francisco are trying to even the balance.

In many of California’s major metropolises local legislators have made it a priority to enact social equity programs. The goal behind many of these social equity programs is clear: the war on drugs disproportionally affected communities of color and as a just society we need to right that wrong. In the Bay Area both Oakland and San Francisco have enacted legislation that stresses the importance of social equity programs.

We previously covered Oakland’s regulatory regime here but as a quick refresher Oakland’s ordinance requires that half of all cannabis businesses permits are issued to equity applicants. Oakland defines an equity applicant as an individual that:

  • Is an Oakland resident; and
  • Has an annual income at or less than 80% of Oakland’s average median income;
  • and either
  • Was arrested after November 05, 1996 and has a cannabis conviction in Oakland, or;
  • Has lived for 10 of the last 20 years in a number of police beats

After equity applicants, Oakland’s licensing regime gives priority to general applicants that are equity incubators. In order to serve as an equity incubator a general applicant must provide the following:

  • Providing free rent for a minimum of three years;
  • Provide a minimum of 1,000 square feet to the equity applicant; and
  • Provide the equity applicant with all required security measures.

Oakland has also realized that just providing priority processing to equity applicants alone is not enough to combat a history of disproportionate targeting of communities of color for criminal law enforcement. Oakland will also be hosting cannabis summits, orientations, and bootcamps for equity applicants. They’ve also created an online portal for equity applicants to connect with incubation partners.

San Francisco, like Oakland, has also created an equity program but has also taken the extra step by placing restrictions on who can apply for a cannabis business license. In 2018, San Francisco’s Office of Cannabis (“Office”) will only issue cannabis licenses to applicants that meet one of following criteria:

  • Qualify as an equity applicant or equity incubator;
  • Previously possess a valid medical dispensary permit under Article 33 of the Health Code;
  • Were issued a temporary cannabis business permit by the Office of Cannabis (which required you to register with the Office and show proof of operation prior to September 26, 2017);
  • Demonstrate compliance with the Compassion Use Act of 1996 (a/k/a Prop 215) and were shut down by federal prosecution or threat of federal prosecution;
  • Applied and received approval for a medical cannabis dispensary from the Planning Commission; or
  • Registered with the Office as pre-existing non-conforming operator.

On top of restricting the individuals that can obtain a license in 2018, San Francisco is placing an emphasis on social equity by granting equity applicants and equity incubators with priority processing in the permitting process. San Francisco’s equity applicant definition and incubator requirements differ from Oakland’s. In San Francisco an equity applicant is defined as someone that meets at least three of the following six conditions:

  • Meet certain household income limits (income limit varies depending on the number of people in your household);
  • Have been arrested from 1971 to 2016 for a cannabis offense;
  • Had a parent, sibling, or child arrested from 1971 to 2016 for a cannabis offense;
  • Lost housing in San Francisco after 1995 through eviction, foreclosure, or subsidy cancellation;
  • Attended school in the San Francisco Unified School District for a total of five years from 1971 to 2016; or
  • For a total of 5 years from 1971 to 2016, have lived in San Francisco census tracts where at least 17% of the households had incomes at or below the federal poverty level.

On top of those requirements there are also certain ownership interests and corporate positions that an equity applicant must hold in the cannabis business. If you want to operate a cannabis business in San Francisco in 2018 and don’t meet any of the criteria previously mentioned (prior operator or equity applicant) you’ll have to act as an equity incubator, which requires ALL of the following for three years:

  • Have local residents perform 30% of all work hours;
  • Have half your employees meet three of the six conditions for equity applicants; and
  • Provide a community investment plan with businesses and residents within 500 feet of your location.

And at least one of the following conditions:

  • Submit a plan to the Office of Cannabis for providing guidance to equity applicants running a new cannabis business; or
  • Provide an equity applicant with rent-free commercial space and use of security services for three years. The rent-free space has to equal or exceed 800 square feet or be at least 10% of the incubator’s space.

Both Oakland and San Francisco will be issuing progress reports on the status of their respective social equity programs and it will be interesting to see how many cannabis permits end up being issued. These are noble and necessary programs and we hope that they succeed. We’ll be sure to keep you posted.

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MLK Day: Cannabis and Civil Rights

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Happy MLK Day!

For our international readers, Martin Luther King, Jr. Day is an American federal holiday marking the birthday of its eponymous civil rights hero. Dr. King was the chief spokesperson for nonviolent activism in the Civil Rights Movement, which successfully protested racial discrimination in federal and state law. Dr. King was assassinated in 1968, four years after the passage of one of the great U.S. laws of the 20th century, the Civil Rights Act of 1964. His death also came two years prior to one of the 20th century’s most controversial and insidious laws, the Federal Controlled Substances Act of 1970 (CSA).

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Don’t forget that cannabis is a civil rights issue.

As cannabis business lawyers, we write about cannabis law topics every day of the year on this blog, but we seldom address pure social issues. When it comes to cannabis, however, it is sometimes difficult to separate law and policy. This is because the federal prohibition of marijuana in the United States has had a racially disparate impact on non-white individuals, especially black and Latino Americans. That should come as no surprise to anyone: It is well documented that former president Richard Nixon wanted to link marijuana use and its negative effects to African Americans and hippies, who he perceived to be his enemies, when he signed the CSA.

That was almost 50 years ago, but in a way, not much has changed. Although the Trump Administration has instated policies that make it more difficult to track drug arrests, publicly available FBI data reveals that 1,572,579 marijuana-related arrests occurred in 2016, comprising 42% of all reported U.S. drug arrests. This is 10,000 more marijuana arrests than were made in 2015. Thus, marijuana arrests are increasing, even as more states legalize possession and sale of the plant. It is profoundly regrettable that non-white individuals are arrested for marijuana crimes on a grossly disproportionate basis to whites, today and historically, despite lower levels of consumption overall. Most arrests are made for simple possession of small amounts of pot, and are made at the state and local level.

As far as federal enforcement and policy, both the Drug Enforcement Administration and the Federal Bureau of Investigation operate under the jurisdiction of the Department of Justice (DOJ), which is headed by Attorney General Jeff Sessions. Mr. Sessions has a long and well-documented history of fervent opposition to marijuana. Since his confirmation in January of 2017, Sessions has made various attempts to strengthen the hand of federal agencies in prosecution of marijuana-related crimes. Most of these attempts are either aggressively or latently anti-civil rights. These attempts include:

  • reversing a DOJ policy to combat draconian federal sentences for drug-related convictions (which affect blacks and Latinos disproportionately);
  • reversing a DOJ policy phasing out federal private prisons (which impound blacks and Latinos disproportionately);
  • calling for an inquiry into the link between marijuana and violent crime (likely to target blacks and Latinos disproportionately);
  • reinstating the controversial and legally problematic police tool of asset forfeiture, which allows law enforcement to seize property of individuals who have been suspected of, but not charged with, crimes (in violation of everyone’s civil rights, but to affect blacks and Latinos disproportionately);
  • petitioning Congress for funds to prosecute the retrograde War on Drugs, including recreational and medical marijuana (still more racially disparate impact);
  • importuning state governors with “serious questions” about their state cannabis programs, in an apparent effort to challenge the legitimacy of those programs (latently problematic); and
  • ripping up the Cole Memo, which gave some cover to marijuana businesses.

Jeff Sessions has been dogged by allegations of racism throughout his career, and his fusillade of anti-civil rights actions begs the question: If a racist were in charge of criminal justice for the United States, what would he do? The answer is literally everything listed above. Unfortunately, there may be more to come.

The War on Drugs started out as a war on minority groups, and not much has changed in 50 years. If Dr. Martin Luther King Jr. were alive today, it is almost certain that he would be advocating for an end to the War on Drugs, starting with removal of marijuana from Schedule I of the CSA. Until that happens, and in honor of Dr. King, here are some ways you can pitch in to reverse the racist, immoral and counterproductive state of federal law with respect to cannabis:

  • demand that your Senator co-sponsor to the Marijuana Justice Act;
  • demand that other public officials in your state finally step up to de- or reschedule marijuana as relates to the CSA;
  • support organizations across the political spectrum, from the American Civil Liberties Union (ACLU) to Republicans Against Marijuana Prohibition (RAMP), with respect to their efforts to end federal prohibition;
  • support trade groups like the Minority Cannabis Business Association, which promote diversity in the cannabis industry; and
  • support and advocate for city and state programs that aim to help disadvantaged communities cash in on marijuana legalization.

Dr. King died 50 years ago, but his legacy continues to resonate and expand. On this day honoring one of our greatest leaders, it is important to remember all of the reasons we strive to put an end to prohibition, including the most important ones.

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Public Officials and Cannabis: The Talkers and the Do-ers

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Talk is cheap.

When it comes to ending federal prohibition, some public officials are do-ers, and other are talkers. Here in Oregon, we are lucky enough to have Congressman Earl Blumenauer, who is a relentless advocate for ending prohibition. Blumenauer helped found the Congressional Cannabis Caucus, and appended his name to the Rohrabacher-Blumenauer Amendment (RBA), which prohibits the U.S. Department of Justice (DOJ) from spending money to interfere with state medical cannabis laws. We are also fortunate to have the likes of Ron Wyden and Jeff Merkley in the Senate, who introduced a marijuana banking bill as far back as 2015, and Governor Kate Brown, who has always been stellar on cannabis.

Those four individuals are Democrats, of course, but there are plenty of vocal Republican advocates for ending prohibition as well. Dana Rohrabacher (of RBA) gets an A+ rating from NORML, and Corey Gardner, the Republican Senator from Colorado, was one of the most strident critics of Jeff Sessions’ recent move to rescind the Cole Memo, pledging to block DOJ nominees until Sessions relents. All of this makes sense, given the status of the plant in these individuals’ respective states, but also the fact that a majority of Republican voters now support marijuana legalization nationwide.

At this point, you would think that every politician in a cannabis-legal state – especially adult-use states – would be pulling on the rope of ending prohibition. Some of our elected and appointed officials, though, are mostly just talk. These individuals give lip service to the notion that the federal government should stand down on cannabis, but they cannot be bothered to introduce legislation, let alone sponsor a bill or make any other attempt to re- or deschedule cannabis with respect to the federal Controlled Substances Act (CSA). President Obama’s Attorney General, Eric Holder, was sometimes criticized for this.

As DOJ head, Holder had the power to press Health and Human Services for an evaluation of cannabis, sufficient to remove it from the CSA. We explained how that works here. Whether Mr. Holder would have succeeded is an open question, but the fact that Holder is now one of the most vocal critics of Session and his cannabis policy, only lends credence to the argument that he should have done more when he had the chance.

Today, at this important time, there are other public officials who should be doing more to end the War on Drugs, but they too are mostly just talk. Case in point: California Democratic Senator Kamala Harris. There are several reasons why Ms. Harris has been catching significant flak for her half measures on cannabis, as compared to other officials: 1) she hails from California, the first state with a medical cannabis program and the world’s largest cannabis economy; 2) she comes from the executive side, having served as California Attorney General; 3) she is a celebrity national politician, who is often floated as a 2020 presidential candidate; and 4) she is constantly talking about the failed War on Drugs. In fact, she talks about it pretty much every single day.

But it’s all talk. As California Attorney General, Ms. Harris did little to advance her state’s interest as to cannabis. In 2014, when she was asked for her opinion on legalizing adult-use cannabis, her response was dismissive laughter. As a state Senator, she has failed to sponsor or even co-sign any bill to re- or deschedule marijuana (and there are some good ones). Aside from lots of talking, Harris’ one big move has been to put together a petition to decriminalize marijuana nationwide (but not to revise the CSA). My eight-year-old niece could do that.

Industry advocates, cannabis users, and voters in general should all pay attention to which of their representatives are talking the talk, and which are walking the walk when it comes to ending prohibition and protecting state industries. Given her career arc and superstar potential, Kamala Harris has famously been referred to as “Eric Holder in a skirt.” When it comes to cannabis, unfortunately, that comparison looks like a pretty good fit.

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They Said It On Marijuana, Quotable Saturday, Part CLXXXVI

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Former Attorney General Gonzales is right; regardless of one’s opinion about cannabis (and we all know how the current administration feels about cannabis!), it simply does not make sense to spend time and resources prosecuting state-legal cannabis businesses. Our country has too much on its plate to waste time and money prosecuting businesses that work hard to comply with state law and that have already been operating successfully for years without issue. Didn’t we learn this from prohibition?

Do you agree?

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They Said It On Marijuana, Quotable Saturday, Part CLXXXV

Representative Cohen’s quote raises a good point about the value of state-level cannabis. Justice Brandeis is right about the benefit of using states as laboratories for trying out new ideas. These state experiments allow us to test what works and what doesn’t before pushing things out nationwide. They also allow each state to tailor its programs to what works for their own citizens and to what their own citizens want.

All this holds true for cannabis too where we see so many of the state-level experimentations working. The states that have legalized cannabis have built up their economies, provided their citizens with access to useful medicine, and offered patients a route out of opioid addiction.

The cannabis “experiment” is working and that bodes well for it to continue rolling out state by state until such time as the whole country wants it.

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They Said It On Marijuana, Quotable Saturday, Part CLXXXIV

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Republican Tom Garrett makes a great point here. Cannabis is an issue but it isn’t the biggest issue. The bigger issue is that the federal government’s cannabis prohibition restricts our personal and economic freedoms. What’s worse is that this prohibition is built on misunderstandings and longstanding bias, as well as ignorance regarding the increasing body of research on the benefits of cannabis. We’re not solely talking personal use, either. The federal government not only limits its citizens from being able to consume cannabis for any purpose, it also limits the types of enterprises into which its citizens can go and the economic benefits cannabis could provide to the country as a whole.

As we so often say on here, we do not care nearly as much about how someone personally feels about cannabis as we do about how they view whether others ought to be allowed to use cannabis free of government interference. There are plenty of people who do not believe cannabis is for them and yet believe it should be fully legal. We embrace those people because our goal is not to convince everyone that cannabis is great, but merely to convince just about everyone that those who seek to use cannabis should be allowed to do so legally and — even ideally — without stigma.

Plain and simple: prohibiting cannabis puts a limit on freedom. And that just isn’t okay. And this is true no matter how you feel about cannabis.

Do you agree?

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They Said It On Marijuana, Quotable Saturday, Part CLXXXIII

Senator Booker nails it again. Though the Trump Administration acts like cannabis is a big, scary drug, the majority of Americans view cannabis as completely normal. Cannabis isn’t simply consumed by “stoners” or “criminals,” but by the girl next door, your grandma, veterans who risked their lives for your country, your congressional leaders even. Yet cannabis remains stigmatized, along with those who use it. And what exemplifies this stigma more than cannabis’ federally illegal status and classification as a Schedule I substance?

As Booker says, our criminal justice laws need to catch up to our society. What good do those laws do us if they don’t represent us?

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They Said It On Marijuana, Quotable Saturday, Part CLXXXII

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Though it would be best if cannabis were just legalized nationwide, Brownfield’s support for state-level experiments is certainly better than nothing, particularly if that does lead to reclassification. The current administration seeks to stand in the way of state experimentation (despite supposedly supporting states’ rights!), while Brownfield believes experimentation with legal cannabis at the state level is tied to the democracy of our country.

And it is.

Do you agree?

 

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They Said It On Marijuana, Quotable Saturday, Part CLXXXI

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Representative Blumenauer provides a great overview here on the current political climate regarding opioids and cannabis. The Trump Administration claims to be working on solutions for the opioid crisis but seems too blinded by the stigma of cannabis to consider it as a viable solution. Research increasingly shows cannabis is at least a partial solution for opioid addiction, but the federal government remains immovable on cannabis.

We have to keep pushing until the politicians get on board.

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They Said It On Marijuana, Quotable Saturday, Part CLXXIX

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Republican Senator Gardner makes a good point. The small amount of research the federal government has permitted has shown many ways cannabis is medically useful, yet barriers to research continue. Gardner is one of several senators who support the Marijuana Effective Drug Studies (MEDS) Act to remove barriers to cannabis research.

It would be helpful for everyone. It’s simple and it’s necessary. Knowledge is power, especially when it comes to medicine and health.