S.D. TO PUSH CANNABIS EQUITY, INCREASE IN LEGAL DISPENSARIES
San Diego is planning key changes this fall to the way the city regulates cannabis, including a new effort to help minorities break into the lucrative business and the first increase since 2014 in the number of dispensaries allowed within the city.
City officials say it’s time for San Diego to catch up with nearly all of California’s other large cities by establishing a state-subsidized cannabis equity program, which could give minorities preference for a city cannabis permit or help them expunge old drug convictions. Officials also plan to ask the City Council to make municipal code changes that would increase the maximum number of dispensaries allowed in the city from 36 to 38.
The proposed changes are in response to last winter’s redrawing of City Council district boundaries, which pushed the number of dispensaries in north coastal District 1 and central urban District 3 above the maximum of four per district.
Efforts to create a cannabis equity program, which the city
launched in 2019 but did not pursue aggressively, are kicking into high gear this spring with a consultant’s analysis and a series of community forums.
A consultant is analyzing city crime statistics — especially before statewide cannabis legalization in 2016 — and the demographics of the people who have received the nearly 80 cannabis business permits San Diego has approved since sales of the drug were legalized.
City officials are also hosting eight community forums this spring to ask residents about barriers they have encountered in entering the legal cannabis industry, and any ideas residents have for ways to make the industry more inclusive.
The forums, which are being held in neighborhoods with relatively high minority populations, will take place May 23 through June 16. There will also be a June 15 forum on Zoom.
The accelerated city efforts are prompted by a Nov. 1 deadline for San Diego to complete all steps necessary for state approval of its proposed cannabis equity program. Council approval of the two studies is expected by September.
“We have a fast timeline,” said Lara Gates, deputy director of the city’s Cannabis Business Division. “There are multiple pieces to this. We need to get our assessments done and then it’s off to the races.”
Seven cities and counties already have cannabis equity programs: Oakland, Los Angeles, San Francisco, Sacramento, Long Beach, Humboldt County and Mendocino County.
But while San Diego is behind, most of those programs have been criticized for not making much impact. Advocates for minorities trying to break into the cannabis industry say there have been two main problems.
In some cases, the cannabis equity program was created after the limited number of cannabis business permits in that city or county had already been issued, making any leg up for minorities essentially useless.
In cases where a minority secured a permit through a cannabis equity program, many still couldn’t follow through on opening a business because of the difficulty of securing small business loans and other financing for such businesses.
Because cannabis is still an illegal drug under federal law, banks essentially can’t work with cannabis businesses because banks are federally regulated.
Gates said San Diego’s late entry into the world of cannabis equity programs might help the city learn from the mistakes of others.
“It’s a lot of lessons learned from those other jurisdictions,” Gates said.
The city’s new Office of Race and Equity will also play a role in creating the cannabis equity program.
“The city is committed to equitable ownership and employment opportunities in our rapidly growing cannabis industry, especially for communities disproportionately impacted by a lack of financial resources caused by systemic racism that was exacerbated by the War on Drugs,” said Kim Desmond, who leads the new city agency.
But before city officials can propose efforts to help minorities, they must complete the required state studies.
The consultant’s study, which is expected to be completed by June, is focused primarily on crime statistics and who owns cannabis businesses now.
City officials say they expect the crime numbers to help establish that minorities suffered more than Whites from law enforcement’s aggressive focus for many years on crimes connected to cannabis and other drugs.
The American Civil Liberties Union says that before legalization, Blacks were nearly four times as likely as Whites to be arrested for cannabis crimes — even though Blacks and Whites use the drug at about the same rate.
Because it typically costs several hundred thousand dollars to get a San Diego permit for a cannabis dispensary or a cannabis production facility, the study is expected to find that most of the permits haven’t gone to low-income minorities.
The eight forums will include city officials asking residents about two separate topics. One will address the impacts to people and their families with cannabis convictions before statewide legalization. The other will be whether residents have tried to break into the cannabis industry and any hurdles they have faced.
The forums will also focus on what an equity program should include. In addition to giving minorities preference for permits, the program could give child care vouchers or housing assistance to people affected by drug convictions.
Money for the program will come from millions in grants the state doles out each year for cannabis equity — money San Diego hasn’t been eligible for because it hasn’t yet done the studies necessary to have a state cannabis equity program. Money for the program might also come from the city’s cannabis tax.
The proposal to increase the maximum number of dispensaries from 36 to 38 is more generous than what industry leaders sought when they first realized last year that redistricting might become a problem.
When San Diego approved legal dispensaries in 2014, a key compromise was limiting the number of dispensaries in each of the city’s nine council districts to a maximum of four. But officials didn’t anticipate what would happen during redistricting, which occurs once every 10 years with new census data.
Industry leaders asked the city last year to ensure that dispensaries approved in one district could continue operating even if new boundary lines shifted the dispensary into another district.
The proposal, which needs City Council approval this fall, would grant the protection sought by industry leaders. But it would also increase the maximum number of dispensaries allowed in Districts 1 and 3 from four to five, increasing the maximum possible number of dispensaries in the city from 36 to 38.
Redistricting is creating new opportunities for dispensaries in many parts of the city. Every council district had the number of legal dispensaries within its boundaries change under redistricting — except north inland District 5, which has no legal dispensaries.
The number of legal dispensaries operating now is 26.