Oakland slow to aid equity pot startups
Oakland promised to set aside $3.4 million in cannabis tax revenue to offer no-interest loans to startup marijuana businesses that qualified for the city’s equity program.
The good news is that the city has finally set aside that money.
The bad news is that it won’t be available for several months, and the startup businesses relying on that help — many are hanging on by a thread — may not be around by then.
What we have here is another example of how Oakland’s execution of its hyped-up equity program is failing the people it was designed to help.
Which is too bad, because the intentions behind the program were good: to right the wrongs of the war on drugs, which unfairly cracked down on black and brown people.
To qualify for Oakland’s equity program, applicants had to be city residents earning
less than 80 percent of the city average. And they had to either live in a specified highcrime zone for at least 10 of the past 20 years or have been convicted of a cannabis crime in Oakland after Nov. 5, 1996.
The city collected the $3.4 million in cannabis tax revenue by March, according to Greg Minor, an assistant city administrator. But the city must hire a consultant to develop a plan for how to disburse the loans.
On April 20, Minor said, the city solicited bids for that job. No, I’m not blowing smoke. This really happened on 4/20, the day people celebrate cannabis culture.
“We need to bring that consultant on board and collectively design the most effective way to allocate a limited amount of funds to potentially a large pool of equity applicants,” Minor said. “We have to find the most effective and equitable way of dividing a limited amount of funds.”
Hold your celebration, because that will take much longer than a smoke break. Hopefully, not as long as it took the City Council to hammer out pot regulations.
Minor told me he thinks it will be three to five months before the city starts issuing loans.
The city should have lined up the consultant well before the equity fund reached the $3.4 million mark. Small pot businesses are struggling to get off the ground. Will they be able to hang on, or will they get smoked out by the well-funded ventures circling Oakland with the munchies?
It’s no secret that equity businesses needed more than a place at the front of the line.
“For most equity businesses, available real estate for them to operate and capital are the two biggest challenges they confront,” said Robert Selna, an Oakland land-use attorney who represents marijuana businesses, including equity applicants. “And they’re both very significant challenges.”
The city dealt with the first challenge by reserving half of cannabis permits for equity applicants.
General applicants who were able to provide 1,000 square feet of free business space to an equity applicant also received preference when applying for permits.
Several equity applicants are relying on financial assistance from Oakland. Some, like Charles Byrd, whose family-run company I’ve written about, planned to use the business loan, in part, just to pay state application fees.
What good is a free local permit if you aren’t able to pay for one from the state?
Darlene Flynn, the director of Oakland’s Department of Race and Equity, which is charged with examining racial inequity in Oakland, acknowledged that the city’s efforts to help equity applicants haven’t been perfect.
“We would’ve put cash in the front end if we would’ve had cash,” Flynn said.
Still, Flynn remains optimistic about the equity program’s future.
“We’ve already got people way farther down the pipeline then they would’ve otherwise been without this program,” she said.
True, but some of those people’s businesses might wilt while waiting to be bailed out of the pipeline.