In 2016, California voters legalized recreational cannabis through Prop 64. Now, five years after legalization, city’s are grappling with the difficulty of prioritizing social equity in the cannabis licensing process for Black, brown, and formerly incarcerated small business owners who were negatively impacted by the war on drugs. In this episode, Talk Policy to Me Reporter Noah Cole talks with Amber Senter, a cannabis advocate and Executive Director of Supernova Women and Chaney Turner, Chair of the Oakland Cannabis Regulatory Commission.
This episode was supported by research from Nabil Aziz and Victor Vasquez of the Cal in Sac Diversity and Entrepreneurship Summer 2021 fellowship program.
References
https://escholarship.org/content/qt7pb360bg/qt7pb360bg.pdf
https://escholarship.org/content/qt1wx6w6w2/qt1wx6w6w2.pdf?t=qzvyay
https://www.beyondequity.online/
Transcript
Amy: [00:00:09] California was the first state to legalize medical cannabis in 1996.
Noah: [00:00:13] And ten years later, after Prop 64 passed in 2016, recreational cannabis was legalized. This opened the door for vendors to open dispensaries across the state.
Amy: [00:00:22] Alongside the legalization of recreational cannabis, there was also a growing acceptance that the war on drugs contributed to disproportionately high incarceration rates for black and brown Americans.
Noah: [00:00:32] Between 2001 and 2010, for example, there were over 8 million cannabis arrests in the U.S. Although the rate of cannabis use is equal amongst all populations, black people are almost four times as likely to be arrested for cannabis possession.
Amy: [00:00:45] As a result, many cities, including L.A., San Francisco, and Oakland, have developed social equity cannabis programs in recent years that aim to help black, brown, and formerly incarcerated community members enter the regulated cannabis industry as a form of reparations.
Noah: [00:00:59] While these social equity programs have provided opportunity for some newcomers to the market, there is still a very high barrier of entry for folks interested in breaking into the cannabis industry. So what equity related problems persist in the cannabis industry even with these programs, and what can be done to solve them?
Amy: [00:01:15] On today’s podcast, we’ll hear from Amber Senter, a pro-cannabis advocate and the executive director of Supernova Women, an organization that empowers people of color in the cannabis industry to become self-sufficient shareholders.
Noah: [00:01:27] We’ll also hear from Chaney Turner, chair of the Oakland Cannabis Regulatory Commission and founder of Beyond Equity, a cannabis advocacy and education organization.
Amy: [00:01:37] On today’s Talk Policy To Me, we’re talking social equity cannabis programs.
Amber: [00:01:44] I wanted to be an entrepreneur in cannabis because cannabis has had a really big impact on the quality of life for me. I suffer from lupus, so I wanted to make products that helped other people that were sick. And when I got into cannabis, I noticed that it was going to be really hard for me to be able to thrive as an entrepreneur, so I really wanted to make space for myself and people that are like me that wanted to pursue a career in cannabis, really.
Noah: [00:02:28] Amber Senter is a black and queer cannabis entrepreneur in Oakland, California. Over the last 15 years, she’s worked across a wide array of roles in the cannabis industry, from manufacturing and distribution to brand development and government relations. Recently, Amber transitioned over to the advocacy space for cannabis, where she’s gained an intimate knowledge of the social equity programs. Amber and I chatted about some of the barriers of entries that exist within social equity programs, starting off with difficulties in the qualification and licensing process.
Amber: [00:03:04] I’ll start with if you qualify for social equity and you’re actually applying to be a social equity applicant. There’s a lot of issues there. And for instance, in Oakland, there’s two qualifiers. You have to meet an income and residency requirement or you have to have a cannabis conviction that originated in the city of Oakland. Showing that you have a cannabis conviction, I don’t think has been too much of an issue for folks, but on the other side of that, the residency requirement and the income requirement has been very, very difficult for people and it’s because they want records of 10 of the last 20 years that you were living in police beats that were overpoliced and deemed to be these areas that have been disproportionately affected by the war on drugs and qualify you. So I’ve worked with a number of different people that have tried to come up with the documentation to prove that they lived in these areas 10 of the last 20 years. And that’s been really difficult. And often it’s because if you do actually qualify, you probably had some housing instability and you probably did not have bills coming to you at certain places when you were surfing somebody’s couch or whatever it may have been. And it’s really hard for folks to come up with that documentation. I know a number of people that should qualify that can’t because they simply cannot produce those documents that are needed. So that’s a huge barrier, even just getting people to be able to have the documentation so that they can show that they actually qualify for social equity programs.
Noah: [00:04:52] And Amber a part of your advocacy has focused on the difficulties that come with local control of the cannabis industry. How does local control create inequity in the cannabis market?
Amber: [00:05:01] Yeah, sure. So cannabis is regulated at the state as well as at the local level. And I think we made a really big mistake by giving so much local control to the cities. And this is why the landscape is just so spotty across the state. You know, 70% of the state voted in favor of legalization, but we’ve only got a little more than 30% of the state that allows for legal cannabis sales. That doesn’t make any sense, and it’s because of local control. So when you get into these municipalities, they’ve got all their very, very specific rules. You’ve got all of this potential for corruption because they have so much control over the permitting process. So, for instance, San Francisco, you apply for a dispensary in San Francisco. They require that you have control of the property before you apply for the license. Now, this is problematic because San Francisco’s dispensary licensing process takes over three years to get through. That adds up quickly. When we’re talking about, you know, average rent at a retail location in San Francisco, 10,000 a month, you know, 120 a year, multiply that by three. Yeah, No. No. And how is that an equitable process? How do we expect people harmed by the war on drugs to be able to come up with that kind of money? You know, it’s just, it doesn’t make any sense.
Noah: [00:06:44] As our conversation went on. It became clear that beyond the licensing and local control issues, there was one major source of frustration for just about anyone in the cannabis industry. But it’s a particularly serious obstacle for social equity cannabis applicants who lack access to capital taxes, specifically the high tax rate on cannabis.
Amber: [00:07:06] I feel like Prop 64 was pitched to the public in a way that was dishonest and that, oh, we’ll generate so much tax revenue from cannabis and it’s going to take care of all of these things without telling people what the actual price of the cannabis was going to be at the end of the day. And so now that it’s out there and everybody’s like, “Oh my gosh, I can’t buy this,” you know, like it really just killed our industry before it was really able to get started on the regulated side of things. There’s a number of different taxes. First of all, there’s a cultivation tax which is fixed that’s taxed at cultivation. Then there’s an excise tax that’s taxed at the point of sale. There’s a sales tax. A buds are taxed at a certain rate, trim is taxed at a certain rate. And then all of these taxes are supposed to be collected by the distributor. And it’s like, what does this distributor have to do with all of this? Why isn’t all of this tax being collected at the retailer, who’s the one who deals with all the money? You know, it’s just, it’s frustrating, you know.
Noah: [00:08:24] That deep sigh you just heard from Amber is a real indication of the frustration experienced by folks, be it black, brown, formerly incarcerated, or small business owners who are new to the regulated cannabis market. And she laid out an important consequence of the high tax rates. When taxes are so high, the cost of the product in the regulated market can become so high that it actually incentivizes the continued existence of the unregulated market. Or, as advocates I spoke with, refer to it as the legacy market. This creates a whole host of new problems for distributors who work within the regulated market. Here’s Chaney Turner, the chair of the Oakland Cannabis Regulatory Commission, expressing concerns about the high taxes and how it contributes to the existence of the legacy market.
Chaney: [00:09:10] People don’t want to operate on the, quote unquote, black market anymore or what we call it legacy market. Folks would rather have a legal business where they’re safe from enforcement, you know, or being shut down or having their assets seized or, you know, or potentially going to, you know, going to prison. People don’t want to do that. But as with anything, as we have seen with any industry that is overtaxed and overregulated, you’re going to have an underground market. We’re five years in and I am literally looking at people who are much worse off than they were when they were on the unlicensed side. Also, it was safer. You didn’t you have had people have been burglarized numerous times over the past two years versus people who are still in the dark, who have never been touched. Right. Or who were never burglarized prior to 64, you didn’t have the amount of burglaries that you do now during the medical time, during 215. And so regulation has also brought a lack of safety. And that was the promise of 64 for decriminalization and safety. Right. And it hasn’t been very safe these past few years.
Noah: [00:10:48] What Chaney’s referring to is a recent high profile burglaries of dispensaries across Oakland. Over one 24-hour period in November, police investigated over a dozen reported burglaries of cannabis businesses in Oakland. Here’s Amber with more on why this has become such a problem.
Amber: [00:11:04] You know, it’s it’s tough. A lot of cannabis businesses in particular in Oakland are zoned in low income, high crime areas. So we’re in areas where we’re not necessarily wanted, and I understand why. And then from there, you know, small businesses like we don’t have all of this capital to have a lot of security. I mean, we have some decent security, some good security, but, you know, we don’t have guards that we can hire. Like, guards are really expensive. You’re looking at one armed guard is about 20 grand a month, you know, and that’s a lot of money. We’re dealing with robberies and bring being broken into, the police not showing up, and getting hit multiple times. You know my facility was was broken into again on Monday, and this is the second time in four months and still no police response. And so it’s like, why aren’t the police responding when you know, my business is paying upwards of 600% more in taxes than a traditional licensed business in Oakland. I’m not saying that I should get some sort of preferential treatment, but I should at least get what any other business owner gets and a response from the police when my business is burglarized.
Noah: [00:13:00] From a difficult qualification and licensing process to high tax rates, burglaries and a lax police response to these burglaries, it’s clear that breaking through the regulated cannabis industry as a distributor who lacks access to capital is extremely difficult. I ended our conversation with the discussion on potential solutions to the problem.
Amber: [00:13:19] So last week I was in Philadelphia at the House Democratic Issues Conference, which is the House Democrats retreat, they have an annual retreat. And they invited me and I had a strategy session with Chairman Jeffries, Congresswoman Pressley, Congresswoman Omar, Congresswoman Barbara Lee, and we talked about black, small business and cannabis and social equity. And a lot of them were very surprised to learn that I do not qualify for social equity. I’m a woman, I’m queer. I’m a veteran of the United States Coast Guard. I’m obviously an advocate and very much believe in social equity, but I do not qualify for the programs. And they said, “Why? Why don’t you qualify?” And it’s because the definitions are very narrow for social equity to qualify. And I have no problem with that, but really, we need to shift the narrative and not have this belief that black and equity and cannabis are the same thing because they’re not. What we really need to make sure we’re doing is that we’re creating policies that help small business. Because small business is really the heartbeat of cannabis. It’s definitely the heartbeat of legacy cannabis. It’s the heartbeat of black cannabis. Brown cannabis. Women owned business, veteran owned business, queer owned business, small business. And if we don’t preserve small business, all of these cannabis businesses, including social equity, will fail. So, you know, it’s okay that I don’t qualify for social equity, but what are we doing to make sure that we’re preserving small business? And I look at and comparison what happened in craft beer. Right. Craft Beer had this resurgence because the small beer brewers really got together and were like, We need to save small craft breweries. And they got all kinds of set asides set up for them. You know, they have reduced excise tax if you produce a certain amount of barrels per year. Like craft cannabis has to do the exact same thing or else we will be in a much worse boat where you’ll have all this homogenized cannabis and these big multistate operating cannabis billion dollar companies with no representation of small black or brown business, women owned. All of us will be wiped out.
Noah: [00:16:11] The Oakland Cannabis Regulatory Commission and Supernova Woman, Amber’s advocacy organization have several initiatives that aim to increase equity for distributors in the industry. This includes workforce development programs, shared kitchens for distributors, and the expansion of green zones, which are areas where cannabis businesses are allowed to operate.
Noah: [00:16:43] So, Amy, before hearing your reaction, I think there were two things that I really wanted to add that weren’t touched on in this episode. The first is that social equity cannabis applicants make up a really small fraction of folks who are granted cannabis licenses in the state. An L.A. Times review revealed that equity applicants made up less than 8% of all people granted cannabis licenses through 2020. So just gives you an idea of how few people actually serve as beneficiaries of this program. The second point is that Oakland has served as this model for cannabis and social equity, and in a lot of ways it is pushing the envelope. But we also know from speaking with Amber and Chaney that this model, especially around taxation and regulation isn’t working, and it’s being replicated to a worse degree in other cities and states. So, for example, Amber told me how cannabis is taxed around $200 a pound here in California. Well, in the New York State program that they’re passing, it’s going to be taxed at around $600 a pound. So it’s really troubling that other cities and states passing these programs and passing the regulation of cannabis aren’t really learning from some of the mistakes that have been made here in California.
Amy: [00:17:53] And I think we need to zoom out even further on the bigger picture here. I saw a study that estimated that the legal marijuana market is on track to be worth $70.6 billion globally by 2028. And big corporations are getting in the game. That’s big tobacco, big alcohol, big Pharma. You’ve players like Philip Morris, Molson Coors, and Johnson & Johnson that are buying or building cannabis products. Investors like Warren Buffett are infusing capital into venture backed businesses and importantly for distribution, which is going to hit folks like Amber. Amazon’s lobbying for legalization with its public policy team on a federal level in the hopes of being a legal cannabis distributor. That’s terrifying for small businesses. So we’re at this really critical time to make sure we save a portion of this market for the heartbeat of America: small businesses. Because if not, we’re going to see not just social equity, but wealth and equity skyrocket in the cannabis industry.
Noah: [00:18:47] Yeah, California’s really been sort of a lab to test how these policies will work, and if the last five years have shown anything, the trends are a little bit troubling. But it’s not too late in these next five, ten, fifty years for California to really become a leader and for these cities to become leaders in modeling how social equity can be prioritized in the cannabis industry. And hopefully we see the tide turn soon.
Amy: [00:19:12] Yeah, it’s inspiring to see folks like Amber and Chaney advocating, and I think we can all do our part by starting to use our voices.
Amy: [00:19:18] Talk policy To Me is a co-production of UC Berkeley’s Goldman School of Public Policy and the Berkeley Institute for Young Americans.
Noah: [00:19:27] Our executive producers are Bora Lee Reed and Sarah Swanbeck.
Amy: [00:19:31] Noah Cole produced and edited this episode with editing assistance from Elena Neale-Sacks and research assistance from Nabil Aziz and Victor Vasquez.
Noah: [00:19:39] The music you heard today is by Blue Dot Sessions and Pat Messiti Miller.
Amy: [00:19:43] I’m Amy Benziger.
Noah: [00:19:44] And I’m Noah Cole.
Amy: [00:19:45] Catch you next time.
