- Voice of San Diego - https://www.voiceofsandiego.org -

San Diego Wants to Infuse Social Equity in the Cannabis Industry

San Diego County Administration Building / Photo by Brittany Cruz-Fejeran

When California legalized cannabis for adult use in 2016, many supporters acknowledged that the War on Drugs had disproportionately impacted communities of color around the state. It was, in fact, one of the selling points of Proposition 64, which went into effect more than a year later. 

On the belief that the ballot initiative didn’t go far enough, though, social equity programs started springing up across the state in recent years to give special privileges to Black, Brown and low-income people who had been arrested and thrown in jail for nonviolent cannabis-related offenses and thereby barred from taking part in the new industry. 

One survey, conducted in 2017 by Marijuana Business Daily, found that about 80 percent [1] of the founders and owners of cannabis businesses at the time were White. 

Neither the city nor the county of San Diego has a social equity program on the books and officials for both say they’re working to create one. By their own admission, they’re late to the game. 

But that’s not necessarily a bad thing, considering that other municipalities in California have tried and failed to correct the injustices they previously identified. In some places, social equity programs have been portrayed as harmful to the same people they were supposed to help. 

Prop. 64 allowed local governments to maintain control when legalization went into effect. To date, adult cannabis sales are legal in the city of San Diego and others, like Vista and La Mesa, but sales, distribution, manufacturing and cultivation continue to be banned [2] in the unincorporated areas of the county.

That is slated to change next year, when the county’s Board of Supervisors considers the full scope of a countywide cannabis ordinance [3] that got the greenlight this past January in a 4-1 vote. The details of what that will look like in practice are still being hammered out, but there is an expectation that there will be a social equity provision in the ordinance. Next month, the county is expected to vote on whether to expand operations at five existing cannabis businesses in unincorporated areas.

Officials have invited the San Diego County Cannabis Stakeholder Group to help in the process of developing a countywide cannabis social equity program. The facilitator of that group, appellate court attorney Andrea St. Julian, said the ordinance needs to make repairing the damage brought by the War on Drugs the front and center issue in a discussion that traditionally starts with land use regulations. 

“When you start to formulate cannabis ordinances and regulations, you really have to start with social equity concerns,” St. Julian said. “And then, you have to consider also the concerns of the cannabis businesses, concerns of cannabis users and of course, the concerns and needs of the community as a whole. So redirecting government officials, and how they think about how to craft cannabis, a cannabis ordinance is really important.”

Andrea St. Julian, co-chair of San Diegans for Justice, appears at a press conference addressing the city’s proposed ordinance establishing the Commission on Police Practices in June. / Photo by Adriana Heldiz

The make-ups of these programs look different depending on where they are implemented, but typically they involve giving expedited licensing, tax breaks or other incentives to businesses run by people of color, particularly those who might have become criminalized thanks to previous cannabis dealings when things were less legal. Local governments have also instituted internship, job apprenticeship and mentorship programs as forays into providing social equity in the cannabis industry. 

Entire communities, including towns in Humboldt County, for example, are mostly made up of growers and sellers who operated in what is sometimes referred to as the “traditional market” — the illegal or unlicensed market that pre-dates legalization and persists to this day. Those communities have received additional social equity funding from the state [4]to help offset the exorbitant costs of running a legal cannabis business in California. 

The distribution of these funds, like legalization itself, amounts to an admission by the state that the War on Drugs was in many ways wrong. These programs have concrete monetary benefits, yes, but the symbolic meaning is also important to people who were targeted by the government for trafficking a good they believe should always have been legal. The current path of legalization suggests they may have been right all along.

In theory, San Diego County is an ideal place for social equity programs because the region houses two communities that could directly benefit — a significant cache of traditional market growers and sellers from the pre-legal days, and communities of color in East County and South Bay.

Emily Wier, deputy director of public policy for County Supervisor Nathan Fletcher, said officials plan to bring in an outside expert to help create the county’s social equity program, which will be led by the county’s Office of Equity and Racial Justice. 

Wier also said the county has issued a request for proposal for services related to the social equity program and they expect the consultant to be selected soon. The county will also soon review five existing legal dispensaries in the unincorporated areas to ensure they are included in future mentorship and internship opportunities that will be run with county support, she said.

While the inclusion of social equity programs has been considered essential by many cannabis industry stakeholders, as well as those shaping policy around the industry, they have not always been successful when implemented.

In Los Angeles, the city’s social equity program rollout has been sluggish and mired in bureaucracy [5], hurting the exact people it was intended to help. Lack of adequate staffing and funding ground the so-called program to a halt, stalling business owners’ ability to effectively run their businesses. 

Others accuse the program of turning people of color and those with arrest records into targets for predatory investors [6] with more flush access to capital so they can further game the system and essentially cut the line. In those instances, all that’s needed is for one applicant in the business to meet the social equity criteria and the whole business qualifies. As a result, programs may inadvertently direct resources to people and businesses who otherwise would not meet those standards.

Another common criticism of equity programs is that many don’t do enough to address the high cost of licensing required to become a legal cannabis business, which is one of the biggest barriers to access in the cannabis industry, period, let alone for those impacted by the War on Drugs. Mentorship and internship programs are helpful, but they don’t provide instant capital. Without that, many would-be cannabis business owners wouldn’t have the funding to start their own venture.

San Diego is in the unusual position of implementing a cannabis program later than other major population areas in California [7], despite being one of the largest metropolitan areas in the country.

“The county has the benefit of being late to the game,” Wier said. “We can learn from other jurisdictions that have had a more phased-in approach to cannabis policy, which didn’t exist for many of the entities that were earlier adopters of cannabis policy. We also can draft a much more comprehensive and effective program if we prioritize social equity from the start of the ordinance development program.”

Fletcher, the chair of the Board of Supervisors, has identified racial justice and equity as a priority, and cannabis policy in particular was part of his “Framework for the Future [8].” 

The county’s Office of Equity and Racial Justice has also been in communication with the City of San Diego, which is also trying to implement an equity program, though cannabis sales, manufacturing, and cultivation have been legal within the city since January 2018.

Sammi Ma, the city’s Cannabis Business Division project manager, said a lengthy bureaucratic process has delayed the city’s creation of an equity program, even though it legalized cannabis sales, manufacturing and cultivation in years ago.

“Senate Bill 1294 established the California Cannabis Equity Act of 2018,” she said. “In the spring of 2019, just a year later, the State’s Department of Cannabis Control (formerly the Bureau of Cannabis Control) launched the social equity grant to support local jurisdictions. At the time, the Development Services Department Cannabis Business Division (CBD) was not yet established. Once the CBD was formed in November 2020, it prioritized applying for the State’s equity grant, which was awarded four months later in March.”

Ma added that the program [9] has not yet been developed, but that the city is conducting an equity assessment that “will provide a data-driven analysis of the historical impacts that the criminalization of cannabis has had within the city, assess potential opportunities and constraints in the current regulatory framework, ultimately providing policy recommendations to assure equity and diversity in the emerging city of San Diego regulated cannabis industry.”

At the same time, the county says it’s still doing its homework, consulting with other jurisdictions, including Los Angeles, San Francisco and the city of San Diego, to find out what worked and what didn’t in their own programs. One of the takeaways, Wier said, is that a social equity program needs to be up and running prior to giving out commercial licenses and the larger ordinance going live. 

“We are currently on track to do just that,” she said. 

In the meantime, industry watchdogs like St. Julian are watching. 

“It’s still too early to tell,” she said, of whether the county is on the right track. She’s encouraged by the county’s statements so far but concerned that none of the concrete actions have been laid out. St. Julian said she hopes the county’s “actions will be in line with their rhetoric.”

Correction: an earlier version of this story misspelled the name of Supervisor Nathan Fletcher’s deputy director of public policy and misstated the scope of the cannabis ordinance coming up for a vote next month at the Board of Supervisors. The county’s wider cannabis ordinances, and social equity program, are expected to come up for discussion next year.

♦♦♦

Interested in hearing more on this topic? Voice of San Diego hosted a panel discussion on Sept. 28 [10] about the challenges and pathways of operating a social equity program in San Diego’s cannabis industry.