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Why Is Medical Cannabis a Racial Equity Priority?

The leaders of Oakland’s new Office of Race and Equity talk about why leveling the playing field in the cannabis industry is so important.

The other green jobs: Oakland's racial-equity angle on medical cannabis licensing could be a model for other cities. (Leonhard Foeger/Reuters)

There’s a lot of discussion these days about how to correct the racial inequities caused and reinforced by government policies—especially in major cities, where the gaps are widest. In Oakland, California, an innovative new cannabis equity assistance program is showing one way to do it: The program privileges and prioritizes African Americans in the process for obtaining city medical marijuana businesses permits.

It’s not a vaguely defined “race relations” program that dances around racism by having “public discussions” and “considering meaningful input” from people of color. Instead, it centers the problem—the devastation caused by the war on drugs on black communities—and provides a tangible, financially rewarding, and proportional remedy for those victims. This was the first project out of Oakland’s newly minted Office of Race and Equity, run by Darlene Flynn, who previously helped develop the city of Seattle’s Race and Social Justice Initiative.

Flynn says she didn’t know that medical cannabis would be her first racial equity experiment when she first took over Oakland’s office in October last year. But once she dove into the city’s cannabis permitting policy, she began to understand why it was imperative that the racial equity work begin here. CityLab talked to Flynn and Greg Minor, who runs the Oakland office responsible for meting out city medical cannabis permits, about how the program works, and why when it comes to racial equity, there is much more to come.

Why did marijuana become the first focal point of Oakland’s race and equity program?

Flynn: This all fairly new work, and [medical cannabis] was a highly difficult issue to take on. However, it was also a really clear issue: It was easy to do the analysis and identify what the barriers were to equity and then address those barriers. It was nice and clean in that way.

Also, the city council was already on that trajectory. They had already decided that they wanted to do this kind of work. They just wanted it analyzed more closely before they implemented it. The conversation was already happening; there just wasn't anyone here who could put together an equity analysis using this particular framework. We'll be doing more [racial equity analyses] on different topics moving forward. Eventually, we will have people in all of the departments that were picked for using this kind of framework for major policy issues.  

So where exactly is the medical cannabis equity program in the pipeline today?

Minor: The ordinance passed about a month ago, and we're looking at releasing our first applications by the end of this month. In terms of the equity assistance program, that will be funded by future cannabis tax revenue. We anticipated not having that tax revenue today; that’s why we are permitting in stages. During the initial phase, there is a requirement that at least half of permits go to those who qualify as equity applicants. But what the [racial equity] program will provide—low-interest startup loans and technical assistance to address some of the financial and technical barriers that we identified—when that gets up and running there will be no restrictions on actual permitting.  

How long will the rollout be for phase one?

Minor: It depends on how quickly we receive the sufficient amount of money to seed the equity assistance program, which is around $3.4 million. That could be next year. But in some ways, some of the provisions of the first phase are just as meaningful, in that there are actual restrictions on who can get the permits. The equity criteria targets those that have been held back either through disproportionate law-enforcement action or lack of access to capital. Also, during this phase-one period, general applicants that provide real estate and act as an incubator [for equity applicants] get priority for the next available phase of general permits. It’s a win-win partnership.

What were the tax revenues from the existing cannabis industry originally earmarked for?

Minor: They weren't earmarked toward anything, just the general fund.… Taking a step back, the city currently permits just the retail side—the dispensaries. This broader discussion more recently has been about bringing into compliance the manufacturing and production side of the industry. That side of the industry hasn’t been regulated.

Flynn: Technically, it hasn’t been legal.

Minor: Yes, some of them have voluntarily been paying taxes, but for the most part they have not. So the tax revenue for the equity assistance program is coming from new revenue sources—from cannabis cultivators and manufacturers who haven’t been paying taxes. Now they’ll pay taxes as part of their permit requirements.

Are their concerns about the sustainability of that funding structure? If I’m a successful equity applicant, how do I know that this program will still work for me three or five years out?

Minor:  So, I referred to that incubator program in phase one—in order for a general applicant to get the benefit of being an incubator, they have to provide three years of free rent to an equity applicant. That builds in a certainty in terms of their business costs. In terms of how much should this fund be, we did our best to look at analogous programs—our commercial lending program, for example. But ultimately we will learn as we go and we will reflect after the first year or two and see what needs to be changed, if anything.  

Some existing cannabis companies are already complaining about the new racial equity addendum, saying it’s unfair.

Flynn: Not everyone is going to agree with it and they will have a whole range of reasons for not agreeing with it. However, the research shows that an equitable society is a more stable society. It’s a healthier society. And it’s a safer society. It’s not about protecting individual interest groups. It’s about creating a society where all of us have a fair chance to succeed. So many barriers have been built into this for hundreds of years that have prevented this from being a level playing field. That is what this program is aiming at. It doesn’t mean everyone is going to appreciate it. Obviously, that playing field has advantages built into it, along with disadvantages.  

One point that some existing companies are making is that they crunched numbers and created business plans with a certain size market in mind, and that the racial equity components distort that market.

Flynn: Of course people make all kinds of calculations when going into business, and that is a natural part of entrepreneurialism. Most business people know that there are things that can change in this environment, and they’ll try to account for those in their calculations. We’ve had policy shifts in the U.S. many times over that have changed the landscape. I think you can see that this actually is for the greater good and it has all kinds of collateral benefits to society as a whole.

Working systematically and incrementally to correct the legacy of stark differences in access to wealth-building and opportunity in this country—that’s why programs like mine exist, to reframe that conversation. We’re putting on the table the conditions that are impacting the segments of our population who have been channeled away from opportunity for a long time.

Have other cities contacted you about your program since it was announced?

Flynn: Yes, they were calling and asking about what was going on even as we were pulling the report together. We suspected that there would be national interest in what we were doing because it really brought to the center of the conversation the history about cannabis and the impacts of the war on drugs. This is a moment in time when we can address historical inequities by doing some things a bit differently. I think more cities were interested to see if we could even pull it off—to get something like this passed in a timely way. Fortunately we were able to do that. My hope is that other cities will simulate it and maybe even improve it.

Many media outlets have called this a “reparations” program, myself included. What are your thoughts about that label applied to this program?

Flynn: I wouldn’t call it a reparations program. That would involve a lot more money. This is about equitable policymaking that hopefully we can replicate in other areas. We're learning how to look at the impacts of our policies past, present, and future to make new choices and policies that don’t continue to exacerbate racial disparities in our city. It’s a policymaking approach to undoing the conditions that we’re currently experiencing. A reparations program would be much more comprehensive. It really is about how to have a more fair and equitable society.  

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