How six years of Oakland’s equity program has impacted local cannabis businesses
This story aired in the June 14, 2023 episode of Crosscurrents.
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I’m at Rose Mary Jane, a black women-owned dispensary on Harrison Street in Oakland. It’s a warm, spring day in March, and the general manager, Sway Macaluso, gives me a tour of the space and its products. The entrance of the dispensary is adorned with green plants and its walls are covered with photos of local cannabis entrepreneurs. At the front counter, where customers buy their weed, a bright neon pink sign is centered with the words: “Rose Mary Jane.” I feel like I’m walking around in a Nicky Minaj music video.
Rose Mary Jane is an equity-owned dispensary, and prioritizes selling products made by other members of the cannabis equity program. At least 35 percent of the products on their shelves are produced by local equity businesses.
Oakland’s equity program provides cannabis permits, grants and interest-free loans to East Bay residents who qualify. It also decreases fees for applicants who have a prior drug conviction, or who have lived for at least 10 years in an overpoliced part of Oakland. An equity applicant can join the program as a cultivator, manufacturer, distributor, dispensary or even a delivery service.
Soon after the City of Oakland enacted the program in 2017, former Governor Jerry Brown signed the Cannabis Equity Act to ensure that equity programs would be greenlit throughout California. Here in Oakland, some local businesses have taken charge of creating a more equitable environment for people who have been historically criminalized for selling weed.
“Being able to consume cannabis to take the edge off, hike, and be focused. I don’t think that folks necessarily believe you can do that,” said Alicia Holcomb, the founder of MAAT Apothecary, a small cannabis company in East Oakland. “You can be an entrepreneur and utilize the plant in order to reach these stages in your development throughout your day.”
Her company makes weed honey, which according to Alicia, helps consumers regulate their doses, and allows them to take cannabis discreetly. She said that while she faces challenges operating a weed business, she’s glad the equity program allows her the chance to operate in an industry that has been largely closed off to people in her community.
“There is a steep incline and a steep learning curve. This is a new industry, it’s developing,” Alicia said. “Having an opportunity at the ground level to be able to influence the ways that people coming behind me and other young girls who are growing up and who have an affinity for plants, for them to not feel that the doors are shut in bringing their ideas to market.”
Although Alicia is grateful, she noted that the City of Oakland often takes too long to distribute the resources that cannabis companies need to start production.
“Time, paperwork, letdowns. It’s really hard to be able to scale a business with so many different moving parts.”
Some equity applicants have also been asked to pay back their loans to the City of Oakland before they have even made a profit, according to a report published by the Oaklandside. She also said that high taxes and permit fees often push out small cannabis businesses from the industry altogether.
“A lot of people think that because you are a cannabis business, you are rolling in money,” she added. “I don’t think people considered that the industry would develop this way. Or that there would be so many points of taxations and fee schedules, to where your profit margin becomes tinier and tinier each year.”
For equity applicants like Rachaude Crawford, issues arose soon after starting the licensing process with Oakland’s equity program in 2019. Rachaude and his mother officially started their weed company Da Bomb in 2021, as soon as they received their cannabis license from the City of Oakland.
When they first began the equity program, they became a part of the “incubator model,” an aspect of the program that provides incentives to larger cannabis companies that can provide a free space for members to operate. The participating incubator must provide a production site for three years rent-free, and the space needs to be a minimum of 1,000 square feet. But when Rachaude’s company was taken in by an incubator, he felt like his business was being treated unfairly.
“Where we're located, it's a rather large location,” Rachaude said. “There are a lot of cannabis companies there, but they're not all the same.”
Rachaude’s company was being charged the same amount of utility bills as the others- even though his operation costs were much less.
“They estimate the electricity cost for the year. Then if the electricity cost exceeds that, then at the end we just end up with a whopping bill,” he added. “Like an extra $2,000. It doesn’t matter, you all average the same.”
Rachaude claims that the companies in the building don’t usually have a choice in what kinds of equipment the incubator purchases for the facility, so utility bills could increase without them even knowing.
“If they do something that causes more power to be consumed, you're also tasked with that,” he said.
According to a letter from an attorney with Oakland’s Equity Technical Assistance Program, similar issues arose with Oakland business Eco Cannabis, where the Eco Cannabis incubator overcharged its equity members on utility payments. Some of their equity applicants had made utility payments that did not show up on Eco Cannabis’ records. Mistakes like this are actually pretty common.
Greg Minor, who works as the Deputy Director of Economic and Workforce Development at the City of Oakland and helped launch the cannabis equity program, has seen firsthand how equity applicants have been hurt in the last few years. Most of the problems, he says, are due to little oversight over how the program is operating.
“Cannabis equity programs don't exist in a vacuum,” Minor said. “Everything that happens for the cannabis industry as a whole is gonna be reflected in our cannabis equity program, if not disproportionately so.”
The City of Oakland is hopeful they can fix some of the program’s flaws in the near future. Minor notes that because of support from the state, including $6.5 million dollars in funds allotted to the equity program in 2020, the City of Oakland will be able to support equity businesses that are struggling financially.
“We've started grant programs a couple of years ago in addition to loan programs using state funding,” he noted. “One of the ideas that we're gonna start doing later this year is supporting equity businesses holding events.”
Even with the City’s support, that can’t stop the huge uptick in dispensary burglaries in Oakland that have harmed equity and non-equity businesses alike. The increase in burglaries has been attributed to economic hardship during the pandemic and the notion that cannabis shops have a lot of cash on hand. Near the end of 2021, 25 Oakland dispensaries reported being robbed. These dispensaries stated they suffered more than $5 million dollars in losses from the break-ins. I asked Minor how these burglaries have affected equity-owned businesses.
“If we have a rise in burglaries of businesses and people targeting cannabis businesses, that's gonna impact equity applicants disproportionately, because they're gonna have to pay for extra security costs or have to rebuild their business after it's been broken into,” he said.
Rose Mary Jane was one of several Bay Area dispensaries to experience a burglary in the last few years. In March, a few weeks after the dispensary celebrated its one-year anniversary, about 15 to 20 people robbed and vandalized the shop.
Sway, who has worked in cannabis for more than 15 years, says that Oakland police have not been supportive when it comes to dispensary break-ins-and often assume that dispensaries have enough money to pick themselves up after they fall.
“It's not okay and it's not something that we don’t have on hand,” she said. “A lot of us, especially in the equity sector are struggling, trying to survive our day-to-day operation, and create a safe place for our community so that people who need plant medicine can come and get it from us.”
Sway says that the break-ins often show her how resilient the cannabis community can be.
“We try and partner with our brands to see if they can help donate any of their products and give us support, so we can try to get back on our feet,” she added. “But even with their help and support it’s still a huge loss for us.”
Despite the achievements that the nation’s first cannabis equity program has made for businesses in Oakland, the program may not be able to fix how decades of unregulated cannabis impacts the most vulnerable communities.
While the state government hopes to reckon with its past of criminalization, many of these issues can’t be solved so easily. To stay in this career without drowning, relying on your neighbors is what will help you stay afloat.