By Ivy Summer
The importance of the social equity program for cannabis businesses is that it offers opportunities for folks from negatively and disproportionately affected communities impacted by the War on Drugs, including formerly incarcerated folks and individuals of historically oppressed groups, to launch a business and career in the cannabis industry. These applicants would otherwise not be able to get a foothold in the industry if not for the assistance they receive in these programs. The Governor’s Office of Business and Economic Development (GO-Biz) is California’s leader in economic development, job growth, small business assistance, and permit streamlining processes. In short, GO-Biz clears regulatory hurdles that start-ups face, and its purpose is to lower the barriers to entry.
The Bureau of Cannabis Control (BCC) and GO-Biz in California dished out $30 million this spring, $23 million of which is reserved for low-/no-interest loans and grants for the social equity programs in certain cities. Oakland received $6.5 million for its social equity program. The benefits of Oakland’s social equity program for applicants allow participants to:
- Work in an incubator for their business where they can utilize rent-free space with a floor safe and security for up to 3 years, which is sponsored by a local cannabis business that commits to mentoring them
- Waive their licensing fees and receive safer financing opportunities
- Learn about the legalese, entrepreneurship in practice, and develop protocols, policies, and protocols that set them up for success before they open shop
The best ways that someone can get involved in existing social equity programs is by contacting the local government entity (which may be affiliated with their city or county) that oversees licensing for commercial cannabis businesses. Each city or county in a green state with a social equity program has an office where you can request more information about how to qualify as a social equity applicant or licensee. There are benefits to all participants that incentivize a business to opt-in to the program.
The sponsoring business receives tax- and license-related benefits in exchange for taking social equity program applicants under its wing. Oakland’s program requires that 50% of its social equity businesses are formerly incarcerated individuals. ECO went one step further than other sponsoring cannabis companies in the program and maintains that 50% of its own employees are formerly incarcerated and given the opportunity to thrive in the industry.
Unfortunately, over the past few years, some investors have exploited loopholes in such programs to take advantage of this system that wasn’t designed for them. Some applicants in Los Angeles have filed lawsuits against the city and its Department of Cannabis Regulation, alleging that the government failed to consider their retail license applications and violated their equal protection rights and due process. Some other cases allege that applicants were shut out of the application process, and experts on the matter conclude that there currently isn’t a perfect model for social equity programs in any city where cannabis is legal. That said, it’s largely in the hands of investors and sponsoring cannabis businesses to ensure a high degree of integrity within their agreements with social equity applicants.
A social equity applicant’s experience may vary depending on the city/county in which they’re located and the sponsoring cannabis business that’s committed to mentoring and incubating their business. ECO has been incubating up to 8 social equity businesses for the past 3 years, and I asked a couple of applicants in the program about their personal and professional experience. The owners of My Natural Solutions and True Passion Dispensary dove into detail about what it’s like to be part of the social equity program in Oakland under ECO’s wing.
“The program assisted in my ability to obtain a cannabis license and start a business,” Olando at My Natural Solutions told us. “I have learned how to operate and run certain aspects of a distribution company.”
Olando spoke about “a lot of business savvy sharks in the cannabis industry that are preying and taking advantage (or at least attempting to) of many equity participants of the equity program, including myself. So after I turned down multiple “sharks,” I met with Kevin, owner of ECO, and he showed true sincerity in assisting and working with equity applicants.”
Alvin at AO Productions and Events said that the funding made other opportunities available to him that otherwise wouldn’t have been possible. “ECO allowed me to use the space for a photo opps to enhance my bios and paid for it which was really cool and meant a lot… [ECO] also helped by purchasing products from me,” which in turn has helped ECO maintain its commitment that 50% of the products available at our store are purchased from social equity companies.
What’s most important about the social equity program is that it continuously develops in ways that truly serve applicants in the way it was designed. The integrity of the emerging cannabis industry depends on how business leaders support one another and acknowledge the barriers to entry for historically oppressed groups who were impacted by the War on Drugs. While each city has the autonomy to establish a social equity program however they see fit, cannabis businesses also have the autonomy to ensure that its applicants are set up to succeed despite an imperfect system.
About the Author:
“Ivy Summer is an independent consultant and collaborator with ECO Cannabis with 5 years of experience working in the cannabis industry both as a consultant and wedding planner. She introduced the annual Cannabis Wedding Expo to California in 2016 and launched America’s first cannabis art museum tours and cannabis yacht tours from 2016 through 2018.
From your workforce, content, or your customer base to your daily interactions – if you aren’t sure how to start incorporating diversity, equity, inclusion, and belonging into various aspects of your life, and you want to commit to making an intergenerational impact in business and beyond, Ivy is your go-to. “Let’s make a diversity committee,” is one of the most common phrases she hears from her prospective clients. She’ll take you deeper. She helps solopreneurs and small-to-medium sized organizations develop ownership over real systemic change within their community and champion diversity and inclusion initiatives they never thought possible. Ivy specializes in identifying areas of business that hinder an organization’s potential for diversity and recommending how to establish best practices in a sustainable way.”