Oakland Cannabis Sellers, Once Full of Hope, Face a Harsh Reality

OAKLAND, Calif. — Across from where the Athletics play baseball sits a two-story concrete building painted bright orange and white. Blunts & Moore has a dispensary there.

Pair of inflatables “tube guys”Flapping wildly on the roof, they beckon customers with their wild gyrations. Under the bright California sun, a food truck sells tacos from the parking lot.

There are signs that everything is not right here. Bullet holes left by an assault rifle are visible at the entrance. Three security guards in military fatigues screen customers as they pass through the metal detector. One of the security guards is an ex-infantryman who wears a camouflage Kevlar vest with mirrored sunglasses. His waist is equipped with a 9-millimeter pistol, 50 rounds of ammunition, and a mirrored sunglasses.

“It’s crazy to think we need all this war stuff to protect our business,” said the store’s owner, Alphonso Blunt, who is known as Tucky. “But that’s where we are today.”

Blunts, Moore were ransacked in May 2020 by automatic weapons-wielding criminals. The losses amounted to nearly $1,000,000, which insurance would not cover. The store has an air of high-end boutique and was robbed yet again in November. The thieves stole nearly $1 million worth of glass, and left the floor covered in blood. Mr. Blunt was struggling financially and turned to his landlord to save the store, but he had to relinquish some managerial control.

This is not the vision of Mr. Blunt, Oakland City Council or the State of California for an ambitious effort that aims to grow a cannabis industry and offer financial opportunity to economically challenged areas with large numbers of Hispanic and Black residents.

Mr. Blunt was one of many entrepreneurs in Oakland, many who are Black, who were awarded equity licenses to start cannabis businesses after California legalized the drug for recreational use. 2016 Candidates who live in areas with high drug-related arrests. You will be given priority for the licenses

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The movement to legalize marijuana has been dominated by race. Some states legalized cannabis mainly to end the number of cannabis-related arrests that disproportionately targeted Black and Hispanic citizens. However, lawmakers in states such as California, Illinois, and New Jersey have been pushing to ensure those same communities can benefit from the legalized sector. This industry has been dominated largely by white owners, many of whom have made a fortune selling cannabis.

On Thursday, Gov. Kathy Hochul of New York announced Thursday that the state will issue its first cannabis retail licences to those who have been convicted or their family members.

Oakland was the first city to prioritize. Equity licenses For Mr. Blunt (42), who was teased in high school for his name, which is a common term to refer to a cannabis cigar. In 2005, he was charged with possessing small quantities of the drug.

The nation’s emerging cannabis industry is being shaped by the broader push for racial justice and the belief that creating business opportunities for Black individuals will help lift communities.

Interviews with more than 30 cannabis investors, business owners, and regulators in California (an early adopter of equity licensing) show how the hope of repairing historical wrongs is being challenged due to the reality that the industry is facing difficult business conditions, including high taxes and volatile revenues.

Conflicting state and federal policies are contributing to some of the problems. Even 18 states can be affected. Legalized the substanceRecreational use is still prohibited by the federal government.

This means that cannabis shops are restricted in their access federally regulated banking service, such as credit card. These businesses can be attractive targets for thieves because they are forced to deal largely with cash.

Federal prohibitions make it difficult to obtain small-business loans or bank financing. This forces some Black social equity applicants into deals with investors who may end up controlling the business.

Policing is another challenge. Some people claim that Oakland’s police have not switched from arresting marijuana dealers to protecting their legal businesses. Business owners claim that the police did not show up for some of the crimes during a wave of robberies in the latter part of last year. According to police, They have been overwhelmed by the rise in crime since the pandemic.

Insurance companies are also contributing to the difficulties. Owners claimed that their claims were denied despite the fact that their policies stated they would be covered. Others claimed they were unfairly treated during the claims process due to their race.

“You are giving licenses to people who would struggle in any industry, but in cannabis, the deck is further stacked against them,”John Hudak is the Brookings Institution’s deputy director for the Center for Effective Public Management. “States need to do a better job adjusting for the structural racism built into the system.”

Since 2017, Oakland has granted cannabis licenses for 282 equity applicants, and 328 non-equity applications. However, the city doesn’t keep a running count of how many businesses are operating at any given time.

“While not a panacea, this program is a meaningful step toward embedding fairness and justice in all we do to improve conditions for communities of color,”Greg Minor, the city administrator’s assistant, stated in an e-mail. Amid the industry’s struggles, Mr. Minor said, the state recently authorized a $5.4 million grant to support Oakland’s equity program and was considering reducing the cannabis taxes.

Legalization has not brought Mr. Blunt the financial boon he expected. He has not made a profit since opening his licensed store four year ago.

“Social equity sounds like peaches and cream,”Mr. Blunt spoke. “But I did better selling weed on the street than I am doing right now.”

Keith Stephenson (53), is a former aviation maintenance technician, originally from South Los Angeles. He suffers from severe arthritis and takes cannabis to ease his constant pain.

“Cannabis saved my life,”He said.

In 2006, Mr. Stephenson opened a dispensary in downtown Oakland on Fourth Street. This was 10 years after California legalized medical cannabis.

His goal has been to own a publicly traded marijuana company for a long time. His store has been closed for almost two decades due to theft, vandalism and an insurer that he claims was unfairly treated because of his race.

Stephenson’s business was founded in a time when there weren’t many generous people. loans or rent subsidies that the city’s equity initiative now provides. He secured a bank loan by putting up $60,000 cash collateral and taking out a second mortgage to his house. The Purple Heart Patient Center was his name, after a cannabis strain called Granddaddy Purple.

The beginning was hard. He was losing $130,000 a month, paying for raw cannabis processing and security guards at the front doors.

Legalization that was more expansive brought in more customers, but did not necessarily bring in higher profits. The state and city impose steep taxes — which can total more than 30 percent of each sale. Some dispensaries earn about $3 million per year, but they have to pay high taxes and other expenses.

He said that there is a perception in Oakland that cannabis operators are making a lot of money.

On May 29, 2020, Mr. Stephenson was watching the news about the murder of George Floyd when he looked at footage from his store’s security camera on his phone. A man tried to break into the bulletproof front door.

Updated 

March 15, 2022, 8 :05 p.m. ET

Over the next few weeks, a gang of thieves returned and ransacked store, stealing everything possible. The police told him they were too busy with the broader unrest provoked by Mr. Floyd’s killing to help.

The real fight came months later when his insurance company reviewed the claims. He said that the adjuster asked him questions. “leading and insulting”Questions such as whether he left the door open, or whether Mr. Stephenson knew any of these thieves personally.

“Are you kidding me?”In reminiscing on the conversation, Mr. Stephenson said. “Did I leave the door open? Come on, man. Why is the door beaten in?”

An adjuster falsely claimed at one point that money had been stolen from an A.T.M. Inside the store. Mr. Stephenson believed the adjuster was trying to catch him in a lie. “It is my belief he would not have said that if I was a white male,”He said.

Christy Thiems, a senior director at American Property Casualty Insurance Association, a trade group, said that she did not know the specifics of Mr. Stephenson’s case, but that the claims process could be difficult. Because adjusters were acting as investigators, some questioning could be offensive for business owners. Due to the federal prohibition, only a few insurance companies will cover the cannabis industry. The few remaining insurers are still trying to understand the situation. “unique risk”The businesses pose.

In the end, Mr. Stephenson’s insurer rejected most of his claims. Stephenson plans to reopen his doors to customers in May or late next month.

“There is no Plan B,”He said.

In the early hours of Nov. 20, a group of 12 people, many of their faces obscured by sweatshirt hoods, streamed into Amber Senter’s cannabis manufacturing facility in East Oakland.

Ms. Senter can help you get your social equity cannabis business off the ground.

Security footage showed that the robbers easily broke through the first entrance. They then opened a second door and a final one. Most of the cannabis product was locked in a cage, which the thieves couldn’t breach. Ms. Senter estimates that the damage was $20,000.

However, when she called the police they told her to fill out an online report. “Where are the police?”Ms. Senter stated. “Why aren’t they helping us?”

The police stated that they investigated more than 12 burglaries of cannabis shops in Oakland in the span of 24 hours in November. Some of the burglaries were armed, while others were officers who were shot at them.

The spate of robberies came after burglaries and crimes at other marijuana businesses in the spring and early summer of 2020.

A spokesperson for the Oakland Police Department stated that it “treats the cannabis businesses as it does all businesses in the city of Oakland”And he added that the police were involved in the incident. “ongoing meetings with cannabis business owners”Safety issues should be taken into consideration

Ersie Joyner, a former captain in the Oakland Police Department said that even after decades of arresting drug dealers, some officers still didn’t consider the cannabis industry a legitimate business.

Mr. Joyner, who supervised Mr. Blunt’s arrest 17 years ago, understands how ingrained drug prosecution is in law enforcement.

“The messaging from the highest level of government was that drugs are bad and destroying the community, and law enforcement should have zero tolerance,”Mr. Joyner stated. “Looking back, it was absolutely the wrong way of dealing with this societal issue.”

Joyner, who is now a security consultant for cannabis businesses, stated that the police need to change their attitude. He claimed that it took three hours for Oakland police officers to reach the client’s store after the business had been robbed.

“If this happened to Bank of America, the police would have a more robust response,”Mr. Joyner was almost killed, he said. In a shootout against robbersLate October at an Oakland gas station According to him, 22 bullet holes had been found in his body.

In many instances, private security companies are acting as the unofficial police force of the city’s cannabis industry.

Black Anchor Tactical Response operates a group of sport utility cars with a color scheme that is similar to that of the Oakland police cruisers. When a client transports cannabis from a warehouse to a store, the company’s guards, some of whom are veterans who served in Iraq and Afghanistan, block off city streets to prevent ambushes. The firm also guards cannabis operators’ homes.

Although it is not possible to pinpoint the cause of the surge in crime during the pandemics, the legacy left by the mass drug arrests still hangs over Oakland.

According to the Oakland Police Department, approximately 71% of those arrested for suspicion of cannabis offenses were Black between 1995-2015. An analysis by the City. During that time, Oakland’s Black population was 30 percent.

The robberies and property damage are compounding the cannabis industry’s other challenges, such as high taxes.

“Why would I want to transition to the legal market if I know I am going to go broke?” said Chaney Turner, a member of the city’s Cannabis Regulatory Commission.

When Tucky Blunt was selected for one of Oakland’s first equity cannabis licenses in early 2018, he remembers shouting out his gratitude to the crowd gathered at City Hall.

Blunt, who began selling cannabis to his friends at a grocery store as a 16-year-old, also recalls being surrounded by representatives of established cannabis companies that wanted to be his partner. He wanted to own the store, not just a share of it.

But he didn’t have the money needed to start a licensed business. He reached an agreement with Grizzly peak, a larger operator of cannabis, which was started by Dave Gash, a San Diego realty contractor.

Grizzly Peak is a cannabis-focused company and was denied a dispensary license by Oakland.

Mr. Blunt was proud of his store’s appearance: glass cases displaying cannabis cigarettes and brightly colored packs of gummies and lots of natural light.

However, Mr. Blunt also had to deal with rising taxes; the rising cost of armed guards who are paid approximately $30 an hour; as well as the looting in 2020’s late spring.

He stated that the problem was worse because one of his partners who oversees the books stopped paying taxes and vendors. A year ago, Mr. Blunt had to close for several months because the store’s finances were a shambles.

Grizzly Peak offered to bail him out, but Mr. Gash said that Mr. Blunt was responsible. “We have to do it our way, and we need total control.”

Mr. Gash’s company has now taken tighter oversight of the store and will split any profits with Mr. Blunt, who still owns a majority stake in the store but is paid a salary as a consultant.

“I am grateful that Grizzly Peak believes in me,”Mr. Blunt spoke. “I wouldn’t be in business without them.”

Business was improving by November end. The store’s finances had been stabilized. But then, a few days before Thanksgiving, Mr. Blunt’s store was robbed for the second time in 18 months. The thieves took much of the store.

“This,”He said, “is not sustainable.”


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