San Diego accelerating cannabis equity program, proposing increase in number of dispensaries

San Diego will make significant changes to its cannabis regulations this fall. These include a new effort by minorities to break into the lucrative business, and the first increase in dispensaries within the city since 2014.

City officials say it’s time for San Diego to catch up with nearly all of California’s other large cities by establishing a state-subsidized cannabis equity program, which could give minorities preference for a city cannabis permit or help them expunge old drug convictions.

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Officials plan to ask the City Council if they will make changes to the municipal code that would allow for an increase in the number of dispensaries permitted in the city from 36 down to 38.

The proposed changes are in response to last winter’s re-drawing of City Council district boundaries, which pushed the number of dispensaries in north coastal District 1 and central urban District 3 above the maximum of four per district.

Efforts to create a cannabis equity program, which the city launched in 2019 but did not pursue aggressively, are kicking into high gear this spring with a consultant’s analysis and a series of community forums.

A consultant is analyzing city crime statistics — especially before statewide cannabis legalization in 2016 — and the demographics of the people who have received the nearly 80 cannabis business permits San Diego has approved since sales of the drug were legalized.

Eight community forums will be held by the city this spring to discuss barriers residents face in entering the legal marijuana industry.

These forums will be held in areas with high minority populations and will take place from May 23 to June 16. Zoom will also host a forum on June 15.

San Diego has a Nov. 1 deadline to complete all necessary steps for state approval of its proposed cannabis equity programs. This prompts San Diego to accelerate its efforts. The two studies are expected to be approved by the council by September.

“We have a fast timeline,” said Lara Gates, deputy director of the city’s Cannabis Business Division. “There are multiple pieces to this. We need to get our assessments done and then it’s off to the races.”

San Francisco, Long Beach and Humboldt County are just seven cities and counties that have established cannabis equity programs.

While San Diego is still behind, many of these programs have been criticised for not having much impact. Advocates for minorities seeking to get into the cannabis industry state that there are two main problems.

In some cases, the cannabis Equity program was created after a limited number cannabis business permits in the county or city had been issued. This renders any leg up for minorities virtually useless.

In cases where a minority secured a permit through a cannabis equity program, many still couldn’t follow through on opening a business because of the difficulty of securing small business loans and other financing for such businesses.

Because cannabis is still an illegal drug under federal law, banks essentially can’t work with cannabis businesses because banks are federally regulated.

Gates said San Diego’s late entry into the world of cannabis equity programs might help the city learn from the mistakes of others.

“It’s a lot of lessons learned from those other jurisdictions,” Gates said.

The city’s new Office of Race and Equity will also play a role in creating the cannabis equity program.

“The city is committed to equitable ownership and employment opportunities in our rapidly growing cannabis industry, especially for communities disproportionately impacted by a lack of financial resources caused by systemic racism that was exacerbated by the War on Drugs,”Kim Desmond is the head of the new agency for cities.

However, before city officials can suggest efforts to help minorities they must first complete the required state studies.

The consultant’s study, which is expected to be completed by June, is focused primarily on crime statistics and who owns cannabis businesses now.

City officials say they expect the crime numbers to help establish that minorities suffered more than Whites from law enforcement’s aggressive focus for many years on crimes connected to cannabis and other drugs.

The American Civil Liberties Union says that before legalization, Blacks were nearly four times as likely as Whites to be arrested for cannabis crimes — even though Blacks and Whites use the drug at about the same rate.

Because it typically costs several hundred thousand dollars to get a San Diego permit for a cannabis dispensary or a cannabis production facility, the study is expected to find that most of the permits haven’t gone to low-income minorities.

The eight forums will feature city officials asking residents questions about two topics. One will discuss the impact on families and individuals who have been convicted of cannabis offenses prior to legalization. The other will examine whether or not residents have tried to get into the cannabis industry, as well as any obstacles they faced.

These forums will also discuss what an equity program should look like. The program could offer housing assistance and child care vouchers to those convicted of drug crimes, in addition to giving minorities preference when applying for permits.

Money for the program will come from millions in grants the state doles out each year for cannabis equity — money San Diego hasn’t been eligible for because it hasn’t yet done the studies necessary to have a state cannabis equity program. Money for the program might also come from the city’s cannabis tax.

The proposal to increase the number of dispensaries to 38 from 36 is more generous than what industry leaders requested when they first realized that redistricting might be a problem last year.

When San Diego approved legal dispensaries in 2014, a key compromise was limiting the number of dispensaries in each of the city’s nine council districts to a maximum of four. But officials didn’t anticipate what would happen during redistricting, which occurs once every 10 years with new census data.

Industry leaders asked last year the city to ensure that dispensaries authorized in one district can continue to operate, regardless of whether new boundary lines shift the dispensary to another district.

Industry leaders want to be protected by the proposal, which must be approved by the City Council this fall. The proposal would allow for an increase of the maximum number allowed in Districts 1, 3 and 5, thereby increasing the maximum number possible in the city to 36 from 38.

Redistricting opens up new opportunities for dispensaries throughout the city. Every council district had the number of legal dispensaries within its boundaries change under redistricting — except north inland District 5, which has no legal dispensaries.

26 legal dispensaries are currently in operation.

The public forums will be held from 5:30 to 7 p.m. on May 23, Sherman Heights Community Center; 5:30-7 p.m. on May 25, North Park Recreation Center; and 4:30-6 p.m. on May 26, Valencia Park/Malcolm X Library.
Mountain View Community Center will be open from 5:30 to 7 p.m., June 2, 2010; 10 a.m. until noon June 4, Martin Luther King Jr. Rec Center; 6:30 to 7 p.m. Sunday June 6, San Ysidro Library will be open from June 6 through June 7, 5:30 to 7 p.m. and 5:30 to 7 p.m. Sunday June 16, City Heights/Weingart Library.

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