In Oakland, 'cannabis equity' juggles social justice and business interests

Dec 19, 2017

Oakland is offering people impacted by cannabis-related arrests a leg up in the marijuana business permitting process. But permits alone can’t help businesses thrive.

After being treated like criminals for decades, marijuana dealers are now going legit.

But with more than 3,000 medical and recreational dispensaries across the country, only one percent of them are owned by people of color, according to a 2016 report by BuzzFeed News.

Oakland is trying to change that, by giving a leg up in the marijuana permitting process to people who were impacted by the war on drugs — but permits alone can’t create equity, or successful businesses.

And if Oakland’s cannabis businesses fail, fewer people will benefit from the larger goals of job creation and tax revenue that legalization promises.

Learning the weed trade

Andre Shavers says everything he knows about the marijuana business, he learned from hawking soda to fans in the bleachers the Oakland Coliseum, and hustling candy at school.

Now he runs a cannabis delivery service called The Medical Strain.

‘I think the Girl Scout Cookies is one of the favorites, and then Gorilla Glue No. 4,” Shavers says.

But Shavers’ entrepreneurial spirit came at a cost. In 2007, police found seven grams of marijuana in his home. He was sentenced to five years probation. He calls this racial profiling.

“The profiling was too extreme around that time,” Shavers says. “For them to punish you for those small amounts such as what I was punished for, it's kind of obscene.”

Marijuana use is roughly equal among African American people and white people across the country. But in Oakland in 2015, African Americans made up 77 percent of marijuana-related arrests.

Now the city is tasked with issuing permits for new marijuana businesses. So Oakland officials designed an equity program that will issue half of its permits to people impacted by marijuana-related arrests or enforcement.  

But what the equity program doesn’t provide, at least not right away, is capital, education, or real estate.

Advice from a cannabis attorney

Organizations like The Hood Incubator aim to bring more people of color into the legal cannabis industry. They host legal clinics, business training courses, and even a public-policy parties at an art gallery in downtown Oakland.

“If you're interested in Oakland, stand up, and shake around like this. Stretch it out!” James Anthony, a cannabis attorney, tells the audience. “I need your brains, I need your bodies, I need your blood.”

He has the kind of energy you’d find in a Richard Simmons workout video, and he’s wearing a cowboy hat.   

The city’s effort to help equity applicants find space to do business has non-equity applicants scrambling.

General applicants can still get an advantage in the permitting process if they provide free rent to equity applicants like Shavers.

“You've got to give away 1,000 square feet, which you probably don't have, or pay someone else's rent for 1,000 square feet,” Anthony says.

In Oakland at least, almost everyone agrees with the goal of helping people who were unfairly punished by drug laws. But they disagree on exactly how to give them the best chances of success.

Businesses need to profit, or they fail. Anthony says the equity requirements ask so much of cannabis entrepreneurs, that the city’s rules set up small businesses for failure.

He says anyone who isn’t an equity applicant, or who can’t provide space for someone who is, should set up shop somewhere else.

“Everybody else who is not equity-qualified, you're done. You need to go somewhere else. Come on down. There's 540 local governments in California, you ain’t stuck in Oakland,” Anthony says.

Capitalism and cannabis

Chip Moore, the CEO of 4&20 Blackbirds, agrees.

“There's nothing about cannabis or capitalism that has ever been fair,” he says.

After two years of searching, Moore finally has a warehouse in West Oakland. He plans to open a “cannabis cultural center” that he promises will include the largest dispensary in the world. But first, he needs a license, and Oakland is only offering permits for eight new brick-and-mortar dispensaries.

Moore says the equity process is messing with his chances.

“Although I'm a black CEO, I don't quality for the equity permitting program,” Moore says.

He doesn’t qualify because he lives in Berkeley. Moore has no faith in capitalism or free enterprise to level the playing field.

But he thinks he can do it himself. He plans on hiring and training people from West Oakland and give them the tools to make it in the cannabis industry.

He says that would make a bigger difference than any city policy ever could.

“I think Oakland has narrowed it so that we're cutting off opportunities,” he says. “And that whole circular firing squad of a cannabis fairness project — this is where it's leaving an African American CEO who’s trying to make a difference in West Oakland.”

Bigger issues than cannabis

Everyone is grumbling. Moore, because equity applicants are in line ahead of him to get a permit. Andre Shavers, because of the lack of affordable commercial real estate for cannabis.

Shavers talks to his attorney, Roy Stanley, before he makes most business moves.

“We've heard horror stories of unscrupulous lawyers saying, I can find you a black person,” Stanley says. “And that's not the way this is supposed to go, that's not in the spirit of the law and what it's trying to do.”

Because Shavers is an equity applicant, people who give him space can increase their odds of getting a permit by sharing real estate.

But Shavers and his lawyer are wary of giving up any control of his enterprise.

Stanley says it’s not surprising. These are businessman they’re dealing with, and businessmen want to make money. And that’s what he and Shavers want, too.

“This is what matters in our community; as African Americans, we have to be business owners,” Stanley says.

The Golden Ticket

Stanley says it’s not always permits and real estate holding people of color back in this business. It’s also networking, financing, and generational wealth.

“The war on drugs, that sucks, but what do you do? What actually works?” Stanley says. “If I throw money at the problem, does that work? If I say these people get a golden ticket and these people don't, what happens?”  

The equity program is a flawed, bureaucratic system but it’s one way to balance the odds for Shavers and others, and give him the chance he needs to build his business.

In the end, after consulting his lawyer, Shavers decided not to team up with a non-equity applicant. Instead he’s going to find his own space, and strike out on his own.

So far, more than 360 people have applied for marijuana-related permits in Oakland. Of those, roughly 184 are equity applicants. The city hasn’t issued any permits yet.