California Controversies Over ‘Social Equity’ Licenses

More localities in California are putting in place “equity license” programs for cannabis dispensaries, prioritizing applicants from those communities that had been most gravely affected by cannabis prohibition and the war on drugs. Such programs are now officially encouraged under state law.

But the continuing conflict over the equity program in Los Angeles casts a harsh light on the challenges of implementation and the social stakes involved.

Last month, prospective cannabis entrepreneurs agreed to drop a lawsuit challenging Los Angeles’s contentious process for granting licenses, after the city government agreed to increase the number of applicants. The suit was brought by the Social Equity Owners & Workers Association (SEOWA), who argued that, even with equity measures officially in place, the process was designed in a way that still effectively excluded the prohibition-impacted communities.

Gaming the System

As the Los Angeles Times reports, principally at issue was the first-come-first-serve aspect of the application process. SEOWA asserted that more than 200 applicants who accessed the online platform before 10 a.m. — the official opening time—got an unfair advantage. Mere seconds could make the difference between getting a license or not. Those with the time and resources could essentially game the system, filling out the application beforehand and hitting “submit” at the precise stroke of 10.

SEOWA, which called on the city to halt new licenses while the suit was pending, contended that “it is fundamental to any fair race that the competitors must start at the same time or, at the very least, be given accurate information about when the race will begin.”

Under the settlement agreement reached July 8, the city agreed to changes in the program, including a prompt review of the next 100 applications that were in line. This could double the number of licenses granted to the current round of applicants. Those changes were voted up by the City Council and received the approval of Mayor Eric Garcetti. 

SEOWA co-founder Kika Keith, called the settlement “a great victory for us.” In her statement, she also said, “Social equity applicants banded together and raised the money for legal fees to fight the injustice of the application process.”

Keith is one of the next 100 applicants in line. But, as the LA Times notes, hundreds more will still be left waiting. Which is why another SEOWA co-founder, Madison Shockley III, characterized the settlement as a compromise. “We made the decision to settle because we don’t see any way to make what happened fair—it’s kind of too late for that,” Shockley said. “So we felt it was for the greater good to accept the settlement that included 200 licenses.”

New Rules for LA Licensing 

The new rules approved by the City Council will also narrow the criteria for applicants who qualify for the equity program, limiting it to those with a cannabis arrest record in the state of California. The new rules also reconfigure the method for identifying areas with disproportionate arrests for cannabis offenses. 

Lynne Lyman, who led the Drug Policy Action campaign for legalization in California, welcomed the changes. According to the LA Times, she commented on the changes at a city meeting where she said, “We all know social equity has been a failure, here in LA and across most jurisdictions. Too many loopholes… This is the first real hope for social equity to succeed.”  
 
The program had previously designated the areas to be prioritized by ZIP codes – but this often meant that wealthier and whiter areas got lumped in with poorer ones that suffered higher levels of cannabis arrests. As the LA Times noted, one of the eligible ZIP codes was 90027, which covers affluent stretches of Los Feliz neighborhood. Under the new system, equity-prioritized areas will correspond to police reporting districts. 

“We agree that this process needs improvement,” admitted Cat Packer, head of the city Department of Cannabis Regulation.  

But plans to replace the first-come-first-serve system with a lottery are raising questions about whether this will really be any more equal. The California Minority Alliance, which also advocates for greater representation by Black and Latino business operators in the cannabis industry, warned that exclusive reliance on a lottery emphasized chance to the exclusion of merit. 
 
SEOWA launched its suit in April, weeks after release of an official audit giving the old system a clean bill of health. It found that although some applicants made it into the system ahead of time, the Department of Cannabis Regulation took “reasonable and appropriate” measures to correct for any unfair advantage.

Unequal Access Means Unequal Arrest Rates

Los Angeles announced its Social Equity Program a year ago, with its stated aim to “decrease disparities in life outcomes for marginalized communities and to address the disproportionate impacts of the War on Drugs.” A California state law passed the previous year, the Cannabis Equity Act, created incentives for such programs.

But those disproportionate impacts persist in Los Angeles. Cannabis arrests continue to disproportionately target Blacks (as in New York City, even after a new policy de-emphasizing pot enforcement). In Los Angeles, arrest figures for Blacks have actually increased in absolute terms since cannabis legalization – certainly a perverse irony. An urban affairs website Crosstown cites the official figures, and they are staggering. In 2017, when adult-use cannabis was still illegal in California, the Los Angeles Police Department arrested 173 Black people for cannabis-related offenses. The next year, after legalization took effect, the LAPD arrested 239 Black people for cannabis offenses. In 2019, the number leapt again, to 261. 

In 2016, Blacks accounted for 32.2% of cannabis arrests in the city. Last year, that share rose to 42.3%, LAPD data indicates. Black folk make up 8.9% of the city’s population. 

And by Crosstown’s analysis, this is due to Blacks basically being forced into the illicit market by the continuing death of dispensaries in their neighborhoods: “Wealthier and predominantly white areas, such as Studio City, North Hollywood, Fairfax and Westwood are home to dozens of dispensaries. Meanwhile, the entire south part of Los Angeles, including areas with larger Black populations, such as Hyde Park and Watts, has fewer than 10 dispensaries registered with the city.”

Equity’s Catch-22 

The neighboring city of Long Beach is grappling with similar dilemmas. According to a recent report in Long Beach Business Journal, since the inception of the city’s Cannabis Equity Program two years ago, just one of 50 qualifying applicants has entered the industry as a business owner. 

Some frustrated aspiring entrepreneurs are protesting that the program has done little more than help with paperwork. “There wasn’t really anything more than showing us how to apply,” said Brian Delahoussaye, 35, who has several years of experience in the cannabis trade. “I’m sure that’s great if you have funds to apply.”

Establishing a cannabis enterprise can cost upward of $1 million for construction, rent, building modifications and equipment. This results in a kind of Catch-22 for equity applicants.

“It’s a strange crux because you’re not supposed to have any money to be in the program, but you need money to make it work,” said Delahoussaye, referring to the income and asset limitations set forth as qualification requirements. 

This contradiction was addressed in an open letter to Mayor Robert Garcia and the Long Beach City Council sent in February by acting City Manager Tom Modica. According to Modica’s letter, the equity program was set up to make “legal cannabis business ownership and employment opportunities more accessible to low-income individuals and communities negatively impacted by the prior criminalization of cannabis.” Yet, “in speaking with prospective applicants, the primary reason for the discrepancy between interest in the program and actual business license applications received, is the substantial amount of capital necessary to start a cannabis business.”

Delahoussaye told the Business Journal that by working in the medical marijuana industry before full adult-use legalization, he had been able to pay for his bachelor’s and master’s degrees. But with full legalization, the costs of licensing, owning or renting property in areas zoned for cannabis jumped (a phenomenon elsewhere described as “cannabis gentrification.”) Delahoussaye said that he and his partners were priced out.  

And, once again, this process disproportionately affected Black entrepreneurs, Delahoussaye said. “We’re locked out of this industry in a major, major way,” he soberly concluded.  

TELL US, how do you feel about cannabis “equity” programs?

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3C Farms: Maximizing the Entourage Effect

3C Farms has been providing SoCal with its classic homage to great OG Kush and a variety of other strains for essentially 20 years. After navigating the regulatory hurdles of 2018, 3C Farms now finds itself a top-shelf mainstay across the world’s largest cannabis market in Southern California after they expanded into tons of new storefronts. Backed by good genetics and a driven team, President of Sales and Director of Operations Waylon Broussard sat down with us to tell the full tale of 3C’s success.

Broussard got his earliest peek at the cannabis industry on a road trip through Northern California’s prime cultivation region in the Emerald Triangle with his dad. During this trip he smoked pot with his dad for the first time.

3C Farms’s Chardonnay.

“That was the highest I’ve ever been,” said Broussard.

In 2006, Broussard opened Cali’s Finest Compassion Co-op with his cousin. At the same time, Bryan Schwartz founded 3C (Schwartz remains the master cultivator at 3C Farms to this day). In the decade prior to the 3C brand’s official founding with proper paperwork in 2014, the operation was essentially a medical effort.

From the beginning, solid genetics served as the core of 3C’s success — helped out by the fact that Schwartz’s cousin is Josh D of OG Kush fame.

“When Josh came back in 1996 from Florida, he brought the original OG strain over here, which is our Club 33 OG,” Broussard said. “He gave that to [Schwartz] back in 1996 and he’s been growing it in the [San Fernando] Valley ever since.”

The canopy in 3C’s growroom bursts with color.

The Club 33 is the essential representation of what people think of when they think of exceptional Southern California OG Kush. It oozes all of the flavors, aromas and impact that made the strain famous in the first place. It would be expanded upon further generations like the Enoch and Illuminati OG.

In 2014, after working together previously, Broussard and Schwartz teamed up bringing 3C under the Coast to Coast Collective flag, with the help of another co-founder Chris Malcolm, who also serves as Coast to Coast Collective’s CEO these days. As Broussard puts it, the team used Cali’s Finest Compassion Co-op’s permit to put 3C on the books. 3C and its partners now has two pre-ICO LA dispensaries with full cultivation grandfathered in. “Pre-ICO” is a special designation meaning those locations were open before the LA Interim Control Ordinance (ICO) established a temporary moratorium on opening new dispensaries in September 2007.

The 3C team collaborates with legendary cultivator Josh D (right).

In this new wave of licensing, 3C has found itself able to put the product on the shelves in various new locations, but the last couple years haven’t been without their hiccups in terms of dealing with California’s regulatory hurdles.

“That’s been a challenge,” said Broussard. “I can’t say any one of us did it ourselves. The best part about that was having a great team behind 3C from our investors to our board of directors. It’s been a fun road, definitely challenging.”

One of the biggest problems has been the constantly evolving regulatory framework of Los Angeles. Broussard says it’s hard to make smart business decisions when things like packaging or testing might change in any given month as far as one knows.

Despite all the regulatory upheaval, 3C is now available in a spread of LA dispensaries. One of the big reasons behind their reach is their wide distribution of genetics bred in-house.

“We do all of our own crossbreeding, obviously,” said Broussard, again pointing to the lineage of their stock. “From there, we share genetics. I did a trade with my boy Kevin over at Moxie for their AC/DC for our Casey Jones. Our new strain A3/DC has been very popular.”

3C’s take on AC/DC comes in at a 20 to 1 CBD to THC ratio. They’ve also released AC/OG in 2018, which is a 2 to 1 ratio made from Illuminati OG crossed with AC/DC. With the current rise in CBD enthusiasm, the fact that breeders like 3C are expanding that area of the cannabis genome is essential.

Another popular 3C strain is Chardonnay. It pairs 3C’s Kraken line with Berry Noir. Broussard says the Berry Noir has a very Blackberry Kush feel to it. The Kraken lineage included Harlequin and 3C’s Conspiracy Kush.

“It’s kind of a trip for me, as to where I thought that strain came from,” Broussard said. “We ran a Phylos Bioscience test and a lot of the markings on that one would come back as a Blue Dream. So [Chardonnay has] been a really fun sativa-dominant hybrid for us, when that’s really not what we were originally going for.”

Broussard believes the success in the breeding program has come down to 3Cs’ efforts to maximize “the entourage effect,” the name for how all the plant’s cannabinoids and terpenes interact with each other to produce a complex effect on the body.

“We’ve always tried to keep the entourage effect with our strains so you’ll see higher levels of CBN and higher levels of CBD in our strains — really it’s more than just a THC thing,” he said. “Even before the testing was out there, people just love the feeling they got from smoking 3C.”

3C has been growing in Southern California for about 20 years, and has successfully transitioned into the regulated market.

We asked Broussard if the last four
years of preparation made it easier for 3C to fight off the bigger corporate
players attempting to grab a chunk of California’s legal cannabis market.

“Definitely in brand recognition, and of course, quality,”
said Broussard. “3C Farms stands for craft cannabis cultivation. We coined that
a long time ago to remind us what we do.”

Broussard said people just need to realize there was always
going to be a place for those larger competitors, resource-wise, as the market expanded.
Broussard describes it as the same thing we see in the beer industry, with small
craft brewers surviving at the same time as larger corporations like
Anheuser-Busch.

“We’ve always gone after the craft market,” Broussard said. “It’s always indoor, hand-trimmed, hand-cured, everything we do we haven’t used any other machinery. “

TELL US, have you ever tried cannabis from 3C Farms?

Originally published in the print edition of Cannabis Now. LEARN MORE

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Friday, January 17, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Friday, January 17, 2020 | Curated by host Shea Gunther

// New Mexico Marijuana Legalization Bill Filed After Governor Puts Issue On 2020 Agenda (Marijuana Moment)

// Global Cannabis Sales Grow 48% to $15 Billion in 2019 (Valdosta Daily Times (AP))

// 40% of Arizona’s Hemp Crops Must Be Destroyed Due to Too Much THC (AZ Marijuana)


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// Raimondo’s $10-billion budget plan includes state-run stores for recreational pot (Providence Journal)

// Ontario Cannabis Store sells out of edibles within hours (Marijuana Business Daily)

// Alaska pot board chair being chaired (Boston Globe)

// Marijuana deliver giant Eaze may go up in smoke (Tech Crunch)

// Congressman Backs Ballot Measure To Legalize Psychedelic Mushrooms For Therapeutic Use (Marijuana Moment)

// Travelers Threw Away Over 37 Pounds of Weed at This Colorado Airport (Merry Jane)

// High Times To Open Dispensaries (Green Market Report)


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Monday, February 3, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Monday, February 3, 2020 | Curated by host Shea Gunther

// MedMen CEO Adam Bierman Is Out (Green Market Report)

// Vermont Committee Unanimously Approves Bill To Legalize Marijuana Sales (Marijuana Moment)

// Businesses Are More Profitable And Innovative In States With Legal Marijuana, Study Finds (Marijuana Moment)


These headlines are brought to you by Curaleaf, one of the leading vertically-integrated cannabis operators in the U.S. With legal medical marijuana dispensaries, cultivation sites, and processing facilities all over the United States, Curaleaf has served more than 165,000 medical cannabis patients and looks forward to helping many more long into the future. Swing over to Curaleaf.com to learn more about this very cool company!


// ‘This was supposed to be reparations’ Why is LA’s cannabis industry devastating black entrepreneurs? (Guardian)

// Rhode Island governor presses for adult-use cannabis legalization to keep pace on East Coast (Marijuana Business Daily)

// Cannabis taxes not bringing the cash government expected (National Post)

// This Detroit Pro Soccer Team Is Now Sponsored by a Weed Dispensary (Merry Jane)

// Chicago needs to license places where marijuana can be consumed on premises, mayor says (Chicago Sun Times)

// Liberal Americans Are Six Times More Likely To Smoke Marijuana Than Conservatives, Poll Finds (Marijuana Moment)

// Bernie Sanders Pledges Legal Marijuana In All 50 States On Day One As President (Forbes)


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Friday, February 14, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Friday, February 14, 2020 | Curated by host Shea Gunther

// Los Angeles County expunges 66,000 marijuana convictions in a day (Leafly)

// Aurora Cannabis reports steep loss, production drop, and higher costs (Marijuana Business Daily)

// California unions ask state’s Democrats to shut out major cannabis trade group (Marijuana Business Daily)


These headlines are brought to you by Atlantic Farms, a Maine-based multistate cannabis business with operations in Maine and Massachusetts. Atlantic Farms is looking for people to help it grow and evolve as investors. Open up TheAtlanticFarms.com for more on the company and email info@theatlanticfarms.com to learn about investment opportunities.


// Baker’s anti-stoned driving bill is dead- but marijuana cafes and employee protections move ahead in Legislature (Boston Globe)

// Scientists Find Aluminum Cans Suck Cannabinoids Out of Infused Beverages (Merry Jane)

// Taxes a big factor behind the financial woes of California marijuana companies (Marijuana Business Daily)

// Scotland Opens First Medical Cannabis Clinic to Treat Chronic Pain (Merry Jane)

// A Psychedelics Company Is About to List on a Public Stock Exchange (Merry Jane)

// California ‘vape art’ exhibit flashes bright light on waste issue (Reuters)

// Las Vegas dispensary offers free joints to Nevada primary voters (Leafly)


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Thursday, February 13, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Thursday, February 13, 2020 | Curated by host Shea Gunther

// Recreational pot bill spurned in New Mexico Legislature (CT Post (AP))

// Vermont Farmers Fear Pot Bill Will Shut Them Out of the Marijuana Market (Seven Days VT)

// Michigan recreational marijuana delivery now only a click away (Michigan Live)


These headlines are brought to you by Atlantic Farms, a Maine-based multistate cannabis business with operations in Maine and Massachusetts. Atlantic Farms is looking for people to help it grow and evolve as investors. Open up TheAtlanticFarms.com for more on the company and email info@theatlanticfarms.com to learn about investment opportunities.


// Medical marijuana bill filed at Alabama State House (ABC 33 40)

// Top Mexican Senator Says Marijuana Legalization Bill Will Be Approved This Month (Marijuana Moment)

// Canopy Growth earnings: When will the weed drinks arrive? (Market Watch)

// Many landlords will take cash from marijuana tenants report says (Marijuana Business Daily)

// L.A. pot licensing delays costing industry millions (LA Weekly)

// Two Pending Bills Could Substantially Change Washington’s Cannabis Advertising Laws (Canna Law Blog)

// Kentucky Lawmakers Approve Medical Marijuana Bill In Committee Vote (Marijuana Moment)


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Friday, March 13, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Friday, March 13, 2020 | Curated by host Shea Gunther

// Cannabis Companies See Boosted Sales in L.A. to ‘Ease Minds’ About Coronavirus (Hollywood Reporter)

// During Coronavirus, Pandemic Weed Is ‘Vice of Choice’ for People in Solitude (Merry Jane)

// Buying weed in the age of coronavirus: Dispensaries tell recreational customers not to put medical patients at risk (Chicago Tribune)


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// Hash Bash postponed amid University of Michigan mandate to cancel large events (Detroit Free Press)

// How coronavirus exposed fragility in the marijuana vape supply chain (Marijuana Business Daily)

// Veteran Affairs Employees Are Also Prohibited From Using Cannabis (Merry Jane)

// US House panel approves medical marijuana bills to help veterans (Marijuana Business Daily)

// Medicine Man Becomes First Publicly Traded Company Approved By Colorado (Green Market Report)

// Alabama Senate Approves Medical Marijuana Bill (Marijuana Moment)

// DC Campaign To Decriminalize Psychedelics Delays Signature Gathering Amid Coronavirus Outbreak (Marijuana Moment)


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Tuesday, April 21, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Tuesday, April 21, 2020 | Curated by host Shea Gunther

// ACLU Releases 4/20 Report on Racist Cannabis Enforcement and Pot Arrests (Merry Jane)

// Deadline to legalize marijuana in Mexico extended again (Marijuana Business Daily)

// Alaska Marijuana Control Board approves emergency changes including curbside pickup (KTUU 1 NBC)


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// Lawsuit seeks to overturn Los Angeles’ cannabis social equity licensing process (Marijuana Business Daily)

// Quebec cannabis sales on pace to exceed CA$300 million for fiscal year (Marijuana Business Daily)

// This Company Just Reclaimed the Title of Leading Revenue Generator for Publicly Traded MSOs (New Cannabis Ventures)

// Congressional Candidates Openly Grow And Smoke Marijuana To Get Through Coronavirus Isolation (Marijuana Moment)

// Sanders Declines To List Marijuana Legalization Among Issues He Thinks Biden Will Back (Marijuana Moment)

// ‘It’s a roller coaster’: Marijuana and booze sales surge, then fall (KGW8 NBC)

// ‘Cartels are scrambling’: Virus snarls global drug trade (AP News)


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Tuesday, May 19, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Tuesday, May 19, 2020 | Curated by host Shea Gunther

// US House OKs cannabis banking in passing $3 trillion coronavirus bill (Marijuana Business Daily)

// Louisiana House Approves Medical Marijuana For Any Debilitating Condition, Along With Delivery Services (Marijuana Moment)

// Feds Withdraw Health Grants For Schools That Allow Medical Marijuana, Maine Official Says (Marijuana Moment)


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// Massachusetts recreational cannabis stores to reopen in a week (Marijuana Business Daily)

// Strawberry Fields, Schwazze Dispensary Acquisition Terminated (Denver Westword)

// Cost-cutting cannabis giant Acreage to take $80 million-$100 million charge (Marijuana Business Daily)

// Curaleaf Generates $96.5 Million Revenue in Q1 (New Cannabis Ventures)

// Oregon sees record breaking $89 million in marijuana sales in April (KGW8 NBC News)

// Oklahoma Legislature Votes To Let Out-Of-State Residents Get Medical Marijuana, And To Allow Delivery (Marijuana Moment)

// Los Angeles explosion shows perils of illicit cannabis market (Leafly)


Check out our other projects:Marijuana Today— Our flagship title, a weekly podcast examining the world of marijuana business and activism with some of the smartest people in the industry and movement. • Marijuana Media Connect— A service that connects industry insiders in the legal marijuana industry with journalists, bloggers, and writers in need of expert sources for their stories.

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Thursday, May 7, 2020 Headlines | Marijuana Today Daily News

Marijuana Today Daily Headlines
Thursday, May 7, 2020 | Curated by host Shea Gunther

// Cannabis tech firm MassRoots receives $50,000 federal stimulus check (Marijuana Business Daily)

// 18 pre-applications submitted for two medical marijuana dispensary licenses in Iowa (Quad-City Times)

// Louisiana Lawmakers Vote To Allow Medical Marijuana For Any Debilitating Condition And Legalize Delivery Services (Marijuana Moment)


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// Nearly 15 Percent of Colorado Weed Failed Microbial Testing in 2019 (Denver Westword)

// Los Angeles marijuana market remains chaotic as entrepreneurs wait for mayor, City Council to act (Marijuana Business Daily)

// New York City Is Shut Down, But Its Black-Market Weed Is Booming (Rolling Stone)

// Ontario extends curbside pickup and delivery for cannabis stores (Marijuana Business Daily)

// Top Minnesota Lawmaker Unveils Long-Delayed ‘Best’ Marijuana Legalization Bill In The Country (Marijuana Moment)

// Campaign To Decriminalize Psychedelics In DC Cleared For Signature Gathering (Marijuana Moment)

// High Times Hires Third CEO In One Year (Green Market Report)


Check out our other projects:Marijuana Today— Our flagship title, a weekly podcast examining the world of marijuana business and activism with some of the smartest people in the industry and movement. • Marijuana Media Connect— A service that connects industry insiders in the legal marijuana industry with journalists, bloggers, and writers in need of expert sources for their stories.

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