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www.modestogov.com
AGENDA
City of Modesto
CANNABIS PROGRAM AND PERMIT REVIEW COMMITTEE
/ COUNCIL WORKSHOP
Held Via Teleconference
(To Access Meeting Please See Instructions Below)
Tuesday, November 15, 2022 at 4:00 PM
*Roll Call: Rosa Escutia-Braaton, Chair
Sue Zwahlen, Vice-Chair
Tony Madrigal, Member
Alternates: Jenny Kenoyer, Chris Ricci, David Wright
* Please Note: In order to respond to COVID-19, and pursuant to AB 361, the City will hold this meeting via teleconference and Committee Members will be calling in. “Wordly” can translate into 25+ different languages! To access written translation during the meeting, please scan the QR Code or click this link https://attend.wordly.ai/join/RJDY-6364.
"Wordly" puede traducir a más de 25 idiomas diferentes! Para acceder a la traducción durante la reunión, por favor escanee el código QR o haga clic en el enlace https://attend.wordly.ai/join/RJDY-6364.
THIS MEETING WILL NOT BE PHYSICALLY OPEN TO THE PUBLIC
In order to minimize the spread of the COVID-19 virus, this meeting will be conducted pursuant to AB 361, which amended the Brown Act’s teleconferencing provisions and will not be physically open to the public. You may observe and participate in the meeting via teleconference as indicated below.
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PARTICIPATING IN COMMITTEE MEETINGS IN CONFORMANCE
WITH AB 361
The City of Modesto is providing alternatives to observe and participate in Committee meetings.
If you wish to make either a general public comment or to comment on a specific agenda item, you may use one of the following options:
SUBMITTING COMMENTS BY E-MAIL
Written comments may be submitted via email to: [email protected] (include Agenda Item Number in the subject line). All comments will be shared with the Committee Members and placed in the record, but will not be read aloud during the meeting. Written comments must be received by 2:00p.m. on the day of the meeting.
VIRTUAL PARTICIPATION BY ZOOM VIDEO
CONFERENCING AND TELEPHONE
Joining the Committee meeting via Zoom
The City of Modesto is now offering the ability to view and participate in Committee meetings via telephonic conferencing via “Zoom” video conferencing computer technology. The meeting may be accessed through the use of Zoom using the following options:
Enter the following link into an Internet Browser
https://us02web.zoom.us/j/86945970570,
Enter the following link into an Internet Browser https://zoom.us/ and using the Webinar ID 869 4597 0570
Passcode 84326
To use Zoom, please visit: https://zoom.us/ and either sign-up for a free Zoom account or continue as a guest. Once you have downloaded the app onto your mobile device, joined from your web browser, or downloaded the Zoom software on your computer you will be ready for the upcoming Committee meeting.
Joining the Committee meeting via Telephone
If you don’t have a smart phone or computer to access the meeting via Zoom, you can participate by phone, by calling 1-877-853-5257 (Toll Free) or 1-888-475-4499 (Toll Free) and enter the Webinar ID 869 4597 0570 Passcode 84326
Providing Public Comment on Zoom and by Telephone
The Committee Chairman will request public comment during the Public Comment periods on the meeting agendas and during each Regular Calendar Item on the Committee Agenda. Once the Chairman has announced the public comment period, please do one of the following.
USING A COMPUTER OR SMART PHONE APP:
Click on the “Raise Hand” feature in the webinar controls. This will notify City staff that you have raised your hand.
City staff will unmute your microphone when it is your turn to provide - 2 -
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public comment.
A prompt will appear to confirm you would like to be unmuted and then you will have three minutes to provide public comment.
Once your public comment has ended, you will be muted again.
USING A REGULAR PHONE (not using a computer or smart phone APP):
Dial *9 (star 9), this will notify City staff that you have “raised your hand” for public comment.
City staff will unmute your microphone when it is your turn to provide public comment.
You will hear “you are unmuted” and then you will have three minutes to provide public comment.
Once your public comment has ended, you will be muted again. If your phone is unmuted, and you are unable to be heard, the host may ask that you Dial *6 to toggle mute on/off in Zoom.
Additional Zoom resources/support
Please visit Zoom’s website support page on helpful tips to prepare for the meeting:
https://support.zoom.us/hc/en-us/categories/201146643
Council has not delegated directive or final approval authority to the Committees. Committee actions are recommendations to the full City Council, not final decisions on an issue.
PUBLIC COMMENTS
Please refer to special public comment instructions above.
Three-minute time limit per speaker
Only interested persons in the audience may present these matters. Under State law, Committee members may respond to matters being presented under this item only as follows:
a. Briefly respond to statements made or questions raised. b. Ask a question for clarification.
c. Provide a reference to staff or other resources for factual information. d. Request staff to report back at a subsequent meeting. e. Finally, a Committee member or the Committee itself may take action to direct staff to place a matter of business on a future agenda.
NEW BUSINESS
1 Consider accepting a Cannabis Equity Assessment Report, adopting a Cannabis Equity Program; approving the submission of a grant application for the Governor’s Office of - 3 -
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Business and Economic Development Cannabis Equity Grant Program for Local Jurisdictions and forwarding to Council for approval. (Funding Source: General Fund) Motion accepting the City of Modesto Cannabis Equity Assessment Report and forwarding to Council for approval.
Motion adopting a City of Modesto Cannabis Equity Program based on this report, and authorizing the City Manager, or designee, to take all actions as may be required to implement this resolution and program, including but not limited to the establishment of internal controls, administrative functions, and application submittal processes as necessary and forwarding to Council for approval.
Motion authorizing the City Manager to apply for a State of California Cannabis Equity Grant Program for Local Jurisdictions, for the purpose of funding a cannabis equity program and to complete and submit the grant application and any subsequent application with the Governor’s office of Business and Economic Development in relation thereto and forwarding to Council for approval.
CED; Sean Rando, 209-577-5473, [email protected]
ADJOURNMENT
Posted pursuant to Government Code Section 54954.2 on the bulletin board at Tenth Street Place on at by
date time signature
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CITY OF MODESTO
COMMITTEE AGENDA REPORT
DATE OF MEETING:
November 15, 2022
Date: October 20, 2022
TO: Cannabis Program and Permit Review Committee
Rosa Escutia-Braaton, Chair
Sue Zwahlen, Vice-Chair
Tony Madrigal, Member
THROUGH: Joseph P. Lopez, City Manager
FROM: Scotty Douglass, Deputy City Manager
SUBJECT: Cannabis Equity Assessment Report, and Submission of a Grant Application for the Governor’s Office of Business and Economic Development Cannabis Equity Grants Program for Local Jurisdictions
CONTACT: Sean Rando, Business Analyst, [email protected], 209-577-5473 DESCRIPTION:
Consider accepting a Cannabis Equity Assessment Report ,adopting a Cannabis Equity Program; approving the submission of a grant application for the Governor’s Office of Business and Economic Development Cannabis Equity Grant Program for Local Jurisdictions and forwarding to Council for approval. (Funding Source: General Fund)
STRATEGIC PLAN ELEMENT:
This item supports the City’s 2020-2025 Strategic Plan Initiative: Dive economic vitality though the success of a vibrant and economically sustainable business climate.
BACKGROUND:
On November 8, 2016, California voters approved Proposition 64, the Control, Regulate, and Tax Adult Use of Marijuana Act (AUMA). In its statement of purpose and intent, AUMA calls for regulating cannabis in a way that “reduces barriers to entry into the legal, regulated market.” Although a legal framework now exists to participate in the adult-use commercial cannabis industry, barriers to start a commercial cannabis business may still exclude some Modesto entrepreneurs from entering the legal cannabis market.
Individuals convicted of a cannabis offense during the era of prohibition and criminalization policies have a more difficult time entering the new adult-use cannabis industry due, in part, to a lack of access to capital, business space, technical support, and regulatory compliance assistance. The Department of Cannabis Control (DCC), in partnership with the Governor’s Office #1.
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Cannabis Program and Permit Review Committee, Cannabis Equity Assessment Report, and Submission of a Grant Application for the Governor’s Office of Business and Economic Development Cannabis Equity Grants Program for Local Jurisdictions
of Business and Economic Development (GO-Biz) established the Cannabis Equity Grants Program for Local Jurisdictions to address this challenge. The program is designed to promote economic opportunity for individuals negatively impacted by former cannabis prohibition and criminalization policies by reducing barriers to enter the regulated cannabis industry for equity applicants and licensees.
There are two (2) types of grant applications with specific funding requirements for the program.
The award of funds for a Type 1 application may only be used for the purposes of conducting an equity assessment and/or developing an equity program. Assessments are conducted prior to the development of a program to help inform the needs of the program. The award of funds for a Type 2 application may only be used for the purpose of assisting equity applicants gain entry to the regulated cannabis marketplace by providing measures to help mitigate the barriers identified in the assessment.
On January 26, 2021, by Resolution No. 2021-024, Council directed staff to submit a Type 1 application for grant funding. In March 2021, GO-Biz announced that the City of Modesto application was selected for funding in the amount of $75,000. On April 27, 2021, by Resolution No. 2021-156, Council authorized the City Manager to execute a grant Agreement to accept the $75,000 grant to conduct a cannabis equity assessment and develop a cannabis equity program.
After receiving the grant, City staff began efforts to conduct and draft an objective equity assessment as a first step to developing a Cannabis Equity Program. The City sought the services of HdL Companies and California State University Stanislaus (CSUS) to assist staff in these efforts. HdL Companies has experience and expertise related to cannabis business permitting, financial and regulatory processes. They currently provide the City with ongoing administration and monitoring of permitted cannabis businesses located in the city including compliance inspections and annual financial audits.
HdL Companies and CSUS intended to collect and analyze data to help identify impacted individuals and populations that were adversely and disproportionally impacted by the prohibition of cannabis. During these efforts, it was discovered that an objective assessment could not be performed because available arrest data was permanently removed from the City’s database in compliance with AUMA. As a result, the City pivoted and sought to work with our community partners to identify a new approach.
The City engaged with an equal rights community group interested in helping to ensure the inclusion of individuals in our city linked to populations or neighborhoods negatively or disproportionately impacted by cannabis criminalization. In coordination with the community group, the City sought a contract with a cannabis equity consultant to help build upon the City’s initial assessment efforts. The intent was to include lived experiences to support the preparation of a subjective assessment.
On December 22, 2021, the City released an Informal Request for Proposals (RFP) soliciting proposals from 3 qualified consulting firms and/or individuals, with demonstrated experience in providing cannabis equity consulting services to conduct a cannabis equity assessment and development of a cannabis equity program. The RFP solicitation yielded one (1) response, and after a thorough interdepartmental review of the proposal, the City selected Brenda Davis Law #1.
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Group, because of the businesses’ demonstrated experience in the assessment and development of cannabis equity programs.
On March 17, 2022, under the City Manager’s authority pursuant to Modesto Municipal Code (MMC) 8-3.102, the City entered into an Agreement with Brenda Davis Law Group (BDLG) for a not to exceed amount of forty thousand dollars ($40,000). BDLG’s duties included the preparation of an equity assessment that consisted of community outreach and consensus building amongst individuals and communities that may have been disproportionally impacted by the prior cannabis prohibition.
The equity assessment data and information captured from the community survey, two (2) community orientation meetings, and lived experience interviews helped determine that there was a need to develop an equity program, leading to a decision to expand the scope of work in the Agreement with the BDLG to continue the development of a program.
On August 9, 2022, by Resolution No. 2022-334, the City Council approved the First Amendment to an Agreement with Brenda Davis Law Group to provide cannabis equity consulting services for the development of a cannabis equity program, increasing the Agreement amount by forty-nine thousand and fifty dollars ($49,050) from forty thousand dollars ($40,000) to a total of eighty-nine thousand and fifty dollars ($89,050).
DISCUSSION:
Equity Assessment Report
The equity assessment report was completed in October of 2022. BDLG emphasized multicultural community outreach and consensus building among individuals and neighborhoods that may have been disproportionally impacted by the prior cannabis prohibition. Their methodology provided for the following advantages:
1. Human-centered, data-driven insight into the history of impacts on individuals and their view of community deterioration and barriers created due to drug enforcement policies that focused on certain neighborhoods.
2. Findings to develop policy as the City of Modesto considers the implementation of a local cannabis equity program that intentionally advances economic justice for populations and communities disproportionately affected by cannabis prohibition.
BDLG worked with city staff and partnered with equal rights community groups and a diverse population of Modesto residents to produce the cannabis equity assessment report. This combined effort across a wide range of organizations identified the local negative impacts that criminalization of cannabis has had on various individuals in our community as it pertains to preventing entry into the cannabis industry.
Data was collected using:
Two (2) bilingual surveys, a baseline and a secondary, conducted via SurveyMonkey, the first beginning in May 2022 and the second beginning in July 2022 Two (2) community forums that hosted a total of eighty-six (86) attendees convened on June 17 and July 21, 2022
Thirteen (13) lived experience interviews conducted on July 9 and 23, 2022 Four (4) focus groups engaged on July 21, 2022
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The assessment found that the historical impacts of cannabis prohibition on people and neighborhoods disproportionately marginalized by cannabis crime policies in the City could be grouped into the following community defined barriers to entry into the commercial cannabis industry:
1. Education and technical training
2. Community reinvestment; and
3. Access to capital
Program Development
The program development process provides specific benefits to help address and mitigate the barriers to entry that were identified in the equity assessment. The State of California currently operates a dual licensing program for legal cannabis operations, which allows for regulations to be passed at both a State and local level. The DCC currently offers fee waivers and deferrals to equity applicants and licensees.
The City’s program will consider the recommendations provided in section 8 of the Assessment report as well as policies implemented by other local governments which were inspired by the Minority Cannabis Business Association’s (MCBA) ten model municipal social equity ordinances.
Additional detail regarding the Modesto Local Cannabis Equity Program can be found in the draft policy document (attachment 2) which will be subject to adjustments as Staff implements the program upon adoption by City Council.
Grant Application
The City has expended the initial Type 1 grant award of seventy-five thousand dollars ($75,000) during the equity assessment/program development stage.
On October 3, 2022, GO-Biz released the fiscal year 2022-2023 grant solicitation for the Cannabis Equity Grants Program for Local Jurisdictions1. The City is now eligible to apply for Type 2 funding to implement a local cannabis equity program.
To receive Type 2 grant funds, the state requires local jurisdictions:
1. To have previously conducted a cannabis equity assessment by the application due date
2. To have adopted or operate a local equity program by the application due date; and The grant timeline for fiscal year 2022-2023 is as follows:
Application Due December 14, 2022
Grant Evaluation and Award Announcement-December 15, 2022-January 20, 2023 Grant Agreements executed no later than: March 31, 2023 Grant Term- April 1, 2023 to October 31, 2024
The City of Modesto is eligible to apply for Type 2 funding and awards will be allocated using a point-based scoring system and funding formula. Two hundred (200) points are possible which are broken down into the following evaluation sections:
1. Local Equity Assessment Information-20 points
1 Cannabis Equity Grants Program for Local Jurisdictions - https://static.business.ca.gov/wpcontent/uploads/2022/10/CEG-Program-Grant-Solicitation-FY-2022-23.pdf #1.
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2. Local Equity Program Outputs and Outcomes-5 points
3. Local Equity Program Regulatory Framework-65 points
4. Local Equity Program Expected Outputs and Outcomes-10 points
5. Local Jurisdiction Population Size-22 points
6. Local Equity Program Components-53 points
7. Financial Question-25 points
a. Jurisdictions will receive additional points depending on a matching investment provided by City general fund appropriations:
i. $0-$99,999.99 (0 points)
ii. $100,000-$249,999.99 (5 points)
iii. $250,000-$999,999.99 (10 points)
iv. $1,000,000-$1,499,999.99 (15 points)
v. $1,500,000-$1,999,999.99 (20 points)
vi. $2,000,000 or more (25 points)
A minimum score of fifty (50) points is required to be considered in the full pool of other eligible applicants. If a locality scores below fifty (50) GO-Biz may offer the applicant an award not to exceed three hundred and fifty thousand dollars ($350,000).
Type two (2) funds may only be used for the following purposes:
1. To provide grants, no-interest loans, or low-interest loans to the jurisdiction’s local equity applicants and/or local equity licensees to assist with startup and ongoing costs.
2. To provide or fund direct technical assistance to the jurisdiction’s local equity applicants and/or local equity licensees. No more than ten (10) percent of the grant award may be used for direct technical assistance.
a. GO-Biz defines direct technical assistance as support to help cannabis equity applicants and licensees acquire the knowledge and/or skills necessary in order to gain entry to, and to successfully operate in, the regulated cannabis marketplace.
Examples of this assistance include:
i. One-on-one consulting and training, including direct interactions in group settings, to provide equity applicants and licensees the technical knowledge and expertise necessary to facilitate business ownership and employment in the cannabis industry.
ii. Small business support services, professional mentorship services, training and education regarding state cannabis licensing and regulatory requirements, manufacturing assistance, financial management, and business resilience such as emergency preparedness
If adopted and the City is successful in receiving Type 2 funds, the City will continue to evaluate the adopted program and adjust as needed to provide benefit to equity applicants. The City can consider the submittal of subsequent applications when the opportunity becomes available to seek additional grant funds to assist with program implementation to help equity applicants gain entry to the regulated cannabis marketplace.
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FISCAL IMPACT:
The City Staff costs to process the grant application will be absorbed within the current Community and Economic Development Department Fiscal Year 2022-2023 operating budget. Therefore, there is no additional impact to the General Fund for these costs as they are already reflected in the budget.
The exact amount of the grant award is unknown at this time and will vary based on the results of the GO-Biz application scoring process. A matching provision is currently not a requirement during this fiscal year’s solicitation period.
STAFF RECOMMENDATION:
1. Motion accepting the City of Modesto Cannabis Equity Assessment Report and forwarding to Council for approval.
2. Motion adopting a City of Modesto Cannabis Equity Program based on this report, and authorizing the City Manager, or designee, to take all actions as may be required to implement this resolution and program, including but not limited to the establishment of internal controls, administrative functions, and application submittal processes as necessary and forwarding to Council for approval.
3. Motion authorizing the City Manager to apply for a State of California Cannabis Equity Grant Program for Local Jurisdictions, for the purpose of funding a cannabis equity program and to complete and submit the grant application and any subsequent application with the Governor’s office of Business and Economic Development in relation thereto and forwarding to Council for approval.
Approved by:
Scotty Douglass,
Deputy City Manager
Joseph P. Lopez, City Manager
Attachments:
1. The Brenda Davis Law Group COM Cannabis Equity Assessment Report
2. Proposed Equity Program Policy
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CANNABIS
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ASSESSMENT
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ABSTRACT
Modesto is a city with rich agricultural roots and a dynamic multicultural mix of residents. Its name is Spanish for “modest,” yet its influence as a major transportation hub for Central Valley industrial and recreational pursuits is far-reaching. The city has made significant progress on its economic vitality goal of making downtown Modesto a regional destination for housing, businesses, events, and entertainment offerings. Cannabis businesses are expressly excluded from locating in the downtown area, however, and this report provides context for how this limitation may have emerged. It also identifies other areas where such businesses may be able to enhance economic vitality.
This City of Modesto Cannabis Equity Assessment (CEA or Assessment) provides human-centered, data-driven insight into the impacts of cannabis criminalization and the War on Drugs on communities within the city’s jurisdiction. The Assessment includes a Program Development section that provides preliminary findings to guide the establishment of a local cannabis equity program (LCEP). The LCEP is consistent with the City of Modesto’s policy on Diversity, Equity and Inclusion as it intends to advance economic justice for populations and communities disproportionately affected by cannabis prohibition.
ACKNOWLEDGEMENTS
It is our pleasure to recognize key community members, organizations, subject matter experts, and City of Modesto staff who have worked diligently to support our outreach and engagement efforts.
Each added critical resources and immense value to every step in this process. We offer a special thank you and owe incredible gratitude to the City of Modesto’s leadership and staff, including Scotty Douglass, Deputy City Manager, Jaylen French, Director of Community & Economic Development, Jorge Barrera, Economic Development Manager, Robert Kimball, Marketing Specialist, Marc Garcia, Office of the City Manager-Community & Media Relations; community volunteers provided by Wendy Byrd, President, NAACP Modesto-Stanislaus Branch, and Michael Baldwin, Chair, Criminal Justice Committee; meeting spaces provided by Dr. Perfecto Munoz, Director, King-Kennedy Memorial Center, and Pastor Nathaniel and Dorothea Green, Christ Unity Baptist Church; community members Eric Epson, LaPrice Reynolds, and George Kirk; and professional services provided by Marquis Townsend, Principal, MIXT Accounting Firm, Dr. Reggae T. Brown, CEO, Ascension Consulting & Multimedia LLC, her subject matter expert circles and media arts team. #1.
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TABLE OF CONTENTS
Section 1. Executive Summary ............................................................................................... 4
1.1 Key Findings ..................................................................................................................... 5 Section 2. Background ............................................................................................................ 6 Section 3. Overview ................................................................................................................ 8 Section 4. Equity Analysis .......................................................................................................11
4.1 Methodology ......................................................................................................................12
4.2 Impacts of Cannabis Criminalization in the City of Modesto .............................................13
4.3 Cannabis, Drug Arrest Rates and Racial Disproportionality in the City of Modesto, California, and the United States ............................................................................................ 21 Section 5. Current Conditions in the City of Modesto ............................................................. 26
5.1 Community Profile ….……………...................................................................................... 28 Section 6. Overview of the City of Modesto’s Cannabis License Process & Applicants .…... 32 Section 7. Barriers to Entry ..................................................................................................... 34 Section 8. Cannabis Equity Program Recommendations ....................................................... 38
8.1 Review of Other Jurisdictions’ Efforts to Promote Equity in Cannabis …………............... 48
8.2 References ........................................................................................................................ 53
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Section 1. EXECUTIVE SUMMARY
The City of Modesto started a Cannabis Equity Assessment (CEA or Assessment) effort to gather data on the people and neighborhoods disproportionately marginalized by prior cannabis criminalization policies. City staff responded to a Cannabis Equity Grants (CEG) Program Solicitation for Local Jurisdictions issued in October 2021 to help fund the CEA. In March of 2022, the City of Modesto contracted with a cannabis subject matter expert from The Brenda Davis Law Group to assist with gathering data and preparing an analysis and report. The effort to use arrest data as a starting point in the analysis continued throughout this process as we pursued access to expunged police data and alternative sources of information for all arrests and convictions for the sale, purchase, possession, or consumption of cannabis prior to the November 8, 2016 legalization of commercial cannabis in California (Prop 64). To round out the Assessment in areas where quantitative data were unavailable or underreported, The Brenda Davis Law Group team also developed a means to gather qualitative information, using surveys, community forums, focus groups, and lived experience interviews to create a robust and specific community profile.
The team emphasized multicultural community outreach and consensus building among individuals and neighborhoods that may have been disproportionately displaced by prior cannabis prohibition.
This approach has produced the following advantages:
o It provides human-centered, data-driven insight into the history of impacts on individuals and their view of community deterioration and barriers created due to drug enforcement policies that focused on certain neighborhoods.
o It provides findings to develop policy recommendations as the City of Modesto considers a local cannabis equity program (LCEP) that intentionally advances economic justice for populations and communities disproportionately affected by cannabis prohibition. #1.
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The City of Modesto can use the LCEP as a process for engaging communities to ensure that people with marginalized identities have the opportunity to gain experience, contribute, and develop consistently with its policy on Diversity, Equity and Inclusion. To accomplish the established scope of work, The Brenda Davis Law Group worked with city staff and partnered with the NAACP and a diverse population of Modesto residents to produce the CEA data and report. Our joint efforts helped the City of Modesto understand the local long-term negative impact that criminalization of cannabis has had on its communities.
Key Findings
The historical impacts of cannabis prohibition on people and neighborhoods disproportionately marginalized by prior cannabis criminalization policies in the City of Modesto occurred primarily in the 95350, 95351, 95354, and 95355 zip codes. These impacts can be grouped into three recurring themes about barriers to entry which emerged from community feedback from the surveys, community forums, focus groups, and lived experience interviews:
I. Education and Technical Training – the City of Modesto should help remove the stigma of prior criminalization and provide simple and clear cannabis business facts and instructions, access to ownership opportunities, support for skills transfers, training and mentoring on starting and running a legally compliant cannabis business or ancillary business.
II. Community Reinvestment – the City of Modesto should reinvest in the communities hardest hit by the War on Drugs by assisting community organizations with drug prevention and treatment services, family support for healing the effects of prior criminalization, grant writing services and tips and alerts to gain access to available city tax revenues and California Community Reinvestment Grants Program (CalCRG) opportunities.
III. Access to Capital – the City of Modesto should provide location assistance for access to commercial properties in the hardest hit communities and technical support and training on how to build wealth and qualify for available sources of small business financing.
Our findings are further discussed below in Section 7, and our recommendations appear below in Section 8. We considered data from all available sources, both quantitative and qualitative. #1.
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Section 2. BACKGROUND
California became the first state
to allow medicinal cannabis use
when voters passed the
Compassionate Use Act in 1996.
Today, cannabis is legal in
California for both medicinal and
adult (recreational) use. The
Medicinal and Adult Use
Cannabis Regulation and Safety
Act (MAUCRSA), established a
uniform licensing regime for both
medicinal and adult-use cannabis, effective January 1, 2018. MAUCRSA authorized a comprehensive system that provides the basic framework used by a number of local jurisdictions, including the City of Modesto, to regulate medicinal and recreational cannabis businesses. Local jurisdictions may ban cannabis businesses entirely or adopt more stringent requirements and limitations than state regulations may allow.
The City of Modesto adopted Ordinance 3684-C.S. legalizing certain types of commercial cannabis businesses in December 2017. Currently, the city allows up to 10 cannabis dispensaries and has no limit on the number of non-dispensary businesses. To date, the City of Modesto has approved 8 cannabis dispensary businesses, of which 7 are operational, and 6 non-dispensary cannabis businesses, of which 3 are operational, according to information provided by city staff on October 13, 2022. The Modesto City Council formed a Cannabis Permit Review Committee to which it delegated the authority to approve all cannabis businesses in 2021. This committee was renamed in 2022 and now advises the full council on all cannabis-related issues as the Cannabis Program and Permit Review Committee. Countywide, the Stanislaus County Board of Supervisors runs a separate permitting program that allows for 61 total Commercial Cannabis Business Licenses. This level of present and potential legal cannabis activity in the area affords an opportunity for Modesto to serve as a hub for retail, cultivation and other authorized cannabis businesses as it makes up 40% of the county population.
Modesto Arch This Photo by Unknown Author is licensed under CC BY-SA- #1.
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MAUCRSA permits adults, 21 years of age or older, to legally possess, transport, purchase, consume, or share up to one ounce (≤ 28.5g) of marijuana, and up to 8 grams of marijuana concentrates. It also permits adults, 21 years of age or older, to grow up to 6 marijuana plants per household out of public view. In addition to its legalization provisions, MAUCRSA reduces the penalty for many marijuana offenses. MAUCRSA also has a resentencing provision which permits persons previously convicted of designated marijuana offenses to obtain a reduced conviction or sentence. There is also a provision requiring the court to “dismiss and seal” the record of conviction.
MAUCRSA creates a marijuana tax to be imposed on purchasers of marijuana and marijuana products. The Governor's Office of Business and Economic Development (GO-Biz) currently allocates a portion of this tax revenue for local health departments and qualified community-based nonprofit organizations. In addition to the tax revenue made available to local communities, GO-Biz provides opportunities for cities and counties to receive grant funding to create cannabis social equity programs. As a result, several cities and counties have adopted cannabis equity ordinances.
Each ordinance supports equity applicants in diverse ways.
The City of Modesto intends to develop a local cannabis equity program (LCEP) designed to remove barriers to entry into the legal cannabis business for people who were negatively impacted by convictions or arrests during the War on Drugs. The community responses to surveys and participation in the community forums, focus groups and lived experience interviews painted a vivid picture of these barriers, as discussed in more detail below. The LCEP, when pursued with diligence by both the City of Modesto and the social equity participants, will help to reconcile the injustices suffered by those individuals who were criminalized and denied access to housing, employment, family stability, and other critical elements of a resilient community for engaging in the same activities that are now legal and highly profitable for others who do not face these barriers. Also, having a LCEP would position Modesto community organizations to better align themselves for access to a portion of the GO-Biz tax funds to provide drug prevention and treatment and youth and adult supportive services as reinvestments in individuals and their neighborhoods. #1.
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Section 3. OVERVIEW
The City of Modesto is located
in the heart of the California
Central Valley within Stanislaus
County. The city’s general
population accounts for 40% of
the residents of Stanislaus
County. This Assessment uses
available data sets and reviews
arrest and conviction rates by
race, ethnicity and geolocation.
The federal government
identified the Central Valley as
a High Intensity Drug
Trafficking Area (HIDTA) in
1999. The region includes metropolitan areas, such as Bakersfield, Fresno, Modesto, and Sacramento. Mexican Drug Trafficking Organizations (DTOs) played a major role in the reason the region received this HIDTA designation. When reviewing arrest and conviction data for this area, we found that Hispanic ethnicity is provided as a racial identity in the region, but not as an ethnicity within the local Modesto community. In fact, researchers at U.C. Davis in 2016 found it necessary to develop a formula for arrest rate analysis because reliable race-specific population estimates were and continue to be sparse. Figure 1a shows the results of applying this formula. Hispanic arrest rates appear in the data as a1:1 ratio. This ratio was calculated as follows: (TOTAL # ARRESTS FOR HISPANICS IN 2005/2009) / 5 (ACS 5-YEAR ESTIMATE OF THE HISPANIC POPULATION FOR 2005-09) / 100,000. The margin of error (MOE) for the Black-White ratio for each year was calculated in the following manner:
MOE (AB/AW * PW/PB) = AB/AW * MOE(PW/PB), where the MOE(PW/PB) was calculated using the MOE formula of the ratio from the 2016 American Community Survey (ACS) 5-year estimates for 2009-2016.
This ratio is highly inconsistent with conviction rates and leads us to believe a large number of Hispanic convictions reported in the California Department of Corrections and Rehabilitation (CDCR) Figure 1a - “When the Smoke Clears Report.” Racial Disparities in California’s Marijuana Arrests
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data may include Hispanics that were identified as “White” and distributed within the “White” category, as shown below in Figure 1b. In comparison, Blacks in Modesto were 3 to 4 times more likely to be arrested for drug felonies prior to 2010. Due to state reforms to reclassify felony drug offenses as misdemeanors, today the data show a steep decline in cannabis related arrests (see Figure 1a above.)
While the State of California bookends the War on Drugs as the period from 1980 to 2016, the CEA also considers the history of criminalization policies prior to 1980 and the negative impacts on individuals and communities that continue to the present day.
According to the 2019 ACS 1-year estimates, as shown in Figure 2a, over 70% of available employment opportunities are in the skilled trades, services, transportation, and labor industries.
Additionally, the City of Modesto has a 55% employment rate, with 16.2% of the population earning a bachelor’s degree or higher. The 2020 ACS 5-year estimates show the median household income in the City of Modesto was $60,254 in 2020. Figure 3 below provides QuickFacts taken from the 2020 ACS 5-year estimates regarding the key population characteristics of the City of Modesto.
Convictions Between 1980-2016 Percentage*
Other 139 2%
White 3283 53%
American Indian 65 1%
Black 675 11%
Hispanic 2014 32%
Asian or Pacific
Islander 25 0.4%
6201 100%
Figure 1b - California Department of Corrections and Rehabilitation - Stanislaus County Percentage of Convictions by Race/Ethnicity
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Figure 2a - Bureau, U. S. C. (n.d.). US Census. 2019 ACS 1-Year Estimates The multicultural mix in
Modesto is largely White
alone, followed by Hispanic or
Latino, then Black or African
American with the inclusion of
Two or More Races, as shown
in Figures 2a and 2b. Over half
the population is comprised of
homeowners who spend
slightly more on their
mortgages than the median
gross rent spent by nonhomeowners. A more detailed
snapshot of the Modesto
population appears in Figure 3.
Figure 2b - 2019 Census Data Modesto, California. (2020).
City of Modesto
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Figure 3 - QuickFacts - Key population characteristics of the City of Modesto in Stanislaus County We gleaned from these data that, overall, both equity and non-equity cannabis businesses can benefit from the high unemployment rate to tap into a properly trained workforce and increase community reinvestment as an additional major employer. Cannabis presents an opportunity to enhance all the sectors listed in the Employment Data shown above in Figure 2a. Also, these businesses can benefit from the locational value of the area as a Central Valley transportation hub.
Equity businesses in particular can learn from the experience and expertise shared by successful non-equity businesses that are currently operational in Modesto to bypass costly mistakes on the way to operating profitable businesses that provide employment, contribute to tax revenue, and enhance the means to reinvest in their own communities.
Section 4. EQUITY ANALYSIS
This analysis of equity addresses current conditions among people and communities criminalized in the City of Modesto and devastated by the War on Drugs. The data serves to identify individuals and neighborhoods targeted by enhanced law enforcement against drug users and drug related crimes.
In the Assessment, we focused on the self-identified victims of the War on Drugs who currently seek to become licensed owners or operators of legal cannabis businesses and ancillary businesses within the City of Modesto. Under this analysis, the term “equity” refers to fairness and justice, as distinguished from “equality”: As defined by the National Association of Colleges and Employers, “Whereas equality means providing the same to all, equity means recognizing that we do not all start #1.
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from the same place and must acknowledge and make adjustments to imbalances”.
4.1 Methodology
The goal of this Assessment is to provide a data-informed look at the impacts of cannabis criminalization and the War on Drugs on communities in the City of Modesto. The CEA effort focused on direct community interaction based on the UCLA Community Based Assessment model (see references in Section 8 below.) It was conducted by The Brenda Davis Law Group team with assistance from the NAACP and city staff to attain firsthand accounts and feedback from a multicultural mix of the populations disproportionately impacted by the War on Drugs. Means of engaging feedback included outreach via emails, phone calls, text messages, social media, and inperson activities. The City of Modesto also set up a cannabis equity assessment webpage, a dedicated phone line and email responder and added community forum dates to its public events calendar.
The team collected data by the following means:
o Two bilingual surveys, one baseline and one secondary, conducted via SurveyMonkey, the first beginning in May 2022 and the second beginning in July 2022 o Two community forums that hosted a total of 86 attendees convened on June 17 and July 21, 2022
o Thirteen lived experience interviews conducted on July 9 and 23, 2022 Figure 3b – Equality Vs. Equity This Photo by Unknown Author is licensed under CC By NC-JR #1.
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o Four focus groups engaged on July 21, 2022
4.2 Impacts of Cannabis Criminalization in the City of Modesto The War on Drugs significantly impacted communities in the City of Modesto; more specifically, the criminalization of cannabis. It is a rural city with a diverse community anchored in the agricultural and service industries. The
correlation between drugrelated enforcement and
people residing in the
poorest, most ethnically
diverse neighborhoods
directly impacted those
individuals and families
economically. California
began to impose harsher
sentencing for drug offenses
beginning in 1881, as shown
in Figure 4a, and what
followed was based on a
collection of biases and
myths. Patterns of
Police SWAT Team Drug Raid in West Side Modesto, California (Special Weapons & Tactics Team) July 21, 2014, United States Broadcasting
Figure 4 - “Central Valley California High Intensity Drug Trafficking Area.” Drug Market Analysis 2010
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misinformation began to spread which insisted that opiates, cocaine, and cannabis were equally dangerous, led to other crimes and were sold and used by immigrants and other despised groups.
As cultivation of Marijuana began to expand within the United States, the Drug Enforcement Administration (DEA) began a Domestic Cannabis Eradication and Suppression program in 1979 with only two states participating, California and Hawaii. According to a DEA 1975-1980 report “In 1979, an estimated 10-15,000 tons of marijuana were consumed in the US. It is believed that up to 10 percent of that amount was cultivated in U.S., a majority from California and Hawaii.” Modesto was an early transport hub for cannabis cultivation in the early 1980s. These routes were mostly controlled by Mexican drug trafficking organizations. Congress passed federal mandatory minimum sentencing legislation in 1986 which significantly intensified the War on Drugs.
As part of this heightened attention to drug law enforcement, the National Drug Intelligence Center (NDIC) was established by the Department of Defense Appropriations Act, 1993 (Public Law 102- 396), signed into law on October 6, 1992.The NDIC was placed under the direction and control of the U.S. Attorney General. The militarization of local law enforcement agencies, particularly as related to drug offenses, was now in full swing. California’s AB 971, which established Three-Strikes sentencing, was signed into law on March 7, 1994. In turn, those sentences produced some of the harshest sentence enhancements applied to felony offenses, more so than most other states. Under Three-Strikes, California law allowed sentences to be doubled for felony offenders regardless of whether the offense was classified as serious or violent.
In 1999, the White House Office of National Drug Control Policy designated the Central Valley a High Intensity Drug Trafficking Area (HIDTA). Prior to that, Modesto was renowned for its agriculture industry. The HIDTA designation allowed for up to $2.5 million in federal funding each year, plus additional law enforcement tools to combat drugs within the region.
After Three-Strikes, the extra money from the HIDTA designation placed Modesto in the prime position to target communities of color and apply longer and harsher sentences. Figure 4b below demonstrates the statewide consequences of this disproportionate law enforcement financed and encouraged by the War on Drugs. Again, the drug arrests among the “White” population may include Hispanics who identify as such. Most telling is the spectacularly high rate of drug arrests among the “Black” population.
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Figure 4b - State of
California Office of
the Attorney
General Bureau of
Criminal
Information and
Analysis Criminal
Justice Statistics
Center Report
Series Volume 2,
Number 2
December 2000
Report on Drug
Arrests in
California, from
1990 to 1999
In 2010, the NDIC published the Central Valley California High Intensity Drug Trafficking Area Drug Market Analysis and reported in the Strategic Drug Threat Development sections that “Cannabis cultivation has increased dramatically in the Central Valley HIDTA region over the past 5 years, making the area one of the most prominent marijuana production areas in the nation.” The Brenda Davis Law Group team conducted lived experience interviews on July 9 and July 23, 2022, at Christ Unity Baptist Church in Modesto. The lived experience interviews provided the team with local stakeholders’ recollections of how cannabis criminalization affected the City of Modesto.
These interviews were conducted within community comfort levels regarding access to gathered data due to overlying federal illegality of cannabis, language and immigration status concerns and the need for formal approval by governing bodies interested in partnering with the City of Modesto. * For the sake of privacy, all parties interviewed have been identified by their first and last initial, in addition to current residence zip code.
One testimonial from the interviews paints a picture of despair and ridicule:
Because of the increase[d] criminalization and the mandatory minimum. I was never given a second chance on life, when I was released back into community. The cannabis possession was a felony, and it was also my identity, that I was unable to escape. #1.
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Every application I had to identify and check the box that I was previously convicted. ~PP95350
Another stakeholder we interviewed reflected on her childhood and the lingering trauma in her adult life:
My mother was arrested for a simple cannabis offense, which was damaging in 1980’s. That was the beginning of continued repeated offenses which had her in and out of jail until she passed away.
Multiple members of my family have been arrested for cannabis offenses. To see progression of society and how it is accepted… now [I am] hurting because my mom’s life was changed due to the criminalization of cannabis. ~RP95368
As described in another lived experience interview, some arrests resulted in job losses and depleted income:
I always thought I was within my legal rights, until I found out I wasn’t. They took me to jail for a year with a 3-year suspended sentence. When I got out of jail, I couldn’t’ find a job and I lost one year of my life. I lost $10,000 to bail out of jail, another $10,000 in attorney fees, a year's worth of wages… so I lost at least $50,000 and served a hellacious year in jail for something I thought was legal and I had a prescription for. How do I get a year of my life back? ~JV95350
Another person we interviewed was visibly shaken while reliving the accounts shared:
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This is hard! We never talk about this stuff....
[The participant noted that a family member with mental health challenges chose to self-medicate with marijuana and was arrested many times as a result.]
As a child and even as an adult, my family member was never offered mental health services or treatment. She should have been evaluated and taking [sic] care of instead of criminalized. What's the hope after that? If we understand better, then we could have done better. If it wasn't so secretive my parents could have gotten her more help. If they would have understood that her problems were trauma-based rather than criminal. But they were so ashamed by the stigma around cannabis and how it was criminalized at the time. ~FC95307
Another stakeholder was very matter of fact about the chaos and loss of assets attributable to cannabis related enforcement actions:
I owned the house and let a friend rent it out. I dabbled a little bit with marijuana, but he was growing marijuana. So, I guess he went and opened up another house and started growing (a different house than mine). About 2 months later the police kicking my door in at my residence and arrest me for manufacturing, distribution, and cultivation. I honestly had nothing to do with my tenant’s activities. I was going through a divorce and didn't have the financial resources to fight with an attorney. So, I went on and took charges, that was probably 10 years ago. Now it's legal, but not legal. What's legal? There's a double standard here as to what is legal and what is not. It seems to be setup against us, not for us. It's in our neighborhoods, we're probably the highest paying customer but it seems like my people when it comes to business can't get in it, when it may cost $50,000 for an application. One or two people own majority of the #1.
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market. Affordability and information are needed. It's not fair…level the playing field. It's not equality. Whether you're smart or not or have the funds or not they take you through hell. ~EW95354 One stakeholder currently works in the cannabis industry, but recounted the harsh consequences of trying to run a cultivation business for medicinal uses during the War on Drugs:
I'm currently working for a dispensary here in Modesto Monday through Friday. In March 2006, my house was raided. I was cultivating cannabis. I was doing it medically but there was a lot of gray area. I was indicted in November that year. My wife (then girlfriend) was also arrested. She was charged, but as a part of my plea deal her charges were dropped and I would take the instead.
The Stanislaus County Criminal Grand Jury did the indictment. It was a multijurisdictional task force that originally did the raid. The FBI was involved but states took the case. I was charged with cultivation sales, and I think they added trafficking. I thought I had a good leg to stand on in court because I had paperwork and a wellknown cannabis attorney. At that time, he explained to me I was part of the war on drugs and unfortunately so many cases like mine had to happen before the laws would change. He said as much as it was bad hopefully some good would come out of it. Beyond the criminal charges I was charged civically [sic], under asset forfeiture they took our cars, jewelry, anything worth of value. I had to go to court separate for my criminal case and prove that these items were not bought with drug money. One of the vehicles was a gift from the family member and DMV records proved it. It still took a while to get the car back. They took all my wife’s’ tax money at the time (out of her purse). They froze our accounts. It was really a hardship. We #1.
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were both scarred and traumatized by the entire experience. ~CR95350
Additional interviews highlighted the
concepts of stigma and multigenerational
trauma, such as, negative effects on
household size that were associated with
cannabis and being stopped by police and,
as a reason, simply being told that the
smell of cannabis is present. Also, we
learned that the most marginalized areas
include the 95350, 95351, 95354, and
95355 zip codes.
Results from two local surveys allowed us additional insight into the complexities of those lives affected by the criminalization of cannabis. The baseline survey demonstrates a correlation between top zip codes for
residences in Modesto
and city arrest rates in
those zip codes, as
shown in Figures 5a
and 5b.
Figure 5a - Modesto Cannabis Equity Assessment Survey #1 Results, Question #2 #1.
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The second survey reveals 80% of its total respondents experienced arrests or convictions, as shown in Figure 6. All these individuals participated in the lived experience interviews.
We observed during the community
forums and focus group activities, via
comments shared there and during
follow up inquiries initiated by various
Modesto residents, that the 86 inperson participants represent a strong multicultural impetus to address what
the War on Drugs did to their families
and neighborhoods. The 125
residents polled expressed a keen
interest in having a local equity
program that they have a hand in
shaping which affords them access to
state and local grant funding and
Figure 6 - Modesto Cannabis Equity Assessment Survey #2 Results, Question #8
Figure 5b - Drug-crimes-per-capita-map-Modesto-CA, Crime Grade #1.
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hands-on business guidance and support. The discussion that follows takes a deeper dive into the characteristics common to those who were disproportionately criminalized by drug enforcement policies.
4.3 Cannabis, Drug Arrest Rates and Racial Disproportionality in the City of Modesto and Stanislaus County, California
To help illustrate the targeted approach to the War on Drugs within the communities of Modesto, Figure 7 below shows Black people being arrested 3 times more frequently than their White counterparts within the city’s jurisdiction. Blacks were arrested at a rate of 29% while making up less than 5% percent of the city’s population.
Law Enforcement
Agency
Black to White
Arrest Ratio (x)
Black to White
Margin of Error (+/-
)
Black
Arrest Rate
Huntington
Beach
5.58 0.46 152.93
Indio 18.37 4 36.96
Inglewood 2.41 0.11 101.38
Irvine 3.18 0.21 28.71
Livermore 6.35 0.89 12.86
Long Beach 8.15 0.1 306.54
Manteca 3.95 0.29 178.9
Merced 9.35 0.43 35.93
Milpitas 5.78 0.6 18.8
Modesto 2.87 0.11 29.54
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Moreno Valley 3.49 0.09 15.45
Mountain View 8.26 0.79 94.19
Murrieta 2.52 0.18 10.15
Napa 12.46 2.01 34.95
Newport Beach 12.43 2.6 421.83
Oakland 25.45 0.29 15.13
Oceanside 1.57 0.21 0.37
Ontario 1.96 0.09 26.09
Orange 7.21 0.44 82.88
Oxnard 1.65 0.1 16.29
Palo Alto 26.22 3.01 105.76
Pasadena 8.99 0.21 230.71
Perris 2.35 0.16 24.48
Pittsburg 2.42 0.08 210.94
Pleasanton 0.77 0.28 1.84
Pomona 4.36 0.12 94.83
Redding 5.99 0.4 111.87
Redlands 5.65 0.49 32.31
Redondo Beach 6.46 0.62 209.94
Redwood City 12.06 1.17 40.72
Rialto 2.17 0.11 9.22
Figure 7 – “When the Smoke Clears Report.” Racial Disparities in California’s Marijuana Arrests #1.
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For Stanislaus County, between the years 2000 and 2016, the rate of cannabis arrests increased to more than 300%, as shown in Figure 8a below. The cannabis and drug arrest rates relative to population size, also shown in Figure 8a, are noticeably higher in Hispanic or Latino, and Black or African American communities.
Figure 8a - “When the Smoke Clears Report.” Racial Disparities in California’s Marijuana Arrests #1.
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We also requested Modesto and Stanislaus County demographic data for drug related arrests between the years 1980 and 2016 from the California Department of Corrections and Rehabilitation (CDCR).
We reviewed arrest data for Stanislaus County from the UC Davis report on racial disparities, as shown in Figure 8a above, and CDCR’s response to our information request on arrests and convictions. While Figure 8a takes into account the census data for Stanislaus County during the 16-year period 2000 to 2016, the data provided by CDCR presents a bigger picture. CDCR reported data from 1980 to 2016, over 30 years of information, and focused on convictions by race.
Currently, Stanislaus County is more diverse than it was in 1980. As shown in Figure 8b, in 2016, the White population made up 83.7% of the population compared to 95.5% in 1980.
Between 1980 and 2016, the share of the population classified as Other grew the most, increasing by 9.6 percentage points to 12.9%. The Black population increased from 1.2% in 1980 to 3.4% in 2016. The CDCR data provided a breakdown of Stanislaus County marijuana related convictions by raw numbers. Figure 8c below shows the percentage of convictions among populations of Whites, Hispanics, and Blacks, among others.
Figure 8b – California Department of Corrections and Rehabilitation Stanislaus County Percentage of Convictions by Race #1.
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While representing only 3.4% of the county’s population in 2016, Black residents accounted for 11% of marijuana related convictions within the county between 1980 and 2016; nearly 3 times their population. This conviction rate supports the conclusion that arrests and convictions were higher within Black communities relative to population size. *Rounded to the nearest
percentages
Figure 8c - California
Department of Corrections
and Rehabilitation -
Stanislaus County
Percentage of Convictions by
Race/Ethnicity
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Section 5. COMMUNITY PROFILE BASED ON CURRENT
CONDITIONS IN THE CITY OF MODESTO
The United States Census Bureau 2019 Community Resilience Estimates (CRE) indicate the City of Modesto has high-risk factors for families in East, West, and South Modesto communities. The individuals and communities disproportionately harmed by cannabis prohibition commonly face challenges to resilience, such as, criminal records, poverty, housing instability, household size reduction, inadequate health care options, and an inability to avoid or absorb the external stresses of a disaster. These factors produce ongoing educational, economic, and psychosocial impacts on residents of the City of Modesto.
The CRE data set provides information about the nation, states, counties, and census tracts from three different data sources. These sources include the CRE, the ACS, and the Census Bureau’s Planning Database. Providing all this information in one data set affords the City of Modesto quick access to the data on a variety of topics concerning social vulnerability and equity, as shown below in Figure 9.
Figure 9 - 2019 Community Resilience Estimates for Equity and Disasters #1.
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The CRE program provides an easily understood metric for how at-risk every county and neighborhood (census tract) in the United States is to the impacts of disasters, including hurricanes, floods, earthquakes, wildfires, and pandemics, such as COVID-19. Modeled estimates are based on 10 resilience-related risk factors.
These estimates were modeled using 2019 ACS 1-year microdata, the Census Bureau’s Population Estimates Program (PEP), as well as small area modeling techniques. They revealed the number and percentage of residents living with 0 risk factors (Low Risk), 1-2 risk factors (Moderate Risk), and 3 or more risk factors (High Risk).
Modeling of individual and household characteristics from the 2019 ACS, in combination with data from the PEP, was used by the Census Bureau to create the CRE. Risk factors from the 2019 ACS include:
o Income to Poverty Ratio
o Single or Zero Caregiver Household
o Crowding
o Communication Barrier
o Households without Full-time, Year-round Employment
o Disability
o No Health Insurance
o Age 65+
o No Vehicle Access
o No Broadband Internet Access
CRE data indicate, considering the 10 risk factors listed above, over 70% of the Modesto population is facing a moderate to high vulnerability and impact rate. While this high risk, low resiliency profile is troubling, it underscores opportunities for improvement through cannabis as a recent and promising source of economic growth.
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5.1 Community Profile
The baseline survey respondents
gave us a snapshot of the most atrisk Modesto residents, as shown in Figure 10.
Currently, over 24,000 residences
live below the poverty level in the
City of Modesto. Survey results
revealed over 50% of residents who
responded to the specific question
Community gathering This Photo by Unknown Author is licensed under CC BY-SA-NC Figure 10 - Modesto Cannabis Equity Assessment Survey #1 Results, Question #4
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had household income less than or
equal to 60% of the current Area
Median Income in Stanislaus County.
Among the 125 residents polled, we
received 64 responses to the
baseline survey which provided
further illumination of the high
household poverty rate in Modesto.
As shown in Figure 11a, over 70% of
respondents who answered the
specific question were participants in
one of the listed government
assistance programs for low-income
households.
We used the information we gathered to compile a community profile for the Assessment, including public sources, such as U.S. Census data, Modesto and Stanislaus County drug crimes data and alternative sources of information, such as the CDCR and the HIDTA report, for all arrests and convictions for the sale, purchase, possession, and/or consumption of cannabis prior to November 8, 2016 (Prop 64) (when adult use of cannabis was legalized statewide.) To round out the Assessment in areas where quantitative data were unavailable or underreported, we also developed a means to gather qualitative information, using surveys, community forums, focus groups, and lived experience interviews to enhance the community profile.
This profile consists of the following components:
A. Risk factors from the 2019 ACS:
CRE data indicate, considering the 10 risk factors listed below, over 70% of the Modesto population is facing a moderate to high vulnerability and impact rate.
Figure 11a - Modesto Cannabis Equity Assessment Survey #1 Results, Question #5
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o Income to Poverty Ratio
o Single or Zero Caregiver Household
o Crowding
o Communication Barrier
o Households without Full-time, Year-round Employment
o Disability
o No Health Insurance
o Age 65+
o No Vehicle Access
o No Broadband Internet Access
The City of Modesto should address many of these risk factors for the most at-risk populations through a LCEP that provides new or expanded business opportunities, access to a trained workforce and tax revenue for community reinvestment.
B. Survey questions and responses:
Using the State of California’s equity criteria as a guide, we formulated several survey questions to provide feedback from online responses and encouraged participation through various means, including the City of Modesto’s website, emails, text messages, phone calls, social media, flyers, and other on-site communications at community forums convened by us and community partners like the NAACP.
1. Have you or anyone in your immediate family been arrested, detained of jailed for any cannabis offense between 1980 and 2016? The second survey reveals 80% of its total respondents experienced arrests or convictions, as shown above in Figure 6.
All these individuals participated in the lived experience interviews.
2. During your residence in the City of Modesto, was your household income less than or equal to the current Area Median Income in Stanislaus County? Currently, over 24,000 residences live below the poverty level in the City of Modesto. Survey results further revealed over 50% of residents who responded to the specific question had household income less than or equal to 60% of the current Area #1.
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Median Income in Stanislaus County.
3. During your residence in the City of Modesto, were you or your head of household eligible to receive financial aid through CalFresh, MediCal, CalWORKS, Supplemental Security Income, or Social Security Disability? Among the 125 residents polled, we received 64 responses to the baseline survey which showed the high household poverty rate in Modesto. As shown above in Figure 11a, over 70% of respondents who answered the specific question were participants in one of the listed government assistance programs for low-income households.
4. Did you reside in any of the following zip codes between 1980 and 2016? The baseline survey demonstrates a correlation between top zip codes for residences in Modesto and city arrest rates in those zip codes, specifically, 95350, 95351, 95354, and 95355, as shown above in Figure 5a.
These responses suggest a distinct population of Modesto residents who would benefit from an equity program that addresses the fallout from the War on Drugs.
C. Arrests and convictions for drug related offenses:
Blacks in Modesto were 3 to 4 times more likely to be arrested for drug felonies prior to 2016.
Despite a steep decline in cannabis related arrests after 2016 and the onset of MAUCRSA (see Figure 1a above), the negative impact of criminalization on housing, employment, family stability, and access to supportive services is ongoing. We learned from community feedback that it continues to be amplified among Black and Hispanic populations in the 95350, 95351, 95354, and 95355 zip codes.
D. Lived experience interviews:
Thirteen community volunteers participated in confidential lived experience interviews on July 9 and July 23, 2022, at Christ Unity Baptist Church in Modesto. They shared recollections of how cannabis criminalization affected their lives, families and neighborhoods #1.
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in the City of Modesto. These interviews highlighted the need for an equity program to help individuals overcome stigma and family trauma, understand the law and how it applies now, get back on their feet as contributing members of their families and communities, and reestablish a sense of belonging.
E. Community forums and focus groups:
We were able to provide community education and engagement on what cannabis social equity looks like and receive input at two well attended Community Orientations held on June 17, 2022, at the King-Kennedy Memorial Center and July 21, 2022, at Christ Unity Baptist Church. Attendance at both forums was multicultural and revealed a keen interest in having a program in the City of Modesto among the 86 participants. The attendees raised concerns that were echoed in the survey responses and lived experience interviews on a more intimate level. Using the worksheet shown in Figure 13, we were able to actively engage the community members in defining equity and suggesting ways to meet community needs to overcome barriers to entry into the legal cannabis business.
Based on this community profile, the hardest hit areas by zip code were 95350, 95351, 95354 and 95355. These areas also coincide with higher populations of Blacks and Hispanics, low-income neighborhoods, and drug related arrests.
Section 6. Overview of the City of Modesto’s Cannabis
License Process & Applicants
Title 10 of the Modesto Municipal Code governs “Commercial Cannabis Uses” and designates areas zoned for cannabis permitted operations. The application process has two phases: Phase 1 covers background checks and zoning clearances; Phase 2 covers all other permitting requirements, as detailed in Ordinance Number 3684-C.S. This ordinance became effective on February 15, 2018. The application process checklist and schedule of fees can be found on the City of Modesto’s website.
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As of June 30, 2021, the City of Modesto has earned $5,379,402 from Cannabis Taxes, according to its fiscal year 2020-2021 budget actuals. The city currently allows medicinal and recreational sales of cannabis through a limited number of retailers, but there are no restrictions on the number of NonRetail Commercial businesses. Modesto
now has about 8
approved retail permits.
As of December 20,
2021, Modesto city staff
reported about 18
approved businesses,
some of which are nonoperational, as shown in
Figure 11b. According to
California Department of
Tax and Fee
Administration (CDTFA)
reports, in 2021,
Stanislaus County
reported
$161,591,171.00 in Total
Taxable Sales. The
Stanislaus County Board
of Supervisors allows for
61 total Commercial
Cannabis Business
Licenses.
The statewide rules for sale, use and possession of cannabis are outlined below and apply in addition to any stricter limitations imposed by local jurisdictions:
18+ Medicinal Use - If you have a physician’s recommendation to use cannabis, you can:
o Buy cannabis products with more THC
Figure 11b.- City of Modesto Cannabis Business Locator
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o Buy more cannabis at a time, if needed for your medical condition o Possess more cannabis
o Grow more plants at home, if needed for your medical condition o Get a medical marijuana ID card (Even with a physician’s recommendation, you must follow laws about where you can use cannabis)
21+ Recreational Use - Adults aged 21 and older may:
o Possess up to 28.5 grams (about one ounce) of cannabis and up to 8 grams of concentrated cannabis, such as hash
o Use cannabis on private property but cannot consume cannabis in any public place where a city or county does not allow it
o Cannabis cannot be consumed or possessed on federal lands, such as national parks o Property owners and landlords may also ban the use and possession of cannabis on their properties
o Don’t Consume & Drive - Driving while under the influence is illegal. It doesn’t matter what substance you are using. If you are not sure whether you are impaired, do not drive.
Section 7. Barriers to Entry
What We Did – Research and Outreach
At the outset of this Assessment effort, The Brenda Davis Law Group team attempted to find and use arrest data in the analysis of who was disproportionately harmed by the War on Drugs in Modesto and what can be done to redress it. We pursued access to expunged police data and alternative sources of information for all arrests and convictions for the sale, purchase, possession, and/or consumption of cannabis prior to November 8, 2016 (Prop 64), when adult use of cannabis was legalized statewide. To round out the Assessment in areas where quantitative data were unavailable or underreported, we also developed a means to gather qualitative information, using #1.
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surveys, community forums, focus groups, and lived experience interviews to enhance the community profile.
What We Learned – Areas of Need
Community input identified the following needs to overcome barriers to entering the legal cannabis business in Modesto:
I. Education and Technical Training
A. Need for public education on cannabis to provide facts, remove stigma and shame and help people overcome fears; show legal side of business in ways in which people can understand the Dos and Don’ts and feel safe sharing information and supporting the existence of legal businesses (e.g., confidential communications, protected files). For example, equity community members suggested handing out business cards with QR Codes that contain basic informational fact sheets about legal cannabis statewide and direct potential equity applicants to a dedicated source of up-to-date information on opportunities available in Modesto; employ methods of communication that require minimum technical ability to gain access.
B. Need for access to ownership opportunities through affordable permits and licenses and clear, simplified instructions on how to become a legal cannabis operation (e.g., Frequently Asked Questions, infographics that diagram the permitting steps, land use and building code documentation requirements and review timelines). For example, equity community members suggested simple step by step guides and infographics could be posted on the website set up by the City of Modesto for this Assessment and accessible via QR Codes to show at a conversational level the opportunities available, potential timelines and the range of costs for entering the cannabis business. To help address community sensitivities around language, immigration status and gaps in technical proficiency, the community partners identified during this Assessment should be actively engaged as trusted resources.
C. Need for skills training in how to plan for, start up and run a business (e.g., business planning and development fundamentals). For example, equity community members want to be coached by subject matter experts on how to progress from an idea to a #1.
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workable plan for a business. They also want to be taught the essential technical and financial components of business ownership and how to use their transferable skills to advance from opening day through maintaining legal operations over the course of their 3-year, 5-year or longer planning horizons.
II. Community Reinvestment
A. Need for California Community Reinvestment Grants Program (CalCRG) and similar types of opportunities in Modesto to reinvest in communities hardest hit by the War on Drugs and provide access to youth and adult services (skills training, recreational activities, etc.), drug prevention and treatment services (e.g., access to grant writing services, workshops on creating and maintaining a nonprofit).For example, the City of Modesto’s resources, such as its website, social media posts and text messaging are critical to alert equity community members on timelines for participating in the latest round of CalCRG grant solicitations. Also, the City of Modesto should designate funding for similar community services to be provided by local organizations and funded locally by either cannabis fees or taxes paid by non-equity participants generally and equity participants once sufficiently profitable.
B. Need to focus on families to help heal the traumas of drug related arrests and convictions and overcome the loss of a sense of belonging to a community (e.g., Insight Treatment Programs: https://insighttreatment.com). For example, the City of Modesto should plan and schedule community activities that encourage family participation at parks and other public venues staffed by the City of Modesto and community partners. These events must include information kiosks and tables that tell the community about available drug treatment and prevention services and how to gain access to these resources.
III. Access to Capital
A. Need for stable sources or means of financing local small business operations, including location assistance for commercial properties in the hardest hit communities (e.g., information clearinghouse available online and via local free community papers).
For example, equity community members want the City of Modesto to assist them with #1.
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zoning requirements, smart investments and finding local real estate that adds value to the community and grows their profitability.
B. Need for access to and training on means of building personal sources of financing for small businesses, such as home ownership, asset acquisition and other foundational sources of wealth (e.g., information clearinghouse and mentoring services on identifying, valuing, and maintaining property in various forms). For example, the City of Modesto should educate equity community members on the fundamentals of business finance, such as pro formas, budgets, profit, and loss statements and how to leverage assets for business purposes. It is also imperative that the City of Modesto explain the details of handling cash without access to traditional banking resources.
What Should Come Next and Why – Being Attentive and Responsive This Assessment provides the City of Modesto with a community profile that shows devastating effects that linger to this day in its underserved communities where Census data shows high crime rates, poverty, and elevated risk factors for inability to recover from disasters of any kind. The harm caused by the War on Drugs is very evident in the hardest hit communities even with limited quantitative data. The
qualitative data collected by
The Brenda Davis Law
Group team helps put faces
and families into the
picture. We identify ways to
address cannabis inequities
by providing a business
driven response to solving
these problems and make
specific recommendations
on what would be most
useful to the local equity
community in Section 8
below.
Modesto Water Tower This Photo by Unknown Author is licensed under CC #1.
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Section 8. Cannabis Equity Program Recommendations
In March and April of 2022, the City of Modesto and The Brenda Davis Law Group team coordinated on various strategic planning efforts, designed a work plan, and began developing tools for building a community profile and engaging individuals and organizations in impacted neighborhoods. We designed this profile to assist the City of Modesto in identifying who should be served and the barriers to entering the legal cannabis market. We then worked with identified stakeholders to outline the array of benefits the city should consider for Program Development of the LCEP In May, June and July of 2022, the City of Modesto and The Brenda Davis Law Group team further developed a framework for addressing historical impacts of cannabis prohibition on people and neighborhoods disproportionately marginalized by prior cannabis criminalization policies in the city.
This framework addresses several key points and includes defining equity, setting eligibility criteria, and addressing common barriers to entry that emerged from extensive multicultural outreach and feedback, including community member surveys, community orientation meetings, lived experience interviews, and focus group activities.
In July of 2022, The Brenda Davis Law
Group continued to move forward with
collecting data. The community defined
equity and presented issues that we
grouped into three common themes for
the City of Modesto to potentially
address: 1) the need for education and
training on local and state cannabis
requirements and business development
for both industry and ancillary
businesses; 2) support for community
reinvestment in youth and adults
regarding prevention, treatment and trauma related health challenges due to the War on Drugs; and 3) assistance with access to capital from legally available sources. Figure 12a outlines the parameters of the community discussion about defining equity.
Figure 12a - Modesto Cannabis Equity Assessment Focus Group Activity
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I. Community Defined Equity
The City of Modesto and The Brenda Davis Law Group team continued moving forward on developing the equity program framework. We set discussion parameters (see Figure 12a) focusing on the overarching goal of increasing equity business ownership by defining equity and identifying specific barriers to entering the legal cannabis market as well as ancillary businesses. At the second Community Orientation on July 21, 2022, we engaged participants in a group setting that resulted in multicultural interaction in person and additional data via the second online survey.
A. Focus Groups – On July 21, 2022, The Brenda Davis Law Group team convened 4 Focus Groups and had them complete worksheets designed to elicit their definition of equity and the barriers to entry into the legal cannabis business. The community interaction was multicultural and very lively, as pictured below.
Figure 12b - Modesto Cannabis Equity Assessment Focus Group Activity Photographs #1.
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B. Survey Responses - Participating residents shared their views on local equity via the following responses shown in Figures 13 and 14 below.
What is your definition of equity?
Respondent ID Response Date Responses
1.18085E+11 Jul 23, 2022, 10:52 AM Payback for unnecessary arrest z1.18084E+11 Jul 21, 2022, 07:24 PM Equal for all
1.18084E+11 Jul 21, 2022, 07:22 PM Financial wealth
1.18084E+11 Jul 21, 2022, 07:21 PM Something that holds value
1.18084E+11 Jul 21, 2022, 07:18 PM Property
1.18084E+11 Jul 21, 2022, 06:32 PM Inclusive
1.18084E+11 Jul 21, 2022, 06:23 PM
Value of something. I have equity in my
home and as I know that is the value of
the home in which I do not have debt from
the loan.
1.18084E+11 Jul 21, 2022, 06:23 PM
Equity in business is basically your assets
not including your debt/liability of what you
might owe others
1.18084E+11 Jul 21, 2022, 06:11 PM
Being completely fair by giving people all
the information and access to perform a
task or make a decision; access an
opportunity.
1.18084E+11 Jul 21, 2022, 03:45 PM Business mentoring, access to capital, access to commercial property
Figure 13 - Modesto Cannabis Equity Assessment Survey #1 Results, Question #10 #1.
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Figure 14 - Modesto Cannabis Equity Assessment Survey #2 Results, Question #12 The community defined equity as all of the above options 70% of the time, as shown in Figure 14.
They also emphasized local and state assistance with start-up costs and access to capital. The top option selected encompassed business opportunities, technical training, and fee waivers. Based on this Assessment data, we recommend that the City of Modesto adopt the following definition: Equity means the City of Modesto will provide assistance with business ownership in a variety of forms, including skills training, technical support, funding sources, waivers and deferrals, mentoring, and family self-sufficiency support services. These services can be provided by city staff or by third party providers.
II. Eligibility Criteria
California’s dual licensing program for legal cannabis operations affords opportunities for government organizations to build in equity benefits at both the state and local levels. The Department of Cannabis Control is the state agency authorized to develop and implement a program to provide waivers for required licensing fees under Business and Professions Code section 26249.
We relied on the state’s official report on the rulemaking which explains and justifies the inclusion of Stanislaus County, among others, as an area with a population disproportionately impacted by #1.
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criminal justice policies implementing cannabis prohibition between 1980 and 2016. As stated above in Section 3, which provides an overview of the City of Modesto and Stanislaus County census data, Modesto makes up about 40% of Stanislaus County’s population and is thus a significant contributor to criminalization policies and impacts. Outlined below are first, the state’s equity criteria and second, the City of Modesto’s non-equity criteria for applicants and licensees.
A. *State of California defined criteria for equity participants - Currently, the Department of Cannabis Control is offering fee waivers and deferrals for eligible equity applicants and licensees. The pertinent regulations can be found here https://cannabis.ca.gov/applicants/equity-fee-waivers. Under the state’s regulatory scheme, the cannabis business must meet the following criteria:
1. Equity ownership: Individuals who meet the equity criteria own 50% or more of the business.
2. Gross revenues: The business has gross revenues of $5 million or less per year. If a new applicant, the business expects gross revenues of $5 million or less for the first year.
The state further provides – Equity owners must meet at least one of the following criteria (additional details appear on the state’s equity website):
1. Cannabis conviction or arrest: The owner was convicted of or arrested for a cannabis offense before November 8, 2016.
2. Household income: The owner’s household income is less than or equal to 60 percent of the Area Median Income for the local jurisdiction where they live. .
3. Neighborhood: The owner lived for at least five years between 1980 and 2016 in an area disproportionately impacted by past criminal justice policies implementing cannabis prohibition. Learn more about qualifying neighborhoods, or use our map tool to see if you lived in a qualifying area.
The State of California allows local jurisdictions to set up their own equity criteria. If equity applicants or licensees participate in a local jurisdiction’s equity program, they can #1.
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prove they meet the state’s equity criteria through an attestation on the state’s fee waiver form. Otherwise, the applicants or licensees who choose not to participate in their local equity program or are in a jurisdiction without an equity program can submit documents to the Department of Cannabis Control to show eligibility.
B. City of Modesto defined criteria for non-equity participants – Local jurisdictions are authorized to adopt criteria for their cannabis programs that are more restrictive than state requirements. On November 7, 2017, the city put forth a ballot measure, known as Measure T, that would approve the Modesto Cannabis Business Tax and authorize the City Council to establish a tax rate of up to ten percent (10%) on gross receipts on cannabis businesses if they are allowed to operate in the City in the future. This measure proceeded to the ballot on a 5-2 vote of Modesto City Council on June 27, 2017. The two dissenting councilmembers expressed a desire for Modesto to establish uniform regulations with Stanislaus County. Measure T was overwhelmingly approved by the voters by more than 82%.
After this vote, the City of Modesto chose to amend its municipal code to regulate and tax commercial cannabis businesses pursuant to Ordinance Number 3684-C.S., adopted on January 16, 2018, and effective on February 15, 2018. It was adopted along with related Ordinance Number 3683-C.S., which includes a land use zoning table designating areas available for commercial cannabis uses. See ordinances as adopted in archives for the year 2018 here. We reviewed the legislative history of these ordinances to illuminate public comments and the Modesto City Council’s motivation in legalizing cannabis operations in the city. See the 2018 legislative history here.
The existing regulatory scheme does not address equity considerations. There are model ordinances listed on the Department of Cannabis Control’s website which broadly capture basic equity considerations. Every local jurisdiction is different, however, and the City of Modesto should focus on its specific community profile, as laid out in Sections 3 through 5 above, when adopting equity measures designed to effectively address impacts of the War on Drugs on its local population and neighborhoods. The discussion below outlines Program Development recommendations to the City of Modesto based on the community profile compiled during this Assessment effort. #1.
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I. Education and Technical Training
Who needs it - Based on the above community profile, the equity eligibility criteria and populations served should include the hardest hit areas by zip code, which were 95350, 95351, 95354, and 95355. These zip codes encompass the least resilient communities, based on the U.S. Census Bureau’s community resilience estimates for equity and disasters, As mentioned in Section 5 above, these risk factors, verified in this Assessment, include the following:
o Income to Poverty Ratio
o Single or Zero Caregiver Household
o Crowding
o Communication Barrier
o Households without Full-time, Year-round Employment
o Disability
o No Health Insurance
o Age 65+
o No Vehicle Access
o No Broadband Internet Access
Eligible applicants should include those directly involved in cannabis operations as owners and the ancillary businesses that serve them, such as accountants, insurance brokers and realtors, to name a few.
A. What it includes - tips on industry specific and general business operations:
1. How to think like a business owner - for example, the City of Sacramento provided curriculum-based training on the entrepreneurial mindset
2. Business entity selection and formation – for example, the Secretary of State and the Franchise Tax Board provide information and resources on what to consider when starting a business
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3. Business plan development – for example, the California Capital Women’s Business Center provides templates for business plans and development assistance for small businesses (including cannabis training)
4. Location assistance – for example, give cannabis equity applicants the nextin-line option to lease or own surplus property after affordable housing
5. How to attract investors – for example, provide City of Modesto seed money and cooperative opportunities to invest in equity participants, including location assistance, marketing and branding, and training in grant writing
6. How to qualify for financing – for example, the City of Sacramento provided curriculum on how to create pro formas, how to create an income statement, and how to produce a profit and loss statement
7. Business management and workforce development – for example, the City of Sacramento provided curriculum on human resources, team building and incubator opportunities for hands on training
8. Navigating the permitting/licensing processes – for example, the City of Sacramento provided legal compliance curriculum that covered state and local processes, as well as non-cannabis requirements, such as intellectual property, labor (via the California Department of Food and Agriculture) employee safety (via the California Office of Safety and Health Administration), fire safety, and police security. The City of Modesto should also assist with background checks, as needed.
B. How to maintain compliance – for example, provide City of Modesto real time alerts and hold weekly workshops that are calendared and publicly available via Zoom links, similar to Mendocino County, and are specifically addressed to equity participants to provide updates and answer questions
C. How it advances equity - Removes elements of intimidation and isolation from process of engaging with government organizations – for example, start a City of Modesto public engagement campaign to provide a cannabis business forum that focuses on health and safety, current and pending licenses, locations suitable for commercial cannabis operations (available, affordable and properly zoned), and technical assistance that connects participants to workshops and other mentoring opportunities. #1.
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The City of Modesto should also ensure equity program features include expungement events and background check technical assistance held in disproportionately impacted neighborhoods. These efforts would help to advance equity by reducing obstacles to navigating the expungement process and mitigate one of the chief barriers to entry into the legal cannabis business, as shown in the community profile discussed above.
II. Community Reinvestment - This Assessment provides the City of Modesto with a community profile that strongly indicates the devastating effects that linger to this day in its underserved communities where various data underscores high crime rates, poverty, and elevated risk factors for inability to recover from disasters and maintain business resilience.
The harm caused by the War on Drugs continues to create blight and hurt families in the hardest hit communities. The City of Modesto should allocate resources from its cannabis tax revenues ($5,379,402 in Fiscal Year 2020-2021) and apply for the Type 2 GOBiz Cannabis Equity Grant Program funding (up to $5 million per local equity jurisdiction competing for a total state funding allocation of $15 million in Fiscal Year 2022-2023) available to assist these distressed individuals and neighborhoods identified in the community profile.
A. Who should benefit – individuals who were arrested or convicted and immediate family members who resided for 5 years between 1980 and 2016 in the most marginalized areas, specifically, the 95350, 95351, 95354, and 95355 zip codes, and intend to operate a business anywhere within the city limits. The City of Modesto has discretion to expand the window of eligibility to the current year, and we recommend they do so using the community profile in this Assessment that shows ongoing moderate to high risk factors for inability to recover from disasters and maintain business resilience. Businesses should only be eligible if they prove a minimum of 51% equity ownership.
B. How to access City of Modesto funding - set up documentation requirements that are easy to follow and practical and can be completed on line or in person – for example, during residency in the City of Modesto, show individual or household eligibility to receive government assistance, evidence of arrest, conviction or expungement or immediate family relationship to someone arrested or convicted, and three years of income less than or equal to 60% of the current Area Median Household Income for #1.
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Stanislaus County. Dedicate a staff member to screen completeness of documentation and set up a review committee to confidentially review and verify applicant eligibility.
C. How to measure impacts – for example, establish a baseline number that identifies businesses currently operating, both cannabis and non-cannabis, which would meet the established eligibility criteria compiled from a list of individuals who elect to apply for enrollment in the LCEP started by the City of Modesto.
1. Building on this list, set an overall goal for number of new or expanded cannabis and ancillary businesses with equity ownership of 51% or more that includes individuals who participate in the education and technical training program and add or expand at least 10 business operations by the end of the first three years of the program’s start. Reaching this goal depends entirely on the City of Modesto’s level of commitment to the program, both financial and instructive, and diligent pursuit of business success by the equity participant.
2. Monitor and report regularly on progress towards goal by measuring number of business plans completed, business locations identified through letters of intent, leases or commercial purchasing agreements, number of no interest loans or grants funded, number of full-time or part-time jobs created within the equity zip codes, number of equity participants who are incubated through existing non-equity businesses, and the proceeds from tax revenues generated by the non-equity businesses at 1% of gross revenues and set aside for reinvestment in the 95350, 95351, 95354, and 95355 zip codes.
Provide quarterly and annual reports on these outcomes to the Modesto City Council for consideration of program adjustments, as needed.
III. Access to Capital
A. Identify allowable cannabis finance sources – provide mentoring by a third-party provider on options beyond friends and family, such as state or local grants or no interest loans, benefits provided by tax and fee waivers or deferrals, existing cannabis businesses located anywhere in the State of California, real estate developers or investors.
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B. Identify funding readiness – provide mentoring on valuation and documentation by a third-party provider on how to compile a financial affidavit and how to interpret the current market value of an asset.
C. Provide solutions – engage with equity participants one-on-one through a third-party provider to assess what works and implement practical measures, as warranted.
8.1 Review of Other Jurisdictions’ Efforts to Promote Equity in Cannabis I. Facilitator Approach Example: City of Sacramento – Sac GreenEquity Program facilitated by the Greater Sacramento Urban League with program implementation by The Brenda Davis Law Group:
The facilitator approach has three key components: 1) setting up the eligibility screening process; 2) setting up/delivering curriculum; and 3) following up on measures to ensure business readiness and successful access to opportunities. We recommend the City of Modesto start by adopting very specific documentation requirements that support equity eligibility. For example, in the City of Sacramento, you must qualify under one or more of Classifications I – V as defined in the Cannabis Opportunity Reinvestment and Equity (CORE) program Resolution Number 2018-0323, as noted here https://sacgreenequity.wordpress.com.
This program identifies initial documentation requirements to process an equity application for admission into a cohort for business development training, technical support, and mentoring. Among the options identified, we recommend the following
1. 5 years proof of residence AND 3 years proof of household income for the years 1980--present
2. A copy of your identification and Social Security card (or any documentation that proves your employment eligibility in the United States)
3. A copy of your resume
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4. A copy of your business plan or completion of a business plan concept essay
5. Additional documentation as required to confirm eligibility (e.g., proof of name change due to marriage or any other event)
6. Assist with any expungements and background checks required in Phase 1 of the application process
7. Provide a means to upload all documents to a secure DropBox link Under this approach, a third-party provider would coordinate services via a twelve-week curriculum and certification of eligibility for all equity benefits but would not provide any direct financial assistance to eligible participants. The City of Modesto should administer all benefits, including permit fee waivers and deferrals, priority processing of land use, construction and business applications, community reinvestment via tax waivers, and direct financial assistance made available through GO-Biz funding. The City of Modesto should disburse all grant funding and monitor access to and use of direct financial assistance to equity participants.
II. In-House Approach Example: Humboldt County - Local Cannabis Equity Program:
If the City of Modesto chooses to commit staff resources to coordinate an equity program, Humboldt County provides an available example:
The Humboldt County Administrative Office – Economic Development Team (Economic Development) is authorized to enter into an interagency agreement, on behalf of the county, with qualifying internal or external agencies capable of providing the services described in SB 1294 (the California Cannabis Equity Act), the California Business and Professions Code and the Humboldt County Local Equity Program (LEP) Manual. Humboldt provides small business support services and direct financial assistance to eligible participants through the Project Trellis Local Equity Program V2.1 to help individuals in the local cannabis community enter and succeed in the commercial cannabis marketplace. #1.
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According to the LEP Manual, Humboldt works with the Project Trellis Citizens’ Advisory Committee (formerly Cannabis Micro-Grant and Loan Advisory Committee), which is authorized to promulgate any policies, procedures, and forms necessary for program administration and submit them to the Board of Supervisors for review and approval. Its membership, according to Resolution Number 19-45 (May 28, 2019), as amended by Resolution Numbers 20-33 (April 28, 2020), 21-06 (January 12, 2021), and 21-05 (January 11, 2022), consists of: (9) Nine total. (7) Seven voting members. (1) from each District Appointed by the Supervisor from that District, (2) At-Large (1 representing the cannabis industry and 1 representing an industry that is lateral to the cannabis industry such as finance or banking) and (2) Alternates Appointed by the Board of Supervisors (nonvoting unless needed).
As between the two approaches modeled above, we recommend the third-party facilitator approach to ensure a dedicated set of professionals is available to help the equity participants on a timely basis. The training and mentoring required to assist the populations identified in this Assessment as most in need of this type of program is best provided in an environment where businesses can develop quickly. We further recommend the City of Modesto assign a staff member to serve as the primary program coordinator to work with the third-party provider and expedite the licensing process to get these businesses up and running as soon as reasonably possible.
III. Sample Ordinances and Resolutions
Example 1. Sacramento Cannabis Opportunity Reinvestment and Equity (CORE) program Resolution Number 2018-0323 - establishes eligibility criteria and program benefits - https://www.cityofsacramento.org/City-Manager/Divisions-Programs/CannabisManagement/Core-Program Example 2. Humboldt County - Humboldt County Cannabis Local Equity Program Manual describes equity eligibility and benefits available - https://humboldtgov.org/2159/CommercialMedical-Marijuana-Permitting Example 3. San Diego - provides a comprehensive reference guide to all cannabis requirements and information in one convenient location, including a recently completed #1.
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Equity Assessment Report –
https://www.sandiego.gov/developmentservices/cannabis#equity IV. Comparative Lists of Equity Benefits
The jurisdictions noted below have cannabis equity programs that illustrate the kinds of benefits that could be useful to eligible participants and practical for the City of Modesto to implement.
Figure 15a – List of equity benefits from other states and local jurisdictions presented as examples at the second Community Orientation
This Photo by Unknown Author is licensed under CC BY
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Figure 15b - List of equity benefit factors from other local jurisdictions presented as examples at the second Community Orientation
As illustrated in the discussion above, the menu of options available to the City of Modesto to establish a cannabis equity program is rich and varied. The needs expressed by the community members as related in this analysis should help the city set priorities and funding levels to begin to address the harm caused by the War on Drugs in its most at-risk communities. We recommend the City of Modesto adopt the City of Sacramento Sac GreenEquity program model with the addition of items 1, 2, 3, 10, 11, 16, and 17 listed above in Figure 15a, which, in addition to the Sacramento program amenities, provide:
o exclusive access to permit license types, such as the remaining 2 dispensary licenses plus first right to apply for any of the other 8 if they become available in the next 3 years or any added dispensaries if the current cap of 10 is raised
o reserved rights to apply for up to 10 non-dispensary licenses before the non-equity population can apply for any additional licenses beyond the existing 6 o adopt a ratio of equity to non-equity applicants of 3:1 over a 10-year period from the launch of the first equity business
o professional development opportunities to learn and hone business management skills o assistance with team building and workforce development of managers and employees o reimbursement of startup costs
o networking opportunities, including memberships, mixers, travel assistance with conferences #1.
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o given the need for premises to support cannabis applications before a license can be completed, the City of Modesto should add funding or property for applicants located in areas zoned for such uses
8.2 REFERENCES
Figure 3 - Bureau, U. S. C. (n.d.). US Census. Last accessed on July 10, 2022, from https://data.census.gov/cedsci/profile?g=0600000US0609991980 and https://www.census.gov/quickfacts/fact/table/modestocitycalifornia/PST045221 Modesto, California. (2020). City of Modesto. Last accessed on May 10, 2022, from https://www.city-data.com/city/Modesto-California.html
“City of Modesto Facts and Figures.” City of Modesto, Dept of Census 2019 ACS 1-Year Estimate, 2019, www.modestogov.com/ImageRepository/Document?documentId=11748 “Performing a Community-Based Assessment.” UCLA Center for Health Policy Research. Last accessed on February 1, 2022, from healthpolicy.ucla.edu/programs/healthModesto Junior College This Photo by Unknown Author is licensed under CC BY #1.
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data/trainings/Pages/community-assessment.aspx
“Central Valley California High Intensity Drug Trafficking Area.” Drug Market Analysis 2010, bit.ly/3zQG5vG
U.S. Declares Central Valley a Drug-Trafficking Zone BY ERIC LICHTBLAU.
Last accessed on June 16, 1999, from https://www.latimes.com/archives/la-xpm-1999-jun-16-mn46939-story.html “When the Smoke Clears Report.” Racial Disparities in California’s Marijuana Arrests, Last accessed on June 15, 2022, from regionalchange.ucdavis.edu/sites/g/files/dgvnsk986/files/inlinefiles/When-the-Smoke-Clears_Report_FINAL.pdf 2019 Community Resilience Estimates for Equity and Disasters - Initial Release Date - August 10, 2021
https://experience.arcgis.com/experience/76f53fb6758b49dc87ef47687f9476cf Arrest Information
https://california.staterecords.org/stanislaus/modesto
https://www.scsdonline.com/crime-incident-reports.html
Report Request
https://www.modestogov.com/DocumentCenter/View/151/Request-to-Inspect-Records-PDF?bidId= Census
https://www.census.gov/quickfacts/fact/table/modestocitycalifornia/AGE775220#AGE775220 https://www.city-data.com/city/Modesto-California.html
Survey
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Please visit this survey link to provide your input on this project. https://www.surveymonkey.com/r/BWYDQXL
California Department of Corrections and Rehabilitation Data cdcr.ca.gov
National Association of Colleges and Employers
https://www.naceweb.org/about-us/equity-definition/
Validated Community Assessment Methodology
https://healthpolicy.ucla.edu/programs/health-data/trainings/Pages/community-assessment.aspx
Drug Enforcement Agency Information
https://www.dea.gov/press-releases/2011/10/06/modesto-cornfield-pot-growers-indicted https://search.dea.gov/search?affiliate=justice-dea&sort_by=&query=Modesto%2C+CA+marijuana Figure 3b – Equality Vs. Equity Retrieved October 30, 2022, from https://www.jamestharpe.com/equity/
Figure 4b - Report on drug arrests in California from 1990 to 1999. (n.d.). Retrieved October 27, 2022, from https://oag.ca.gov/sites/all/files/agweb/pdfs/cjsc/publications/misc/drugarrests-fullreport.pdf Figure 5 - Modesto Cannabis Equity Assessment Survey #1 Results, Question #2 https://www.surveymonkey.com/stories/SM-BcXm6234gOEHeproti_2BJWA_3D_3D/ Figure 6 - Modesto Cannabis Equity Assessment Survey #2 Results, Question #8 https://www.surveymonkey.com/stories/SM-enyKNJxoeNAZ7J_2BrpZgb_2Fg_3D_3D/ Figure 10 - Modesto Cannabis Equity Assessment Survey #1 Results, Question #4 https://www.surveymonkey.com/stories/SM-BcXm6234gOEHeproti_2BJWA_3D_3D/ #1.
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Figure 11a - Modesto Cannabis Equity Assessment Survey #1 Results, Question #5 https://www.surveymonkey.com/stories/SM-BcXm6234gOEHeproti_2BJWA_3D_3D/ Figure 12a - Modesto Cannabis Equity Assessment Focus Group Activity Figure 12b - Modesto Cannabis Equity Assessment Focus Group Activity Photographs Figure 13 - Modesto Cannabis Equity Assessment Survey #1 Results, Question #10 https://www.surveymonkey.com/stories/SM-BcXm6234gOEHeproti_2BJWA_3D_3D/ Figure 14 - Modesto Cannabis Equity Assessment Survey #2 Results, Question #12 https://www.surveymonkey.com/stories/SM-enyKNJxoeNAZ7J_2BrpZgb_2Fg_3D_3D/ Police SWAT Team Drug Raid In West Side Modesto, California (Special Weapons & Tactics Team) July 21, 2014, United States Broadcasting https://youtu.be/CD6XZcG3uNg Archive center • Ordinances as Adopted • civicengage. (n.d.). Last accessed on August 31, 2022, from https://www.modestogov.com/Archive.aspx?AMID=64
Archive center • Legislative History • civicengage. (n.d.). Last accessed on October 31, 2022, from https://www.modestogov.com/Archive.aspx?AMID=67
California.ca.gov. (n.d.). Equity Fee Waivers. Department of Cannabis Control. Last accessed on October 31, 2022, from https://cannabis.ca.gov/applicants/equity-fee-waivers Sac GreenEquity. Greater Sacramento Urban League, Facilitator for City of Sacramento Cannabis Opportunity Reinvestment and Equity (CORE) Program via SacGreenEquity. (n.d.). Last accessed on October 31, 2022, from https://sacgreenequity.wordpress.com/ Cannabis Opportunity Reinvestment and Equity (CORE) Program. City of Sacramento (n.d.). Last accessed on August 31, 2022, from https://www.cityofsacramento.org/City-Manager/DivisionsPrograms/Cannabis-Management/Core-Program #1.
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Commercial Marijuana Permitting | Humboldt County, CA - Official Website. (n.d.). Last accessed on August 31, 2022, from https://humboldtgov.org/2159/Commercial-Medical-Marijuana-Permitting The City of San Diego’s Development Services Cannabis Information | - Official Website. (n.d.). Last accessed on October 31, 2022, from https://www.sandiego.gov/developmentservices/cannabis#equity DEA.gov. DEA. (n.d.). Last accessed on October 31, 2022, from https://www.dea.gov/sites/default/files/2021-04/1975-1980_p_39-49.pdf
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Community & Economic
Development Department
P.O. Box 642
Modesto, California 95354
209.577.5267
Modestogov.com
City of Modesto Cannabis Equity Program Policy
The City of Modesto has determined, based on its 2022 Cannabis Equity Assessment, that a cannabis equity program should be adopted which will be dedicated to assisting communities who were subject to criminal law enforcement of cannabis related crimes disproportionately compared to the population at large within the City.
The policies set forth in the following program description will be monitored and subject to change as City Staff continue to develop internal controls and administrative functions to ensure the effective, efficient, and properly controlled distribution of funds to eligible equity applicants.
Applicability of Modesto Municipal Code: All Program participants are subject to the provisions of Modesto Municipal Code Section 10-3.700.
Definitions
a. "Ancillary business” means support business services (e.g., human resources or payroll and call centers).
b. "Applicant” means an individual or business who makes a formal application to be admitted in the Program.
c. "Business” means a firm, organization, association, partnership, business trust, corporation, company, or like entity.
d. "Cannabis Social Enterprise” or "CSE” means a cannabis business in the city that incubates and/or employs Classification 1 participants and uses commercial strategies to maximize improvements in financial, social, and environmental well-being of the disadvantaged community the organization sits in. This may include maximizing social impact alongside profits for external shareholders. CSEs can be structured as a for-profit or non-profit organization and may take the form of a co-operative, mutual organization, a disregarded entity, a social business, a benefit corporation, a community interest company, a company limited by guarantee, or a charity organization. They can also take more conventional structures. Social enterprises have both business goals and social goals. As a result, their social goals are embedded in their objective, which differentiates them from other organizations and corporations. e. "Equity share” means an ordinary share, including a fractional or part ownership in which a shareholder, as a fractional owner, undertakes the maximum entrepreneurial risk associated with a business venture. The holders of such shares are members of the company and have voting rights.
f. "Floor space” means at least 10%, but not less than 800 square feet, of building space. #1.
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g. "Host” means to rent or lease operations-ready building or floor space to a participant that resides in the city district where the cannabis business sits, if any, free of charge for two years, or at a rate of 30% of the market value for four years; and to provide that participant with business or technical assistance.
h. "Immediate family member” means a person in the first, second, or third degree of lineal or collateral kinship as defined in chapter 13 of Part 1 of Division 1 of the California Probate Code. i. "Incubate” means to assist one or more participants that reside in the city district where the cannabis business sits, if any, to enter the cannabis industry by hosting, providing training, technical assistance, and general business guidance. If no such participants exist, participants from other applicable areas shall be utilized.
j. "Incubator” means a cannabis business which as a condition for receiving priority processing, either:
i. Hosts a participant; 30% of its workforce are Classification 1 eligible participants, measured by hours worked; and contracts no less than 51% of its cannabis products or services and ancillary business support with eligible participants; or ii. Is a shared manufacturing cannabis business and donates at least 10% of its hours of operation to allow participant(s) to utilize 100% of its business’ floor space and equipment; or
iii. Is a cannabis business that sells, gives or otherwise transfers no less than a 33% equity share in the Incubator’s cannabis business to eligible participants; 30% of its workforce be Classification 1; and contracts no less than 30% of its cannabis and ancillary business with Classification 1 eligible participants.
k. "Individual” means a person.
l. "Low income household” has the same meaning provided in Modesto Municipal Code section 10-
8.402.
m. "Operations-ready” means a hosted building or floor space that is in compliance with the applicable health and safety laws and regulations and has the appropriate equipment and licensure to lawfully run or conduct any type of cannabis business. n. "Participant” means an individual or a business that has been admitted to participate in the Program.
o. "Priority processing” or "priority” means the City will review cannabis related business or conditional use permit applications or renewals of participants, if any, before any cannabis related business or conditional use application or renewal received by the City that would otherwise be processed on a first come, first served basis.
p. "Sits” means to be engaged in its cannabis business. q. “Direct Technical Assistance” refers to support to help cannabis equity applicants and licensees acquire the knowledge and/or skills necessary in order to gain entry to, and to successfully operate in, the regulated cannabis marketplace. Direct technical assistance includes:
i. One-on-one consulting and training, including direct interactions in group settings, to provide equity applicants and licensees the technical knowledge and expertise necessary to facilitate business ownership and employment in the cannabis industry. ii. Small business support services, professional mentorship services, training and education #1.
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regarding state cannabis licensing and regulatory requirements, manufacturing assistance, financial management, and business resilience such as emergency preparedness.
Applications
1. In addition to the information required per city code section 10-3.704 an applicant shall also provide the following with its application for the Program, in addition to any other documentation that the City deems necessary to determine the applicant’s eligibility:
a. Proof of Income: Proof of income shall be supported with federal and state tax returns and at least one of the following documents from the last five (5) years: two months of pay stubs; proof of current eligibility for General Assistance, food stamps, Medi-Cal/CalWORKS, supplemental security income, or social security disability, or similar documentation. b. Proof of residency: Proof of residency shall be supported by a minimum of two of the following documents: California driver’s or identification card records, property tax billings and payments, signed rental agreement, verified copies of state or federal tax returns with an address in the geographic area of the City of Modesto, school records, medical records, banking records, Housing Authority records, or utility, cable, or internet company billing and payment records. c. Proof of arrest or conviction of a cannabis related crime: Proof of an arrest or conviction of a cannabis related crime shall be demonstrated by federal or state court records indicating the disposition of the criminal matter, records expungement documentation, or any other applicable law enforcement record.
2. Individual
a. Must be lawfully able to work in the United States;
b. Twenty-one (21) years of age or older;
3. Business
1. A description of the statutory entity or business form that will serve as the legal structure for the applicant and a copy of its formation and organizing documents, including, but not limited to, articles of incorporation, certificate of amendment, statement of information, articles of association, bylaws, partnership agreement, operating agreement and fictitious business name statement.
4. A statement dated and signed by the applicant, under penalty, affirming that the applicant meets the program eligibility requirements as applicable to the particular applicant.
Review Process
City Staff or qualified consultants, as designated by the City Manager, shall review and approve all program applications that meet the eligibility requirements described herein.
Eligibility for Equity Assistance Program
A. Classification 1: To be eligible for the Equity Assistance Program as an equity employee, an individual shall satisfy the following criteria:
1. Be a natural person; and
2. Be a current or former resident of the City of Modesto who previously resided or currently resides in a low-income household and was either: a) arrested or convicted for a cannabis #1.
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related crime in Modesto between the years 1980 and 2011; or is b) an immediate family member of an individual convicted for a cannabis related crime during that same period; and
3. The individual satisfies the following criteria:
a. Has lived for at least five (5) years, between the years of 1980 and 2011 in the following zip codes: 95355, 95354, 95350,95351; and one of the following:
b. Was arrested or convicted for a crime relating to the sale, possession, use, or cultivation of cannabis in California, excluding those offenses which would be disqualifying for cannabis licensure under current State law; or
c. Had a parent, guardian, child, or sibling convicted of a crime relating to the sale, possession, use, or cultivation of cannabis in California, excluding those offenses which would be disqualifying for cannabis licensure under current State law.
B. Classification 2: To be eligible for the Equity Assistance Program as an equity business owner, an individual shall satisfy the following criteria:
1. Be a natural person; and
2. In the year prior to submitting the application to be an equity business owner, the individual resided in a household with an income at or below 80% of the Area Median Income for Modesto; and
3. Holds a minimum of fifty-one percent (51%) or more ownership of the entity applying for a Cannabis Business Registration as an Equity Business Owner; and
4. Has lived for at least five years in one of the following zip codes: 95355, 95354, 95350, 95351; and
5. Already operates or intends to operate a commercial cannabis business in one of the previously mentioned zip codes within the incorporated limits of the City of Modesto
6. Meets one of the following criteria:
a. Has worked in the cannabis industry in Modesto for at least two years between 1996 and the present; or
b. Was arrested or convicted for a crime relating to the sale, possession, use, or cultivation of cannabis in California, excluding those offenses which would be disqualifying for cannabis licensure under current State law; or
c. Had a parent, guardian, child, or sibling convicted of a crime relating to the sale, possession, use, or cultivation of cannabis in the California, excluding those offenses which would be disqualifying for cannabis licensure under current State law; or C. Classification 3: A Cannabis Social Enterprise with not less than 51% ownership by individuals meeting the Classification 1 criteria.
Assistance Available to Equity Employees and Equity Business Owners Individuals applying as equity employees at a Cannabis Business or applying for a Cannabis Business Registration as an equity business owner or a Cannabis Social Enterprise applicant, may be eligible to receive benefits including but not limited to technical assistance, priority application processing, training for prospective employees, and other services dependent upon funding. #1.
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Regulations for Equity Assistance Program
The City Manager shall promulgate regulations further establishing an application process and procedures for the Equity Assistance Program. Such regulations may include but are not limited to eligibility verification procedures and registration requirements.
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