Community & Economic Development Committee
October 27, 2026
AGENDA REPORT
TO: Elizabeth Lake FROM: Ashleigh Kanat
Interim City Administrator Director, Department of
Economic and Workforce
Development
SUBJECT: BSCC Proposition 64 Cohort 4
Grant
DATE: October 12, 2026
City Administrator Approval Date:
RECOMMENDATION
Staff Recommends That The City Council Adopt A Resolution Authorizing The City Administrator To: (1) Apply For, Accept, And Appropriate A Grant In An Amount Not To Exceed Four Million, Five Hundred Thousand Dollars ($4,500,000) In State Of California, Board of State and Community Corrections (BSCC); Proposition 64 Public Health and Safety (Prop 64) Grant Program Funds; And (2) Expend And Administer The Prop 64 Grant By: (A) Assisting The City of Oakland’s Capacity To Conduct Public Safety Operations And Coordinated Enforcement Of Illicit Cannabis Activities, Including Unlicensed Cultivation, Manufacturing, Distribution, and Retail; And (B) Enabling Equipment Purchases, Covering Overtime Staffing Costs, And Providing Funding For Other Related Administrative Costs Over A Five (5) Year Period Beginning July 1, 2026 And Ending June 30, 2031.
EXECUTIVE SUMMARY
In November 2016 California voters approved Proposition 64, the Control, Regulate, and Tax Adult Use of Marijuana Act (AUMA), which legalized the recreational use of cannabis in California for people aged 21 and older. Proposition 64 also directed a portion of state cannabis tax revenue towards a grant program administered by the Board of State and Community Corrections (BSCC) to assist with law enforcement or other local programs addressing public health and safety associated with AUMA. In the fall of 2025, the BSCC released a Request for Proposals (RFP) for Proposition 64 Public Health and Safety Grant Program Cohort Four, which offered a maximum of $4.5 million in grant funding over five years per midsize local jurisdiction.
In March 2026, City of Oakland (City) staff submitted a grant proposal to the BSCC requesting funding to (i) support a safe and equitable regulated cannabis marketplace by expanding the City of Oakland’s capacity to conduct coordinated enforcement and public safety operations and Elizabeth Lake (Oct 15, 2026 15:56:57 PDT)
Oct 15, 2026
Elizabeth Lake, Interim City Administrator
Subject: BSCC Proposition 64 Cohort 4 Grant
Date: September 29, 2026 Page 2
Community & Economic Development Committee
October 27, 2026
(ii) enable equipment purchases and cover staffing costs to support cross departmental code enforcement operations, targeting illicit cannabis activities reported in parks, school zones, smoke shops, commercial corridors, industrial warehouses, and abandoned properties across all districts in Oakland. These efforts will support a safe and equitably regulated marketplace, allowing licensed operators to not just survive but thrive by protecting legitimate businesses, preserving commercial-corridor vitality, promoting compliance, and ensuring a level playing field for legal cannabis businesses. In June 2026 the BSCC approved the City of Oakland’s grant application. Adoption of this proposed Resolution will authorize the City Administrator to accept and appropriate $4.5 million in funding from the BSCC to implement this work.
BACKGROUND / LEGISLATIVE HISTORY
Oakland’s Cannabis Regulatory History
The City has been a leader in regulating cannabis. In 2004, following the federal closure of the Oakland Cannabis Buyers Club, the city’s initial medical cannabis provider under Oakland Municipal Code (OMC) 8.46, the City enacted OMC 5.80, which established the nation’s first permitting process for medical cannabis dispensaries. In 2011 the City expanded the number of available dispensary permits from four to eight and attempted to establish a permitting process for the cultivation of medical cannabis under OMC 5.81, however, threats of federal intervention and the lack of comprehensive state law prevented implementation of OMC 5.81.
Oakland Examines Equity Within Cannabis Industry
In anticipation of state legalization of the cannabis industry’s supply chain and the adult use of cannabis, in 2015 and 2016, the City began exploring approaches to legalizing the cannabis industry within Oakland. Discussions at the City Council centered around one question: Who benefits from cannabis legalization? This inquiry led the City Council in the fall of 2016 to adopt the goal of promoting equitable ownership and employment opportunities in the cannabis industry to address the disproportionate impacts of the war on drugs in marginalized communities of color and to direct the City Administration to conduct a race and equity analysis of proposed medical cannabis regulations. Oakland’s pioneering race and equity analysis of the cannabis industry and creation of an Equity Program inspired jurisdictions across the country to pursue and support similar programs. In 2019 the State of California began setting aside annual grant funding to support local jurisdictions’ cannabis equity programs.
Proposition 64 Public Health and Safety Grant Program
California voters established the Proposition 64 Public Health and Safety Grant Program through the passage of Proposition 64. Proposition 64 directs a portion of state tax revenue generated from the cultivation and retail sale of cannabis and cannabis products towards grant programs to mitigate the impacts resulting from the legalization of recreational cannabis.
Specifically, the Revenue and Taxation Code directs the BSCC to make grants to local governments to assist with law enforcement, fire protection, or other local programs addressing public health and safety associated with the implementation of the AUMA.
Elizabeth Lake, Interim City Administrator
Subject: BSCC Proposition 64 Cohort 4 Grant
Date: September 29, 2026 Page 3
Community & Economic Development Committee
October 27, 2026
In 2023 the City Council approved receipt of a five-year $3,000,000 Proposition 64 Cohort 3 Grant from the BSCC via Resolution No. 89791 CMS. The Proposition 64 Cohort 3 Grant provided resources for (i) onsite security grants for cannabis operators, (ii) an adult public awareness campaign to support equity businesses, and (iii) funding for a grant evaluator.
The California Cannabis Market Outlook (DCC, March 2025)1 cited the primary challenges in the cannabis industry as being high taxes, fees, and compliance costs; declining wholesale prices since 2020; some business consolidations or exits; competition from illicit cannabinoid products; and federal restrictions limiting financing. The 2025 Governor’s report on the Condition and Health of the Cannabis Industry in California cites that “Continuing to move a greater share of consumers away from illicit sources and into the licensed market is critically important, because cannabis purchased from illicit sources poses serious public health and safety risks.”2
ANALYSIS AND POLICY ALTERNATIVES
Proposition 64 established a legal market for the adult use of cannabis that features a mountain of obstacles for licensed operators to overcome. From high taxation, federal restrictions on banking and tax deductions, and competition with the unregulated market, licensed cannabis operators have struggled to succeed in the regulated marketplace.
Between 2022 and 2026, Oakland’s illicit cannabis market has generated measurable impacts across public safety, violence, health, and economic domains. Illegal indoor cultivation sites, often operating in warehouses and residential structures, have been linked to structure fires caused by unsafe electrical systems, hazardous materials, and unpermitted modifications.
Several multi-alarm fires during this period required extensive emergency response and posed risks to residents, first responders, and surrounding infrastructure.
Other significant consequences are economic: the illicit cannabis market operates as a highvalue parallel and competitive system that evades taxation and regulatory compliance, undermining licensed operators and distorting markets. The result is revenue loss, reduced public resources, additional fiscal burdens from fire suppression and law enforcement response, environmental remediation costs, and administrative enforcement actions. There is a gap in staffing resources available to counter illicit cannabis activity. The lack of resources focused on enforcement allows illicit operations the ability to operate in potentially unsafe and compromised conditions, subjecting surrounding communities to unnecessary risks associated with unpermitted cannabis operations. Community and commercial corridors are impacted by violence, crime and homicide while the stability of the regulated cannabis market is 1 California Cannabis Market Outlook. (2025, March 3). Department of Cannabis Control. https://www.cannabis.ca.gov/posts/california-cannabis-market-outlook/ 2 Gavin Newsom, Tomiquia Moss, & Nicole Elliott. (2025). Health of the cannabis industry in California (pp. 1–5). https://cdn.cannabis.ca.gov/wp-content/uploads/sites/2/2025/03/Report-on-the-Condition-andHealth-of-the-Cannabis-Industry-FNL-03.06.25.pdf Elizabeth Lake, Interim City Administrator
Subject: BSCC Proposition 64 Cohort 4 Grant
Date: September 29, 2026 Page 4
Community & Economic Development Committee
October 27, 2026
compromised with the continuing influx of illicit cannabis activity. In the event the City does not accept the grant, departmental coordination will remain limited to current levels and presents a risk of increased illicit cannabis operations.
Use of Grant Proceeds
Proposition 64 Cohort Four grant award will be committed to protecting legitimate businesses, preserving commercial-corridor vitality, promoting compliance, and ensuring a level playing field for legal cannabis businesses by increasing enforcement efforts countering illicit cannabis operations. This will be done through a combination of increased Special Activity Permits Division (SAPD) staffing, and access to funds to cover overtime for the Fire Prevention Bureau (FPB) and the Oakland Police Department (OPD). Funds will be used for procuring equipment and supplies and enabling improvements to technology and data systems to support legislative and administrative demands of enforcement. Cross departmental operations and will be coordinated to support identifying illicit activity and conducting investigations with the intent of disrupting and deterring illicit commercial cannabis operations in Oakland. This work can only be advanced through the expansion of SAPD inspector staff, administrative staff and the ability to cover overtime costs for partnering City departments.
For reporting purposes and fiscal accountability, funding for a Grant Evaluator and Auditor has been included in the proposed budget. The City of Oakland will select a third-party evaluator through a Request for Proposal (RFP) process at the end of the Fiscal Year 2026-2027 who will lead the evaluation of the City of Oakland’s Proposition 64 Cohort 4 project. This will ensure a neutral third party is in place to evaluate and audit the project. The City of Oakland’s Proposition 64 Cohort 4 Grant Budget specifically allocates funding for the third-party evaluator and auditor to carry out their respective assignments.
The Evaluator will track the effectiveness of enforcement operations and maintain administrative records such as police reports of crime related to illicit cannabis businesses and monthly impact statements from business improvement districts, community groups, City Council, and the Cannabis Regulatory Commission. By comparing cannabis related crime data and evaluating the increase or decrease in legal cannabis operations through application tracking and surveys, the City will be able to determine if and how the BSCC Cohort 4 funded enforcement measures deter illicit cannabis activity, defining where and how to continue making public safety investments to meet our goals.
Proposition 64 Cohort 4 Grant offers an opportunity for the City of Oakland to support personnel and staffing needs by providing dedicated enforcement teams, analytical intelligence functions, essential equipment, enforcement vehicles, and evidence storage capacity. Investments in technology and data systems, including completing an Accela inspector module, will enhance case management, hotspot identification, and interagency coordination.
Resources will also support legal and administrative actions such as citations, hearings, permit revocations, civil enforcement, and contracted legal services. Together, these investments will improve enforcement effectiveness, strengthen regulatory oversight, and mitigate the sustained public safety, health, and economic risks posed by illicit cannabis operations.
The Department of Cannabis Control (DCC) recently sunset issuance of state issued provisional licenses requiring all operators obtain their annual state licenses to remain in compliance. The Elizabeth Lake, Interim City Administrator
Subject: BSCC Proposition 64 Cohort 4 Grant
Date: September 29, 2026 Page 5
Community & Economic Development Committee
October 27, 2026
City of Oakland has made efforts over the past three years to connect with operators holding provisional licenses and encourage them to gain their annual state license as quickly as possible. SAPD continues to check if businesses with lapsed permits, abandoned applications and revoked licenses or suspended licenses are operational but lack adequate staff to perform comprehensive follow up on non-responsive businesses. The cannabis industry experienced a boom in recent years but has declined rapidly producing an uncertain market and increasing costs to operate legally.
With the support of the grant funding SAPD will be able to make a concentrated effort to increase the jurisdiction’s ability to prevent and respond to reports of illegal cannabis activity.
Through review, research and additional site visits to verify the legality of operations, the opportunity to address illicit sales taking place in local parks, business corridors, industrial zones, near schools and within unpermitted special events will be possible.
Table 1 offers a summary of the proposed uses of Proposition 64 Cohort 4 Grant funds and the level of funding proposed for each use.
Table 1: Proposed Use of Proposition 64 Cohort Four Grant Funds for Labor For Fiscal Years (FY) 2026-2031
Uses Year 1
FY 26-27
Year 2
FY 27-28
Year 3
FY 28-29
Year 4
FY 29-30
Year 5
FY 30-31
TOTAL
Police Officer OT $231,420 $233,074 $231,668 $228,874 $211,988 $1,137,024 SAPD Inspector,
Sup $158,032 $161,193 $164,417 $167,705 $171,059 $822,406 SAPD Inspector $152,884 $155,942 $159,061 $162,242 $165,487 $795,616 Program Analyst II $117,383 $119,730 $122,125 $124,568 $127,059 $610,865 Fire Inspector
Supervisor OT $184,624 $185,498 $183,458 $180,090 $181,299 $914,969 $4,280,880
A grant supported Supervising Inspector will be tasked with coordinating interdepartmental operations that may also interface with exterior state agencies engaged in illicit cannabis law enforcement. The grant will support 50% of the Supervisor’s concentrated focus on these operations to ensure that enforcement is consistent, well planned, effective and referrals are followed up with acute attention. Overtime allowance supported by this grant will provide incentive to enlist OPD sworn officers and FPB personnel in consistent, safe and well-staffed enforcement operations. The proposed project looks to eliminate existing gaps in enforcement, increase ability to organize state and City collaborations and help alleviate the burden of funding resources available to support staff.
Elizabeth Lake, Interim City Administrator
Subject: BSCC Proposition 64 Cohort 4 Grant
Date: September 29, 2026 Page 6
Community & Economic Development Committee
October 27, 2026
RELATED PLANNING EFFORTS
The project relates to the Oakland Strategic Plan and the Economic Development Action Plan.
Oakland Strategic Plan: The proposed use of Proposition 64 Cohort 4 funds directly supports the City of Oakland's FY 2025–2028 Citywide Strategic Plan by strengthening operational capacity, improving cross-departmental coordination, optimizing workforce resources, and enhancing the City's ability to use technology and data to deliver core regulatory and publicsafety services. The proposed expansion of SAPD inspection and administrative capacity, combined with overtime resources for participating departments, will address existing operational constraints and enable coordinated enforcement activities involving SAPD, the Fire Prevention Bureau, and the Oakland Police Department. Investments in equipment, technology, and data systems will further improve information sharing, investigative coordination, and the City's ability to identify and respond to illicit commercial cannabis activity. The project therefore represents a concrete implementation of the Strategic Plan's emphasis on streamlined operations, cross-departmental collaboration, workforce optimization, and alignment of resources with citywide priorities.
Economic Development Action Plan: The proposed BSCC Cohort 4 investment supports Oakland's 2025–2029 Economic Development Action Plan by strengthening the City's capacity to maintain a fair, predictable, and functional regulated cannabis marketplace. Expanded SAPD inspection and administrative capacity, together with coordinated enforcement involving FPB and OPD, will improve the City's ability to identify illicit commercial cannabis activity, promote compliance, and protect legitimate cannabis businesses from unfair competition. The proposal also supports EDAP's goals of sustaining and supporting businesses and investing in places by addressing activities that can undermine neighborhood commercial corridors, business vitality, and community well-being. Investments in technology, data systems, and interdepartmental coordination will further improve the City's ability to provide consistent regulatory oversight and make data-informed decisions. The proposal is particularly aligned with EDAP's equity-centered approach because effective enforcement helps ensure that compliant businesses, including small and cannabis-equity businesses, are not disadvantaged by operators that avoid licensing, permitting, safety, and other regulatory requirements. Oakland's existing budget commitment to expanding SAPD inspection capacity further demonstrates that strengthening cannabis regulatory and enforcement capacity is consistent with the City's economic-development priorities.
FISCAL IMPACT
Acceptance and appropriation of the Proposition 64 Cohort Four grant of $4,500,000 will not supplant but will supplement existing resources and enable EWDD City staff to initiate new projects in collaboration with other City departments over the next five years to support the growth of the legal cannabis market through enforcement of illicit cannabis operations. There is no matching fund requirement for this grant.
Elizabeth Lake, Interim City Administrator
Subject: BSCC Proposition 64 Cohort 4 Grant
Date: September 29, 2026 Page 7
Community & Economic Development Committee
October 27, 2026
Proposition 64 Cohort Four grant funds will be received on a grant reimbursement schedule.
Reports and receipts will be submitted quarterly, grant funds will be released accordingly then deposited in the State of California Other Fund (2159), Cannabis Organization (85621), Administration Program (IP03) in a Project to be determined or created (TBD).
PUBLIC OUTREACH / INTEREST
Prior to submission of the Proposition 64 Cohort 4 grant application, SAPD engage the Cannabis Regulatory Commission, key cannabis industry, equity, community, business, and stakeholders to solicit input regarding the proposed enforcement strategy. Engagement focused on identifying the impacts of illicit commercial cannabis activity, barriers to compliance, enforcement and inspection capacity needs, equity considerations, and opportunities to protect legitimate cannabis businesses and affected communities. Feedback received through this process has been used to refine the proposed scope, activities, performance measures, and implementation strategy.
COORDINATION
The project was coordinated with input on a cross-departmental enforcement model led by SAPD and supported by OPD, FPB, Planning and Building, Public Works, the City Administrator, and other appropriate City departments. Coordination included regular casereview meetings, standardized referrals, shared data and case-management practices, and joint inspections and enforcement operations. This structure will enable the City to more efficiently identify illicit commercial cannabis activity, leverage specialized departmental expertise, coordinate appropriate responses to complaints and, and maximize the impact of Proposition 64 Cohort 4 resources. The model will also strengthen long-term institutional capacity by establishing consistent processes for interdepartmental communication, data sharing, and coordinated enforcement.
PAST PERFORMANCE, EVALUATION AND FOLLOW-UP
The third-party evaluator will independently assess the implementation, effectiveness, and outcomes of the Proposition 64 Cohort 4 project. Evaluation activities will include establishing baseline measures, monitoring project performance, assessing interdepartmental coordination and enforcement activities, analyzing the impact of expanded staffing and resources, and evaluating improvements in technology and data systems. The evaluator will also assess equity and community impacts and identify successes, challenges, and opportunities for improvement.
Findings will be used to demonstrate grant effectiveness, support accountability and reporting requirements, and inform the City's future illicit cannabis enforcement and regulatory strategies.
Elizabeth Lake, Interim City Administrator
Subject: BSCC Proposition 64 Cohort 4 Grant
Date: September 29, 2026 Page 8
Community & Economic Development Committee
October 27, 2026
RACE AND EQUITY
The Department of Race and Equity will serve as an equity advisor throughout project implementation, providing guidance to ensure that Proposition 64 Cohort 4 activities are consistent with the City's racial equity principles. DRE will support the development of equityfocused performance measures, review data and enforcement outcomes for potential disparities, advise on community and cannabis-equity stakeholder engagement, and help identify and address unintended impacts. DRE's involvement will help ensure that enforcement is data-driven, equitable, transparent, and responsive to communities disproportionately affected by cannabis prohibition and enforcement.
ACTION REQUESTED OF THE CITY COUNCIL
Staff Recommends That The City Council adopt a resolution authorizing the City Administrator to (1) apply for, accept, and appropriate the grant in an amount no to exceed four million five hundred thousand dollars ($4,500,000) in the State of California, Board of State and Community Corrections (BSCC); Proposition 64 Public Health and Safety (Prop 64) Grant Program and (2) expand and administer the Prop 64 Grant: by (A) assisting the City of Oakland’s capacity to conduct public safety operations and coordinated enforcement of illicit cannabis activities, including unlicensed cultivation, manufacturing, distribution, and retail and (B) enabling equipment purchases, covering overtime staffing costs, and providing funding for other related administrative costs over a five(5) year period beginning July 1, 2026 and ending June 30, 2031.
Elizabeth Lake, Interim City Administrator
Subject: BSCC Proposition 64 Cohort 4 Grant
Date: September 29, 2026 Page 9
Community & Economic Development Committee
October 27, 2026
For questions regarding this report, please contact Kat Torio, Program Manager, at (510)238- 4948 or [email protected].
Respectfully submitted,
Ashleigh Kanat (Oct 15, 2026 10:54:01 PDT)
Ashleigh Kanat
Director, EWDD
Prepared by:
Kat Torio, Division Manager
Special Activities Permitting Division
Attachments (1):
A: Proposition 64 Cohort Four Budget