City of Sacramento
City Council Report
915 I Street, 1st Floor
Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-01429 9/6/2022 Consent Item 6.
Resolution Reestablishing the Cannabis Opportunity Reinvestment and Equity (CORE) Program with a Sunset Date of April 9, 2024
File ID: 2022-01429
Location: Citywide
Recommendation: Adopt a Resolution reestablishing the Cannabis Opportunity Reinvestment and Equity (CORE) Program with a sunset date of April 9, 2024.
Contact: Davina Smith, Cannabis Manager, (916) 808-4772, [email protected]; Zarah Cruz, Program Specialist, (916) 808-8925, [email protected], Office of Cannabis Management, Office of the City Manager
Presenter: None
Attachments:
1-Description/Analysis
2-Resolution
Description/Analysis
Issue Detail: To be eligible for cannabis equity grant funding from the State, the City must have a cannabis equity program. The City Council (Council) is asked to reestablish the City’s cannabis equity program for an additional two-year term to enable the City to apply for these grants for the next funding cycles. Cannabis equity grants from the State are used to provide capital to equity members to start a regulated cannabis business.
On November 28, 2017, the Council authorized the development of a social equity program for the City’s cannabis business licensing program and directed staff to return with a resolution adopting the program.
On August 9, 2018, Council adopted a resolution establishing the Cannabis Opportunity City of Sacramento Page 1 of 4
File ID: 2022-01429 9/6/2022 Consent Item 6.
Reinvestment and Equity program (CORE), a two-year pilot program aimed at removing or reducing the barriers to entry into the cannabis industry by persons that were impacted by the disproportionate enforcement of cannabis-related crimes. The program was developed based on the results of an equity study which compared cannabis-related enforcement data between 1980 and 2011 against various demographic groups.
The CORE resolution provided that individuals and their immediate family members could qualify for CORE program benefits if they lived in a low-income household and had a cannabis-related arrest between 1980 and 2011 or if they resided in an identified community impacted by the War on Drugs for at least five years between 1980 and 2011. Cannabis business incubators and businesses with at least 51% CORE membership could also qualify for CORE benefits.
CORE program benefits are intended to reduce the barriers of entry into the regulated cannabis industry and include a waiver of Business Operating Permit (BOP) fees for participants in the program; expedited permit processing; eligibility for grants and no-interest loans, and small business support and mentoring. A contracted program facilitator currently provides these small business support and mentoring services which include business plan development, cannabis-specific education and training, coaching on access to capital and loan readiness, fiscal management, regulatory compliance, and legal and technical information required in starting a cannabis business.
The pilot program was originally scheduled to sunset on August 9, 2020. But because the contracts for the program facilitators were valid until April 9, 2021, Council approved resolution 2020-0141 extending the sunset date of the program to coincide with the termination of the contracts. On April 20, 2021, staff sought direction from the Law and Legislation Committee (Committee) on whether to make CORE a permanent program or to extend the pilot program. Due to concerns over funding a permanent program at that time in the Pandemic, the Committee recommended that the pilot program be extended for a year. On May 18, 2021, Council approved Resolution No. 2021-0131 extending the CORE program to April 9, 2022.
Staff is recommending that the program be extended for a period of approximately two years. The attached resolution will reestablish the program with a sunset date of April 9, 2024. (Attachment 2).
Although the CORE resolution provided that benefits continue to be available to participants even after the program expires, an expired program may limit the ability of the City to apply for State cannabis equity grants. These grants are currently CORE program participants’ only source of financial assistance for regulated cannabis business start-up costs.
Since the program’s inception, the City has received over $11 million in grants from the State to benefit the CORE program’s participants. These grants include $1.12 million from the then Bureau of Cannabis Control (BCC) and $3.88 million from the Governor’s Office of Business and Economic Development (Go-Biz) in 2020; $1.81 million from Go-Biz for funding year 2021; and another $4.34 million for funding year 2022. Through these grants the City was able to implement:
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File ID: 2022-01429 9/6/2022 Consent Item 6.
· a reimbursement program, which benefitted close to 50 CORE businesses; · a 6-year interest-free revolving loan program, which has so far issued loans to more than 50 CORE participants;
· a grant program which funded 13.5 grantees of $125,000 and 30 smaller loans of $5,000 each; and
· the 2022 grant funding will be allocated towards two types of grants, one being competitive grants for larger projects and the other a more targeted grant specific to a business’ phase in development.
The State grants have provided a crucial source of direct financial assistance to applicants. With the help of these grants, more than 30 CORE-owned businesses are now operational with 41 businesses going through the BOP process.
Policy Considerations: An expired CORE program may limit the ability of the City to qualify for State grants, which is currently the only source of direct funding to CORE participants for cannabis business start-up costs. The Council is asked to approve the resolution reestablishing the program for another two years, with the new program expiration date set for April 9, 2024.
Economic Impacts: None.
Environmental Considerations:
California Environmental Quality Act (CEQA): This action is exempt from California Environmental Quality Act (“CEQA”) because it is the adoption of an ordinance, rule, or regulation that requires discretionary review, including environmental review, and approval of permits, licenses, or other authorizations to engage in commercial cannabis activity (CEQA Guidelines § 15061(B)(1), Bus. and Prof. Code § 26055(h)) and because it does not have the potential for causing a significant effect on the environment (CEQA Guidelines §15061(b)(3)).
Sustainability: Not applicable.
Commission/Committee Action: Not applicable.
Rationale for Recommendation: To be eligible for cannabis equity grant funding from the State, the City must have a cannabis equity program. Since 2019, the City has received over $11 million in State grant funds for CORE program participants. By reestablishing the City’s cannabis equity program for an additional two-year term, the City can apply for State grants for the next funding cycles.
Financial Considerations: Funding for CORE programming will be provided to the extent possible City of Sacramento Page 3 of 4
File ID: 2022-01429 9/6/2022 Consent Item 6.
within existing resources and future State grant funding.
Local Business Enterprise (LBE): Not applicable.
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RESOLUTION NO. 2022-
Adopted by the Sacramento City Council
[date adopted]
Reestablishing the Cannabis Opportunity Reinvestment and Equity (“CORE”) Program with a Sunset Date of April 9, 2024
BACKGROUND
A. On August 9, 2018, the City Council established the Cannabis Opportunity Reinvestment and Equity (“CORE”) Program (the “Program”), a two-year pilot program designed to reduce the barriers of entry into the cannabis industry by persons who were negatively impacted by the disproportionate enforcement of cannabis crimes in Sacramento. (Resolution Nos. 2018-0323 and 2020-0141.)
B. On May 19, 2020, the City Council extended the Program to account for the required procurement process to acquire vendors to facilitate the Program. (Resolution No. 2020-0141.) On May 18, 2021, the Council reestablished the Program for one-year to allow for the Office of Cannabis Management to commission a comprehensive study, to evaluate of the Program and potential funding resources. The Program’s sunset date was April 9, 2022. (Resolution No. 2021-0131.) The equity study is now underway and any appropriate recommendations from the study will be taken into consideration in efforts to make the Program permanent with a permanent funding source.
C. Since the inception of the Program, over 300 individuals have completed the Program and 30 CORE-owned businesses have received a cannabis business operating permit (“BOP”), while at least 41 businesses are currently going through the permit application process.
D. Over the last three years, the CORE Program has also received close to $10 million in grant funds from the California Department of Cannabis Control and the Governor’s Office of Economic Development (Go-Biz) which covered the funding for the Program’s business start-up expense reimbursement program, a 6-year zero-interest revolving loan program, and a large grant and a small grant program.
E. The Office of Cannabis Management believes the Program’s benefits may be expanded to meet more specific needs of CORE Program participants, including evolving its business training program. The State has additional grant opportunities for municipalities with cannabis equity programs. The Program must be reestablished in order for the City to apply for these grant opportunities.
BASED ON THE FACTS SET FORTH IN THE BACKGROUND, THE CITY COUNCIL RESOLVES AS FOLLOWS:
Section 1. Notwithstanding any language to the contrary in Resolutions 2018-0323 and 2020-0141, 2021-0131 and their exhibits, the pilot CORE Program is extended for a period of two years and will sunset on April 9, 2024, barring further action by the City Council.