Santa Monica City Council
September 9, 2025

1 City Council Meeting: September 9, 2025 Santa Monica, California RESOLUTION NUMBER _________ (CCS)
(City Council Series)

AN RESOLUTION OF THE CITY COUNCIL OF THE CITY OF

SANTA MONICA ADOPTING THE CITY OF SANTA MONICA CANNABIS EQUITY

ASSESSMENT AND PROGRAM MANUAL
WHEREAS, the City of Santa Monica supports the development of a local cannabis equity program; and
WHEREAS, on April 23, 2024, Council authorized staff to conduct a cannabis equity assessment and develop a local equity program; and WHEREAS, staff conducted and prepared the attached Cannabis Equity Assessment to identify communities that have been disproportionally impacted by the enforcement of cannabis-related laws and crimes within the City of Santa Monica, a copy of which is attached to this Resolution as Exhibit A; and WHEREAS, assessment findings were used to inform the creation of the Cannabis Equity Program (“Program”), a copy of which is attached to this Resolution as Exhibit B; and
WHEREAS, the Program aims to recognize and address the ongoing negative social impact associated with the disproportionate enforcement of cannabis policies on certain communities in the City; and
WHEREAS, long-term impacts from the criminalization of cannabis include social stigma of criminal conviction and incarceration, family and community disintegration, permanent loss of property, disqualification from employment opportunities, reduced 2 earnings potential, exclusion from public benefits, and inability to vote in public elections; and
WHEREAS, the Program implements a focused and equitable program that balances access, oversight, and community benefit; and
WHEREAS, the Program’s elements respond directly to the City’s scale, market conditions, and resources while aligning with the broader goals of social equity, community reinvestment, and local economic inclusion, with the goal of creating a lean, high-impact program that delivers meaningful benefits to those disproportionately affected by cannabis enforcement while remaining practical and sustainable; and WHEREAS, the City Council has determined that grant funds from the Governor’s Office of Business and Economic Development are available and can be used to assist local equity applicants and licensees throughout local equity program for commercial cannabis activity as described in its application for grant funds.

NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA MONICA DOES HEREBY ORDAIN AS FOLLOWS:

SECTION 1. The City Council of the City of Santa Monica hereby adopts the City of Santa Monica Cannabis Equity Assessment, as set forth in Exhibit A.

SECTION 2. The City Council of the City of Santa Monica adopts the City of Santa Monica Cannabis Equity Program Manual, as set forth in Exhibit B.

SECTION 3. The City will continue to evaluate the Program to address any disparate, negative impacts of cannabis-related regulation and enforcement in the City of Santa Monica.
3 SECTION 4. The City Clerk shall certify to the adoption of this Resolution, and thenceforth and thereafter, the same shall be in full force and effect.

APPROVED AS TO FORM:
_________________________
Heidi von Tongeln, Interim City Attorney

EXHIBIT A

CANNABIS EQUITY ASSESSMENT

CITY OF SANTA MONICA
Cannabis Equity Assessment
July 2025
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Acknowledgements
The City of Santa Monica extends its sincerest appreciation to the following individuals and entities whose contribution has made the creation of the Cannabis Equity Assessment possible:

City Council
Lana Negrete, Mayor
Caroline Torosis, Mayor Pro Tem
Jesse Zwick, Councilmember
Dan Hall, Councilmember
Ellis Raskin, Councilmember
Barry Snell, Councilmember
Natalya Zernitskaya, Councilmember
Phil Brock, Councilmember (2024)
Oscar de la Torre, Councilmember (2024)
Christine Parra, Councilmember (2024)
Gleam Davis, Councilmember (2024)
Planning Commission
Samuel Tolkin, Chair
Josh Hamilton, Vice Chair
Peer Chacko, Commissioner
Nina Fresco, Commissioner
Leslie Lambert, Commissioner
Shawn Landres, Commissioner
Jim Ries, Commissioner
Community Development Staff
Arminé Chaparyan, Director
David Martin, Director (retired)
Jing Yeo, Planning Manager
Tony Kim, Principal Planner
Shira Moch, Associate Planner
Ana Fernandez, Associate Planner
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Santa Monica Police Department
Diversity, Equity, and Inclusion Team
City Attorney’s Office
State of California
Governor's Office of Business and Economic Development (Go-Biz) Grants Team City of Santa Monica
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Table of Contents
Introduction............................................................................................................... 1 Purpose of Cannabis Equity Assessment................................................................................... 2

1. Cannabis Equity Analysis..................................................................................... 3 Methodology ............................................................................................................................. 3 Cannabis Enforcement History.................................................................................................. 3 City of Santa Monica Demographics ......................................................................................... 5 Cannabis-Related Arrests.......................................................................................................... 6 Cannabis-Related Arrest Types ................................................................................................. 7 Cannabis-Related Arrests by Race/Ethnicity...........................................................................10 Identification of Disproportionately Affected Communities...................................................11 Disproportionately Affected Communities Analysis...............................................................16 Conclusions Regarding Disproportionately Affected Communities........................................19

2. Overview of Cannabis-Related Businesses and Activities................................... 21 Legislative History of Cannabis in Santa Monica.....................................................................21 Taxation...................................................................................................................................23

3. Barriers to Entry................................................................................................ 24 Financial Barriers.....................................................................................................................24 Technical Barriers....................................................................................................................26 Criminal Barriers......................................................................................................................28

4. Community Outreach and Feedback.................................................................. 29 Online Survey ..........................................................................................................................29 Community Workshops...........................................................................................................31 Stakeholder Interviews............................................................................................................31 Community-Led Discussions (Micro-grant).............................................................................32 Summary of Feedback and Common Themes.........................................................................32

5. Best Practices ................................................................................................... 36 City of Oakland (2017).............................................................................................................36 City of San Francisco (2017) ....................................................................................................38 City of Sacramento (2018).......................................................................................................39 City of Los Angeles (2017) .......................................................................................................41 City of Long Beach (2018)........................................................................................................42 City of Santa Monica
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6. Findings............................................................................................................ 44

1. Unrestricted Permitting and Licensing May Have Consequences................................44

2. Program Eligibility Criteria Should Prioritize Those Most Harmed by Cannabis Enforcement............................................................................................................................44

3. Application and Permitting Processes Present Barriers to Entry .................................45

4. Systemic Barriers Limit Access to the Regulated Marketplace ....................................45

5. Equity Applicants are Vulnerable to Exploitative Partnerships....................................45

6. Stakeholder Engagement and Education are Crucial to Program Success...................45

7. Past Convictions Have Long-Term Consequences........................................................46

8. Lack of Workforce Development Limits Equitable Participation..................................46

9. Sustainable Program Funding Is Critical to Success and Long-Term Effectiveness of the Program...................................................................................................................................46

10. Community Reinvestment is Key to Providing Communitywide Equity Program Benefits....................................................................................................................................46

11. Ongoing Data Collection and Program Evaluation Are Essential to Program Success.47

7. Potential Equity Program Elements................................................................... 48 Licensing Structure and Market Access...................................................................................48 Application and Permitting Process........................................................................................48 Equity Program Support Services............................................................................................49 Preventing Predatory Practices...............................................................................................50 Outreach and Education..........................................................................................................50 Workforce Development and Employment Inclusion.............................................................51 Community Reinvestment.......................................................................................................52 Equity Program Funding Strategy............................................................................................53 Ongoing Evaluation and Transparency....................................................................................53

8. Recommendations for Santa Monica’s Equity Program...................................... 55 Equity Program Eligibility Criteria............................................................................................55 Core Program Elements and Services......................................................................................57 Expanded Services with State Grant Funding .........................................................................59 Appendix A: Cannabis Equity Assessment Survey (English)........................................ 61 Appendix B: Cannabis Equity Assessment Survey (Spanish)....................................... 86 City of Santa Monica
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List of Figures
Figure 1 – Distribution of Race/Ethnicity, City of Santa Monica (2022) .......................................... 5 Figure 2 – Cannabis-Related Arrests by Year, City of Santa Monica (1993-2023)........................... 6 Figure 3 – Cannabis-Related Arrest Types (1993-2024) .................................................................. 9 Figure 4 – Cannabis-Related Arrest Types by Year.......................................................................... 9 Figure 5 – Cannabis-Related Arrests by Race/Ethnicity, City of Santa Monica (1993-2023)......... 10 Figure 6 – Population Percentage vs. Arrest Percentage, City of Santa Monica (1993-2023) ...... 11 Figure 7 – People of Color as a Percentage of Population............................................................. 12 Figure 8 – Low-Income Households as a Percentage of Population.............................................. 13 Figure 9 – Educational Attainment................................................................................................ 14 Figure 10 – Cannabis Arrests and Socioeconomic Disadvantage by Census Tract........................ 16 Figure 11 – Census Tracts with Highest Concentration of Cannabis Arrests................................. 17 Figure 12 – Disadvantaged Census Tracts...................................................................................... 18 Figure 13 – Least Impacted Census Tracts..................................................................................... 18 City of Santa Monica
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Introduction
The history of cannabis prohibition in California—and across the United States—extends beyond the past; it continues to shape the economic, social, and legal realities of many communities today. For decades, communities of color, particularly Black, Indigenous, and People of Color (BIPOC), have faced the harshest consequences of cannabis enforcement, experiencing not only legal penalties but also long-term economic and social repercussions. These include barriers to employment, education, financial stability, and overall community well-being. The disproportionate impact of cannabis-related arrests and convictions, coupled with systemic inequalities such as generational poverty and education gaps, has created formidable barriers to economic participation, particularly within the regulated cannabis industry.

Recognizing these ongoing inequities, California enacted the California Cannabis Equity Act1 in 2018 as a legislative initiative to mitigate the lasting harm caused by cannabis prohibition. The Act aims to promote equitable ownership and employment opportunities within the cannabis industry by establishing a state-supported program to assist local jurisdictions in developing and implementing cannabis equity programs. Through this initiative, the state provides loans, grants, and technical assistance to support entrepreneurs from disproportionately impacted communities in entering and sustaining businesses in the regulated market.

To effectively administer the Cannabis Equity Grants Program, the Department of Cannabis Control (DCC)—formerly the Bureau of Cannabis Control—entered into an interagency agreement with the Governor’s Office of Business and Economic Development (GO-Biz). This collaborative effort is designed to support local jurisdictions in their efforts to provide financial and technical assistance to equity applicants and licensees, ensuring that those most affected by prohibition have access to meaningful opportunities in the legal cannabis industry.

While the legalization of cannabis in California represented a critical step toward addressing historical injustices, the experience of affected communities has demonstrated that legalization alone is insufficient. Cannabis equity programs are a necessary response to these systemic challenges, aiming to achieve three primary objectives:
 Economic Justice – Providing financial resources, technical support, and business development assistance to individuals from disproportionately impacted communities to enable them to enter and thrive in the legal cannabis industry.  Barrier Reduction – Addressing systemic challenges such as limited access to capital, complex regulatory requirements, and the social stigma associated with past cannabisrelated convictions to create a more inclusive and accessible industry. 1 https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201720180SB1294 City of Santa Monica
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 Community Reinvestment – Ensuring that economic benefits flow back into the communities that were most affected by cannabis criminalization, fostering long-term recovery, economic empowerment, and social equity.

Purpose of Cannabis Equity Assessment
The Cannabis Equity Assessment (“Equity Assessment”) serves as a comprehensive analysis of the impact of cannabis criminalization in Santa Monica (“City”) and the systemic barriers that have prevented affected communities and individuals from accessing opportunities within the legal cannabis industry. This assessment employs a data-driven approach to identify communities disproportionately impacted by past cannabis enforcement, examining key indicators such as arrest records, poverty rates, educational attainment, and other socioeconomic factors that reflect the long-term consequences of prohibition policies. Additionally, the assessment evaluates the structure of the existing cannabis industry to identify the specific obstacles that hinder equitable participation within the City.

The primary objective of this Equity Assessment is to provide a foundation for the development and implementation of a cannabis equity program in Santa Monica. Such a program would establish targeted policies, initiatives, and support mechanisms to assist historically impacted communities in entering and succeeding in the legal cannabis market. To be effective, the City's cannabis equity program must be transparent, accessible, and equitable, addressing the unique challenges and needs faced by affected individuals. By leveraging this assessment, the City can create a cannabis equity framework that fosters economic inclusion, social justice, and long-term community reinvestment.

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1. Cannabis Equity Analysis
Methodology
This Equity Assessment examines historical cannabis-related arrest data in the City to evaluate the disproportionate impact of cannabis enforcement and the War on Drugs in communities within Santa Monica. The analysis utilizes cannabis-related arrest statistics provided by the Santa Monica Police Department (SMPD) and overlays this data with census tract information to identify spatial and demographic disparities. By mapping arrest “hot spots” within the City, this study seeks to determine whether a correlation exists between high-arrest areas and concentrations of demographic factors, thereby identifying communities disproportionately affected by cannabis criminalization.

The cannabis-related arrest data, covering the period from 1993 to 2023, was obtained directly from the SMPD. To contextualize this information, demographic data was sourced from the 2018– 2022 American Community Survey (ACS) 5-Year Estimates. The selection of this dataset ensures alignment with demographic indicators from the U.S. Environmental Protection Agency’s (EPA) Environmental Justice Screening and Mapping Tool, which also relies on the ACS 2018–2022 5- Year Summary.

Cannabis Enforcement History
Prior to the 1900’s, cannabis was cultivated throughout the United States primarily for its industrial use (as “hemp” for use in a variety of commercial items including paper, rope, textiles, etc.) and its medicinal uses with very little targeted government regulation. Cannabis use for its psychoactive effects began to increase during the 1900’s. Simultaneously, a widespread national “anti-intoxicant” sentiment that resulted in prohibition of alcohol was also emerging.

As a result, beginning in the early 1900s, most States began placing restrictions on the cultivation and sale of cannabis. The first national regulation of cannabis was created by the Marihuana Tax Act of 1937 (as marijuana was spelled at the time), which placed a tax on the sale of cannabis and allowed for law enforcement to make arrests for non-payment of the tax. The Narcotic Control Act of 1961 and the Controlled Substances Act of 1970 officially made the manufacture, importation, possession, use, and distribution of cannabis illegal throughout the United States.

The Drug Enforcement Agency (DEA) was created in 1973 and began increasing its enforcement activities, while recreational cannabis use was also increasing – first as popularized by the counter-culture revolution of the time and then as it moved into the more mainstream population. The term “War on Drugs” emerged following several press conferences held by thenPresident Richard Nixon during the Summer of 1971.

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The Comprehensive Crime Control Act of 1984 increased federal penalties for cultivation, possession, or transfer of marijuana; and the 1990 Crime Control Act provided funding for local law enforcement agencies to seize private property associated with unlawful drug activities, including cannabis cultivation or distribution.

Illegal cannabis use was increasing, and so was the response from law enforcement. In their 2012 definitive analysis on the subject, researchers Holly Nguyen and Peter Reuter point out that:
“There has been a dramatic rise in the number of arrests for simple possession since 1991.

In 2008, about 800,000 individuals were arrested for possession of small amounts of marijuana (typically less than an ounce). That figure was more than three times the number in 1991.”2
Most importantly, Nguyen and Reuter showed that although the cannabis use rate was about the same for White and Black Americans, rates of arrest are about three times higher for Black Americans:
“Although Whites and Blacks show an overall increase in arrest rates since 1991, the rates for the two races are markedly different. In 1991, Blacks were arrested twice as often as Whites. In 2008, Blacks were more than three times likely to be arrested as Whites. This starkly contrasts with their almost identical rates of use.” Meanwhile, although the War on Drugs continued to rage and affect Black/African American, LatinX, and indigenous communities disproportionately, attitudes of Californians began to change significantly in the early 1990s. The medicinal value of cannabis to HIV patients for appetite stimulation and pain management was well supported by Californians who began a 20-year acceptance of medicinal, and ultimately recreational, cannabis along with the associated decriminalization.

In 1996, Californians passed Proposition 215, the Compassionate Use Act, which allowed for the use of medicinal cannabis. In 2011, there were notable changes in California law, and some misdemeanor marijuana statutes were re-classified as infractions, leading to a significant decline in misdemeanor marijuana arrests. The Medical Marijuana Regulation and Safety Act was adopted by the California Legislature in 2015, and in November 2016, California voters passed Proposition 64, which legalized the possession and use of marijuana for individuals 21 years of age and older and reduced the offense degree for a number of marijuana-related offenses. Proposition 64 essentially ended cannabis prohibition in California. For example, in 2014, there were 13,300 felony arrests for cannabis in California, where that number had dropped to 1,181 by 2019. 2 Nguyen, H., & Reuter, P. (2012). How Risky Is Marijuana Possession? Considering the Role of Age, Race, and Gender. Crime & Delinquency, 58(6), 879-910. https://doi.org/10.1177/0011128712461122 City of Santa Monica
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However, much of the damage from disproportionate enforcement of cannabis-related laws had already been done, and the long-term effects of the War on Drugs, have persisted and are well documented. For example, in their 2017 research for the Cato Institute (“Four Decades and Counting: The Continued Failure of the War on Drugs”) Christopher J. Coyne and Abigail R. Hall point out that:
“A felony drug charge can also cause an individual to lose eligibility to work for the federal government; enlist in the U.S. Armed Forces; obtain an import, customs, or other license; or obtain a passport. Many private-sector job applications require criminal background checks and the disclosure of felony convictions, preventing individuals convicted of drug offenses from obtaining gainful employment. Given the rate at which minorities are arrested for crime, this has immense implications for the long-term prosperity of both individuals and broader communities.”3
Further, in its 2020 “Crime in California” report, the California Department of Justice indicated that although the overall number of arrests for cannabis related activities is trending downward since legalization, arrests are still disproportionately high for non-white citizens – Hispanic citizens accounted for nearly 42% of those arrests, followed by Black citizens, at 22%, with White citizens at 21%.

City of Santa Monica Demographics
Figure 1 below presents the 2018–2022 5-Year demographic estimates for Santa Monica. Among residents who reported a single racial identity, the largest demographic group is White (69.0%), followed by Hispanic or Latino (17.2%), Asian (8.8%), Black or African American (5.3%), American Indian and Alaska Native (0.7%), and Native Hawaiian and Other Pacific Islander (0.1%).

Figure 1 – Distribution of Race/Ethnicity, City of Santa Monica (2022) 3 Coyne, Christopher J. and Hall, Abigail R, Four Decades and Counting: The Continued Failure of the War on Drugs (April 12, 2017). Cato Institute Policy Analysis No. 811, Available at SSRN:
https://ssrn.com/abstract=2979445
Race/Ethnicity Population Percent
White alone 63,638 69.0%
Hispanic or Latino 15,831 17.2%
Asian alone 8,156 8.8%
Black or African American alone 4,854 5.3%
American Indian and Alaska Native alone 608 0.7%
Native Hawaiian and Other Pacific Islander Alone 79 0.1% Source: U.S. Census Bureau, 2018-2022 American Community Survey 5-Year Estimates City of Santa Monica
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July 2025

Cannabis-Related Arrests
As part of this analysis, historical cannabis-related arrest data in the City was examined for the period spanning 1993 to 2023. Over this 30-year period, a total of 2,229 cannabis-related arrests were recorded citywide, as illustrated in Figure 2.

Figure 2 – Cannabis-Related Arrests by Year, City of Santa Monica (1993-2023) Source: Santa Monica Police Department
Over the past three decades, cannabis-related arrests in the City have followed a dynamic trajectory, reflecting shifts in policy, enforcement priorities, and societal attitudes toward cannabis use. In the early 1990s, arrests were relatively low but began to rise steadily, culminating in a noticeable peak in 1997 with 103 recorded arrests.

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The late 1990s and early 2000s saw fluctuating arrest numbers, but a large increase occurred in 2004, reaching 157 arrests. In 2007, arrests spiked again to their highest recorded level of 173.

However, this peak appears to be an anomaly in what soon became a downward trend following a significant policy shift in November 2006. That year, the City passed an ordinance establishing Chapter 3.724 in the City Municipal Code, which deprioritized law enforcement actions related to marijuana offenses involving personal adult use. This ordinance made investigations, citations, arrests, property seizures, and prosecutions for such offenses the lowest law enforcement priority in the City.

The timing of this legislation suggests a crucial turning point. While arrests spiked briefly in 2007, the overall trend after 2006 was a steady decline. By 2012, cannabis-related arrests had fallen to

87. This decline continued through the 2010s, with arrests decreasing to 64 by 2018. A key factor that further accelerated the reduction in arrests was the passage of Proposition 64 in 2016, which legalized and decriminalized recreational cannabis use across California. With the legalization of adult-use cannabis, enforcement actions related to personal possession and use were drastically reduced, contributing to an even steeper decline in cannabis-related arrests in Santa Monica and throughout the state.

Cannabis-Related Arrest Types
Figures 3 and 4 provide a historical overview of the types of cannabis-related offenses. The data on cannabis-related arrests in the City from 1993 to 2023 reveals significant shifts in enforcement patterns, particularly in response to legislative changes toward cannabis use. The most frequently cited offense over this period was possession of less than 28.5 grams of cannabis (11357(B) HS), accounting for 1,145 total arrests, followed by possession for sale (11359 HS) with 513 arrests, and transport, import, sale, or gift of cannabis (11360 HS) with 247 arrests. Notably, the number of arrests for possession of small amounts of cannabis peaked in the early 2000s, with 123 arrests recorded in both 2007 and 2008, before declining significantly in the years following the passage of Santa Monica’s Chapter 3.72 ordinance in 2006 and Proposition 64 in 2016. 4 https://ecode360.com/42726729
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Similarly, possession of concentrated cannabis (11357(A) HS) and possession greater than 28.5 grams (11357(C) HS) show a downward trend, particularly after 2016, reflecting the reduced enforcement of possession-related offenses following legalization. On the other hand, possession for sale (11359 HS) and transport, import, sale, or gift of cannabis (11360 HS) continued to be enforced, although at lower rates after legalization, indicating that law enforcement efforts may have shifted toward regulating illegal sales rather than personal possession. Meanwhile, offenses related to driving under the influence of cannabis (23152(F) VC) remained consistent, with notable spikes in 2016 (46 arrests) and 2017 (38 arrests). This suggests that while cannabis possession laws have relaxed, enforcement related to impaired driving increased in priority.

Offenses involving minors (11357(D), 11357(E), 11357(a) HS) remained relatively low in comparison to adult-related offenses but saw intermittent enforcement, particularly in recent years. This suggests that while adult use has been largely decriminalized, underage possession and involvement in cannabis-related activities remain areas of concern.

The data highlights the significant impact and legal consequences of possession arrests for small amounts of cannabis (11357(B) HS), which accounted for 1,145 total arrests. Prior to major policy reforms, individuals in possession of less than 28.5 grams of cannabis faced criminal penalties, fines, and potential long-term legal repercussions for a product that is now legal.

City of Santa Monica
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Figure 3 – Cannabis-Related Arrest Types (1993-2024)
Figure 4 – Cannabis-Related Arrest Types by Year
Statute 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total 11357(A) HS - - - 3 2 1 2 4 1 5 1 1 7 4 7 10 8 13 8 11 11 11 5 3 - - - - - - - 118 11357(B) HS - - - 45 69 57 48 37 12 18 50 109 40 4 123 123 110 90 60 50 34 23 19 24 - - - - - - - 1,145 11357(C) HS - - - 1 3 - 1 - - 1 - - - - 3 2 3 4 2 1 7 1 4 2 - - - - - - - 35 11357(D) HS - - - - - 1 - - - 1 - - - - - - - - - 1 - 2 - - - - - - - - - 5 11357(E) HS - - - - - - - - - - - - - - - - - 1 2 1 - - - - - - - - - - - 4 11357(a) HS - - - - - - - - - - - - - - - - - - - - - - - - - 2 1 - - 2 1 6 11357(b) HS - - - - - - - - - - - - - - - - - - - - - - - - 1 3 1 - - - 1 6 11357(c) HS - - - - - - - - - - - - - - - - - - - - - - - - - 2 1 - 1 2 2 8 11357(d) HS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 0 11357.5(A)HS - - - - - - - - - - - - - - - - - - - - - - - - - 1 - - - - - 1 11358 HS 4 4 2 3 6 2 - - 7 1 - 3 1 2 2 6 3 2 1 - 1 - - - 1 - - - - - - 51 11359 HS 14 21 12 19 13 11 17 16 23 17 33 26 47 26 42 32 17 16 12 22 7 11 8 12 6 5 8 2 4 11 3 513 11360 HS 18 6 4 8 13 8 11 7 14 14 18 24 12 10 9 11 10 9 3 7 1 5 - 4 - 3 8 - 3 3 4 247 11361 HS 1 - 4 4 - - - 1 - - - - 1 - 1 - 3 - - - - - - - - - - - - - - 15 11362.3(A) HS - - - - - - - - - - - - - - - - - - - - - - - - - 2 1 1 - - 1 5 23152(F) VC - - - - - - - - - - - - - - - - - - - - - 12 10 18 32 46 38 35 22 14 23 250 23222(B) VC 4 3 2 6 2 4 5 - - - - - - - - - - - - - - - - - - - - - - - - 26 City of Santa Monica
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Cannabis-Related Arrests by Race/Ethnicity
Figure 5 below illustrates the distribution of cannabis-related arrests by race/ethnicity in the City from 1993 to 2023. Over this period, White individuals accounted for the largest share of arrests (43.7%), followed by Black (26.3%), Hispanic/Latino (24.8%), and Asian (0.4%) populations.

Figure 5 – Cannabis-Related Arrests by Race/Ethnicity, City of Santa Monica (1993- 2023)
To evaluate the disparities in cannabis-related arrests across different demographic groups in the City, arrest rates were analyzed relative to each group's total population share. The findings reveal significant racial and ethnic disparities in enforcement, particularly affecting Black/African American and Hispanic/Latino communities.
 Black/African American individuals faced the highest disproportionate arrest rate.

Despite representing only 5.3% of the City’s population, they accounted for 26.3% of cannabis-related arrests, a rate nearly 5 times higher than their population proportion.  Hispanic/Latino individuals were also disproportionately affected, with arrest rates nearly 1.5 times as high as their population representation.  In contrast, other demographic groups were arrested at rates well below their respective population percentages.

These local disparities mirror national patterns; for example, Black individuals across the U.S. are nearly four times more likely than white individuals to be arrested for cannabis-related offenses, despite similar usage rates5
.
5 American Civil Liberties Union, A Tale of Two Countries: Racially Targeted Arrests in the Era of Marijuana Reform (April 2020). ACLU Policy Report, Available at: https://www.aclu.org/report/tale-two-countriesracially-targeted-arrests-era-marijuana-reform Race/ Ethnicity
Total Percent Total Percent
White 975 43.7% 63,638 69.0%
Black or African American 587 26.3% 4,854 5.3%
Hispanic or Latino 552 24.8% 15,831 17.2%
Asian 8 0.4% 8,156 8.8%
2 Source: U.S. Census Bureau, 2018-2022 ACS 5-Year Estimates Arrests Population
(1993-2023)1 (2022)2
1 Source: Santa Monica Police Department
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Figure 6 – Population Percentage vs. Arrest Percentage, City of Santa Monica (1993- 2023)
Source: Santa Monica Police Department
Source: Source: U.S. Census Bureau, 2018-2022 American Community Survey 5-Year Estimates Identification of Disproportionately Affected Communities The objective of this Equity Assessment is to identify disproportionately affected communities in the City that have been historically impacted by cannabis criminalization. As demonstrated in the analysis in the previous section, Black/African American and Hispanic/Latino populations have historically been subject to a disproportionate rate of cannabis-related arrests in the City.

Research indicates that such arrests have long-term consequences, limiting opportunities for employment, education, and housing, which, in turn, hinder economic mobility. These systemic barriers combined with the high financial costs of entering the regulated cannabis industry create significant challenges for affected individuals seeking to participate in the legal market.

To determine the communities most impacted, three key indicators were analyzed at the census tract level:
 Race and Ethnicity: Communities of color have historically faced higher cannabis-related arrest rates.
 Income Level: Individuals with lower financial resources encounter greater obstacles in accessing capital and business opportunities within the regulated cannabis industry.  Educational Attainment: Those with lower levels of education often lack access to resources, training, and networks necessary for successful industry entry.

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By evaluating these indicators alongside the geographic distribution of cannabis-related arrests, this assessment provides a comprehensive understanding of the communities disproportionately affected by cannabis prohibition and enforcement.

Data and Methodology
To identify impacted communities, demographic data was sourced from the United States Environmental Protection Agency’s (EPA) EJSCREEN tool, which compiles nationwide demographic and environmental data. EJSCREEN’s data, derived from the U.S. Census Bureau’s American Community Survey (ACS) 2018-2022 5-year Summary, was used to map and analyze:
 Communities of color (percentage of non-Hispanic white alone vs. all other racial/ethnic groups).
 Low-income households (household incomes at or below twice the federal poverty level).
 Educational attainment (percentage of individuals aged 25 or older without a high school diploma).

People of Color Populations
Figure 7 provides a visual representation of the percentage of individuals within a census tract who list their racial status as a race other than White alone and/or list their ethnicity as Hispanic or Latino; in other words, individuals who do not identify as non-Hispanic white alone. The term "alone" here signifies that the individual identifies with a single racial category, rather than being multiracial.

A clear spatial pattern emerges, showing that arrests are heavily concentrated in the eastern and central parts of the City—particularly in census tracts shaded in red and orange, which represent areas where people of color make up 34% to 67% of the population. In contrast, the western and northern tracts, which have lower percentages of people of color (shaded in green and yellow), show significantly fewer arrests. This visual correlation reinforces the conclusion that communities with larger populations of color have experienced a disproportionate burden of cannabis-related policing. The clustering of arrests in demographically diverse neighborhoods suggests that cannabis enforcement has not been evenly distributed across the city but rather has disproportionately impacted communities of color.

Figure 7 – People of Color as a Percentage of Population City of Santa Monica
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July 2025

Low-Income Populations
Figure 8 displays cannabis-related arrests across the City of Santa Monica overlaid with census tracts color-coded by the percentage of low-income households. Low-income households are defined as those with household incomes at or below twice the federal poverty level.

The analysis reveals a strong spatial correlation between areas of economic disadvantage and the concentration of arrests. Census tracts shaded in red—representing the highest percentages of low-income households (29% to 38%)—show a dense clustering of cannabis arrests, particularly in the central and southern parts of the City. Conversely, tracts in the northern and western areas, shaded green to indicate lower levels of poverty (5% to 14%), exhibit far fewer arrests. This pattern indicates that cannabis enforcement has disproportionately affected lower-income neighborhoods, suggesting that residents in these communities have borne the brunt of criminalization.

Figure 8 – Low-Income Households as a Percentage of Population City of Santa Monica
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July 2025

Educational Attainment
Figure 9 presents cannabis-related arrests in the City overlaid with census tracts shaded by the percentage of residents over age 25 who have not completed high school. Census tracts with the greatest concentration of those who have not completed high school (shown in red and orange) have the highest density of cannabis arrests. These areas, located primarily in the eastern and central parts of the city, stand in sharp contrast to the western and northern tracts shaded in green, where educational attainment is higher (0% to 2% without a diploma), and arrest rates are notably lower. The spatial overlap between educational disadvantage and enforcement activity suggests that residents with fewer educational opportunities have been more heavily targeted by cannabis policing.

Figure 9 – Educational Attainment
City of Santa Monica
Cannabis Equity Assessment
July 2025

City of Santa Monica
Cannabis Equity Assessment
July 2025

Disproportionately Affected Communities Analysis
To identify socioeconomically disadvantaged areas, data was analyzed and ranked using a colorcoded system to categorize census tracts based on their impact level:

Figure 10 presents the spatial relationship between cannabis-related arrests and socioeconomic indicators. A comparative analysis of arrest data and demographic indicators indicates a strong connection between disadvantaged census tracts and the concentration of cannabis-related arrests. Many of the census tracts with the highest arrest numbers also feature a large percentage of residents who are people of color, have lower income levels, and possess lower educational attainment.

Figure 10 – Cannabis Arrests and Socioeconomic Disadvantage by Census Tract Green Minimal Impact
Yellow Low Impact
Orange Moderate Impact
Red High Impact
Census Tract Number of
Arrests
Percent of
Arrests
% People of
Color % Low Income % Not Completed High School
06037701902 854 42.3% 32% 38% 4%
06037702002 202 10.0% 39% 31% 4%
06037701802 196 9.7% 61% 33% 13%
06037702102 129 6.4% 27% 22% 1%
06037701801 100 5.0% 67% 36% 12%
06037701402 97 4.8% 38% 22% 5%
06037702201 79 3.9% 45% 24% 9%
06037701702 63 3.1% 39% 37% 6%
06037701502 54 2.7% 38% 10% 8%
06037702300 53 2.6% 38% 23% 7%
06037701501 35 1.7% 33% 18% 4%
06037702202 28 1.4% 27% 13% 3%
06037701304 27 1.3% 27% 11% 4%
06037701602 26 1.3% 50% 28% 8%
06037701701 25 1.2% 43% 30% 4%
06037701302 22 1.1% 23% 15% 4%
06037701601 13 0.6% 28% 14% 1%
06037701201 10 0.5% 28% 11% 1%
06037701202 7 0.3% 18% 11% 1%
City of Santa Monica
Cannabis Equity Assessment
July 2025

Findings
An analysis of cannabis-related arrest data by census tract, alongside key demographic indicators, reveals a strong relationship between enforcement patterns and socio-economic disadvantage.

Arrests are heavily concentrated in a small number of geographic areas, with one census tract (06037701902) alone accounting for over 42% of total arrests. Together, the top four census tracts (06037701902, 06037702002, 06037701802, and 06037702102) represent nearly 70% of all cannabis-related arrests in the City, as illustrated in Figure 11 below. It should be noted that the three western census tracts highlighted in red are the City’s downtown area and beach front that connects to Vencie Beach in the City of Los Angeles. These areas of the City attract tourists, increasing the daytime population.

Figure 11 – Census Tracts with Highest Concentration of Cannabis Arrests City of Santa Monica
Cannabis Equity Assessment
July 2025

When cross-referenced with demographic characteristics—specifically, the percentage of people of color, percentage of low-income households, and percentage of individuals without a high school diploma—several high-arrest areas also show clear signs of socio-economic disadvantage.

For example, census tracts 06037701802 and 06037701801—encompassing the Pico neighborhood—have some of the highest arrest rates in the area and rank among the most demographically disadvantaged. Over 60% of residents identify as people of color, more than onethird of households are low-income, and a significant portion of the population—well into the double digits—has not completed high school.

Figure 12 – Disadvantaged Census Tracts
By contrast, census tracts with low arrest rates generally reflect lower proportions of people of color, lower poverty rates, and higher levels of educational attainment. Tracts such as 06037701202, 06037701201, and 06037701601, which account for less than 1% of arrests each, consistently rank low across all disadvantage indicators.

Figure 13 – Least Impacted Census Tracts
City of Santa Monica
Cannabis Equity Assessment
July 2025

While there are a few exceptions—such as tract 06037702102, which has a relatively high number of arrests but does not display high levels of disadvantage, the overall trend is consistent:
communities with the highest levels of arrest activity also tend to face the greatest structural barriers.

Conclusions Regarding Disproportionately Affected Communities The data clearly demonstrates that cannabis criminalization has disproportionately impacted specific communities within the City—particularly those characterized by higher concentrations of people of color, lower income levels, and lower educational attainment. Findings from earlier research further contextualize the demographic patterns observed in the arrest data. From 1993 to 2023, cannabis-related arrests in the City disproportionately affected Black/African American and Hispanic/Latino individuals.

City of Santa Monica
Cannabis Equity Assessment
July 2025

The findings support the conclusion that historically cannabis prohibition has not been enforced uniformly across the City but has instead been found to burden areas that show clear signs of socioeconomic disadvantage, particularly the census tracts the encompass the Pico neighborhood.

City of Santa Monica
Cannabis Equity Assessment
July 2025

2. Overview of Cannabis-Related Businesses and Activities Legislative History of Cannabis in Santa Monica
The regulation of cannabis in the City has evolved significantly over the years, shaped by both local policy decisions and broader state-level reforms. The City’s approach has largely been cautious and highly regulated, with initial policies focused exclusively on medicinal cannabis while prohibiting adult-use (recreational) commercial cannabis activities.

Early Regulations and Medicinal Cannabis (2015–2017)
Santa Monica first established regulations for medical marijuana (medicinal cannabis) in June 2015 as part of a comprehensive Zoning Ordinance update (Article 9 of the Santa Monica Municipal Code). This ordinance allowed for up to two medicinal cannabis retailers within the City, subject to a rigorous regulatory permit and selection process. However, all other cannabisrelated activities—including adult-use sales, cultivation, manufacturing, and distribution— remained prohibited.

The City also imposed strict zoning restrictions on where these medicinal cannabis retailers could operate. They were permitted only within limited sections of Wilshire Boulevard and Santa Monica Boulevard, specifically in Mixed-Use Boulevard Low (MUBL), Mixed-Use Boulevard (MUB), or General Commercial (GC) zones, and required approval through a Conditional Use Permit (CUP). These restrictions reflected Santa Monica’s deliberate and incremental approach to cannabis regulation, prioritizing controlled access to medicinal cannabis while limiting broader industry growth.

Prohibition of Adult-Use Cannabis and Expanded Medicinal Regulations (2017) Following the passage of Proposition 64 in 2016, which legalized adult-use (recreational) cannabis in California, local jurisdictions were given the authority to regulate or prohibit commercial cannabis activities within their borders. On March 7, 2017, the Santa Monica City Council formally directed staff to prohibit adult-use commercial cannabis activities.

At the same time, the City sought to refine and expand its regulations for medicinal cannabis to align with evolving state laws. The Council directed staff to:
 Develop a regulatory permit and selection process for medicinal cannabis retailers.  Amend the Santa Monica Municipal Code to address state law changes.  Explore options for allowing limited, non-volatile medicinal cannabis manufacturing.

City of Santa Monica
Cannabis Equity Assessment
July 2025

On October 24, 2017, the City Council adopted an Interim Zoning Ordinance (IZO) which formally established general regulations for commercial cannabis activities, including the following:
 A regulatory permit process for medicinal cannabis retailers and non-volatile manufacturing.
 Prohibition of all adult-use commercial cannabis activities, including retail sales, cultivation, testing, distribution, and manufacturing.
 Conformance with state law changes regarding medicinal cannabis regulation.

The IZO was a temporary measure intended to provide structure and oversight for medicinal cannabis businesses. After an extensive selection process, Santa Monica approved two medicinal cannabis retailers.

Current Status Cannabis Activity in Santa Monica
In July 2022 the City Council placed Measure HMP on the ballot. This measure proposed a tax structure for cannabis businesses, signaling the City’s recognition of the economic potential of the cannabis industry. When put to a vote in November 2022, residents demonstrated strong support, approving the measure by a decisive 66% to 34% margin.

Building on this momentum, the City Council held study sessions in June 2023 and April 2024 to explore the future of adult-use cannabis in Santa Monica. During these sessions, the Council made several key policy determinations. The Council directed staff to expand cannabis business opportunities beyond medicinal use, allowing for all types of adult-use cannabis businesses, not just retail dispensaries.

Two specific directives from this session are particularly relevant to ongoing equity efforts:

1. Allow Existing Medicinal Cannabis Retailers to Sell Adult-Use Cannabis – This directive provides a pathway for the City’s permitted medicinal dispensaries to transition into the broader adult-use market, ensuring continuity and expansion of legal access.

2. Develop a Social Equity Program – Recognizing the disproportionate impact of past cannabis enforcement on marginalized communities, the Council directed staff to conduct a cannabis equity assessment and to design a cannabis equity program. This initiative aims to provide opportunities and support for individuals and communities most affected by historical cannabis-related policing, aligning Santa Monica’s cannabis policy with broader social justice goals.

In November 2023, the Council passed an Interim Zoning Ordinance allowing the City's two medicinal cannabis retailers to begin adult-use sales, providing an initial pathway for expansion.

This ordinance was further extended in December 2023, demonstrating the City’s commitment to transitioning toward a regulated adult-use market.

City of Santa Monica
Cannabis Equity Assessment
July 2025

The ongoing development of adult-use cannabis regulations and social equity initiatives will be crucial in addressing past harms, expanding economic opportunities, and ensuring a more inclusive and just cannabis industry in Santa Monica.

Taxation
On November 8, 2022, Santa Monica voters approved Measure HMP implementing a Cannabis Business Tax for the City. The measure imposed a gross receipts tax capped at 10% on all cannabis businesses. The current tax rates are as follows:
 3% of gross receipts for non-medicinal cannabis retailers  2% of gross receipts for medicinal cannabis retailers  1% of gross receipts for other licensed cannabis businesses City of Santa Monica
Cannabis Equity Assessment
July 2025

3. Barriers to Entry
Understanding the barriers to entry into the cannabis industry for populations and communities who have been disproportionately or negatively impacted by cannabis enforcement is an important factor when developing and implementing an equity program. The success of a local equity program is dependent on the program’s ability to reduce and eliminate these barriers. This section examines the prominent barriers to entry, which can be summarized into the following categories: Financial, Technical, and Criminal.
 Financial barriers: These barriers can include the high costs of starting and operating a cannabis business, such as licensing fees, insurance, and other expenses. Affected communities may have difficulty accessing capital or may lack the financial resources to cover these costs.
 Technical barriers: These barriers can include a lack of knowledge about the cannabis industry and the regulatory environment, as well as a lack of access to resources and support to help aspiring cannabis entrepreneurs succeed.  Criminal barriers: These barriers can include the collateral consequences of cannabisrelated arrests and convictions, such as barriers to employment, education, and housings. These consequences can make it difficult for affected individuals to enter the legal cannabis industry.

Addressing these barriers is crucial to promoting fairness and equity in the cannabis industry and helping affected communities succeed as entrepreneurs. Cannabis equity programs can provide financial assistance, business development resources, and technical assistance to help individuals and communities overcome these barriers and enter the legal cannabis industry. It is important for these programs to be designed and implemented in a way that addresses the specific needs and challenges faced by affected communities.

Financial Barriers
When starting any business, financial barriers are among of the most common obstacles entrepreneurs face due to the high costs of local and State licensing fees and the tax burdens, especially in the regulated cannabis industry. Financial barriers present an even bigger challenge for economically disadvantaged individuals who have been disproportionately impacted by cannabis enforcement.

City of Santa Monica
Cannabis Equity Assessment
July 2025

Access to capital or financing – start-up and operational Starting and operating a cannabis business often requires significant amounts of capital including funds for licenses, equipment, product, and other expenses. For individuals or businesses who do not have access to capital, it can be difficult to enter the industry or succeed as entrepreneurs.

Many individuals and businesses, particularly communities that have been disproportionately impacted, seeking to enter the cannabis industry may have limited access to credit, which can make it difficult to secure the financing needed to start and operate a business. This may be due to a lack of credit history, collateral, or other factors.

Furthermore, existing federal banking regulations prevent most financial institutions from lending to cannabis businesses. Hence, cannabis businesses must rely on access to capital from personal wealth, friends and family, and investors for start-up costs. The impeded access to banking services also negatively affects the ability for cannabis businesses to run as efficiently. This barrier is more pronounced for disproportionately affected communities who may not have access to private funding.

Access to real estate
Access to real estate can be a significant barrier to entry for individuals and businesses seeking to enter the cannabis industry, particularly for those who do not have the financial resources to purchase or lease property. This barrier may be due to a variety of factors, including:
 High cost of real estate: The cost of real estate in many areas, particularly in urban areas, can be high, making it difficult for individuals or businesses with limited financial resources to afford the necessary space for a cannabis business.  Limited availability of real estate: In some areas, the availability of real estate that is suitable for a cannabis business may be limited, which can make it difficult for businesses to find the space they need.
 Zoning restrictions: Many localities have zoning laws that regulate the types of businesses that can operate in specific areas, and cannabis businesses may be restricted to certain areas or may be prohibited entirely. This can make it difficult for businesses to find suitable locations.
 Discrimination: Some landlords and property owners may be unwilling to rent or sell property to cannabis businesses due to negative attitudes towards the industry or concerns about legal risks. This can create barriers for businesses seeking to enter the cannabis industry.

City of Santa Monica
Cannabis Equity Assessment
July 2025

By addressing these barriers and others, equity programs can help to promote fairness and equity in the cannabis industry and support the success of affected communities as entrepreneurs. This may include providing financial assistance to help with the cost of real estate, working to reduce zoning restrictions, or addressing discrimination in the real estate market.

Licensing and regulatory fees
In addition to traditional business start-up (e.g., real estate, inventory, equipment, staffing, marketing, etc.) and operational costs, regulated cannabis businesses typically have a higher financial burden from state and local municipalities’ licensing and regulatory fees. Licensing fees can be a significant barrier to entry for individuals and businesses seeking to enter the cannabis industry, particularly for those who do not have the financial resources to cover these fees.

Licensing fees may be required at various stages of the cannabis business process, including:
 Application fees: Many jurisdictions require applicants to pay a fee when they apply for a cannabis business license. These fees vary widely depending on the jurisdiction and the type of license being sought.
 Annual renewal fees: In many jurisdictions, cannabis business licenses must be renewed annually, and a fee may be required to do so. These fees can be a burden for businesses with limited financial resources.
 Compliance fees: In addition to licensing fees, some jurisdictions may also require cannabis businesses to pay fees to cover the cost of compliance activities, such as inspections and audits.

By addressing these barriers and others, equity programs can help to promote fairness and equity in the cannabis industry and support the success of affected communities as entrepreneurs. This may include providing financial assistance to help cover licensing fees and other costs or working to reduce or eliminate these fees for certain groups or individuals.

Technical Barriers
Technical barriers can refer to a range of challenges and obstacles that can prevent individuals or businesses from participating in the cannabis industry, even if they are otherwise qualified and capable. Barriers can include the following.

City of Santa Monica
Cannabis Equity Assessment
July 2025

Business Ownership
The cannabis industry is highly specialized and requires significant industry knowledge and access to a network of regulated vendors. Additionally, traditional business experience is needed such as business plans, payroll taxes, inventory management, etc. Lastly, the cannabis business marketplace has historically been secretive and underground resulting in information and experience flowing slowly to new interested parties. Again, these barriers are more pronounced for disproportionately affected communities.

Legal and Regulatory
The cannabis industry is heavily regulated at the state and local level, and navigating these regulations can be complex and burdensome, particularly for those who are new to the industry.

This can include requirements related to licensing, zoning, and other areas of compliance. Some aspects of the cannabis industry, such as cultivation and manufacturing, require specialized knowledge and expertise. For individuals or businesses who do not have this expertise, it can be difficult to enter the industry or succeed as entrepreneurs.

Awareness
Awareness of the significant business opportunities within the legal and regulated cannabis marketplace continues to be a significant barrier. Moreover, equity-based programs intended to support disproportionately affected communities’ access into the legal cannabis industry have also struggled to be well-known within these communities. Additional outreach is needed in impacted communities to better daylight opportunities through the equity program.

Distrust of Government
Distrust in government can be a significant barrier to the success of cannabis equity programs, as it can discourage affected communities from participating in the programs or engaging with government agencies and officials. This distrust may be based on a range of factors, including historical and ongoing injustices, such as racial profiling and discrimination, and a lack of transparency and accountability on the part of government.

To address this barrier, it is important for cannabis equity programs to be designed and implemented in a way that is transparent, accessible, and fair, and that considers the specific needs and challenges faced by affected communities. This may include:

1. Involving affected communities in the design and implementation of the program.

Engaging with affected communities and seeking their input and feedback on the equity program can help to build trust and ensure that the program is responsive to their needs and concerns.

City of Santa Monica
Cannabis Equity Assessment
July 2025

2. Being transparent about the program's goals, objectives, and funding sources. Providing clear and transparent information about the program's goals, objectives, and funding sources can help to build trust and accountability.

3. Establishing clear and fair eligibility requirements: Establishing clear and fair eligibility requirements for the equity program can help to build trust and ensure that the program is accessible and fair to all affected communities.

4. Providing ongoing support and assistance. Providing ongoing support and assistance to affected communities as they participate in the equity program can help to build trust and ensure that the program is successful in promoting fairness and equity.

By addressing issues of distrust and building trust with affected communities, cannabis equity programs can be more effective in promoting fairness and equity in the cannabis industry.

Criminal Barriers
Criminal records (often exposed through background checks) significantly impede an individual’s ability to succeed in this industry, both as an owner and/or an employee. Former felons are often discriminated against by employers and in many cases earn a lower wage, get recommended for jobs less often, and tend to associate with individuals that also have fewer opportunities. In addition, a past criminal history can present significant challenges for cannabis operators such as accessing financing, loans, or even signing a lease.

These barriers can include the collateral consequences of cannabis-related arrests and convictions, such as barriers to employment, education, and housing. These consequences can make it difficult for affected individuals to enter the legal cannabis industry.

A criminal history, particularly a history of cannabis-related arrests and convictions, can have a significant impact on an individual's ability to enter the legal cannabis industry. This is because many states have laws that disqualify individuals with certain criminal convictions from obtaining licenses to operate cannabis businesses or from working in the cannabis industry.

In some cases, these laws may be based on a blanket ban on individuals with any criminal convictions, regardless of the nature or severity of the offense. In other cases, the laws may only disqualify individuals with certain types of convictions, such as convictions for violent crimes or drug offenses.

The impact of these laws can be especially significant for communities that have been disproportionately affected by cannabis criminalization, as they may have higher rates of arrests and convictions, even for low-level offenses. This can make it difficult for these communities to enter the legal cannabis industry, even if they are otherwise qualified and capable of operating successful businesses.

City of Santa Monica
Cannabis Equity Assessment
July 2025

4. Community Outreach and Feedback
In addition to the analysis conducted in Section 1 above, outreach and education are an essential component of this Equity Assessment as they help to ensure widespread dissemination and comprehension of the assessment’s findings by the communities that the study is intended to benefit. The Equity Assessment incorporated data collected through stakeholder interviews, community workshops, surveys, and community-led discussions, which helped provide public input to guide the City with the development of its equity program.

Online Survey
In October of 2024, an online survey was conducted to ensure broad community engagement.

The survey, available in both English and Spanish, was promoted across various channels to encourage participation from residents throughout the City. The survey gathered insights from 170 respondents, highlighting public opinions, concerns, and recommendations regarding cannabis business and equity programs in the City. The complete findings of the survey are detailed in Appendix A and B of this report. The bullets below summarize key takeaways from the survey6
:
 Support for Cannabis Equity Program
o 54% of respondents support the creation of a Cannabis Equity Program in Santa Monica.
o 46% of respondents do not support such a program.
 Demographics of Respondents
o 88% of respondents live in Santa Monica.
o 39% of respondents work in the city.
 Impacts of Cannabis Criminalization
o 20% of respondents reported knowing someone convicted of a cannabisrelated crime, indicating potential concerns about the impact of past criminalization.
 Interest & Involvement in Cannabis
o 40% of respondents identified as recreational consumers. 6 Note: Percentages may exceed 100% because respondents were allowed to select more than one option for certain questions.

City of Santa Monica
Cannabis Equity Assessment
July 2025

o 33% of respondents identified as interested parties.
o 47% of respondents were impacted by past cannabis criminalization. o 5% of respondents are current cannabis business owners.  Preferred Types of Cannabis Businesses
o 62% of respondents want retail storefronts.
o 54% of respondents want retail delivery services.
o 52% of respondents want consumption lounges.
o 48% of respondents want special events allowing cannabis use.  Barriers to Cannabis Business Ownership
o 50% of respondents identified the local permitting process as a major barrier.
o 43% of respondents identified high fees as a major barrier. o 40% of respondents identified state licensing and application process as a major barrier.
o 38% of respondents identified access to capital as a major barrier.  Barriers to Entering the Cannabis Workforce
o 50% of respondents identified the lack of awareness of job opportunities as a barrier.
o 26% of respondents identified low pay for entry-level jobs as a barrier. o 11% of respondents identified the limited opportunities to break into the industry as a barrier.
o 14% of respondents identified criminal background checks as a barrier.  Recommended Strategies for Cannabis Equity
o 38% of respondents selected improved access to capital (e.g. grants and funding for equity applicants).
o 29% of respondents selected reduced licensing fees and fee waivers for qualifying individuals).
o 29% of respondents selected mentorship programs (e.g. business guidance for aspiring entrepreneurs).
o 18% of respondents selected workforce development programs (e.g. job training and education).
 Eligibility Criteria for Equity Applicant
o 36% of respondents prioritized income level.
o 32% of respondents prioritized area of residence.

City of Santa Monica
Cannabis Equity Assessment
July 2025

o 12% of respondents prioritized prior cannabis-related arrest record. o 7% of respondents prioritized residency duration in Santa Monica.

Community Workshops
To better understand the perspective of the community in regard to developing a local cannabis equity program, the City and SCI Consulting Group hosted two community workshops. These workshops are detailed below:
 Community Workshop #1 (November 13th, 2024, from 6:00-8:00pm at the Ken Edwards Center)
 Community Workshop #2 (February 27th, 2025, from 6:00-8:00pm at the Pico Branch Library)
The primary purpose of these workshops was twofold: (1) to disseminate crucial information about the City's forthcoming Cannabis Equity Assessment and (2) to actively seek public input and gather valuable perspectives on the community's needs, opportunities, and obstacles that may shape the development of the City’s future Cannabis Equity Program. The meeting aimed to foster an inclusive environment where attendees could receive comprehensive details regarding the proposed Cannabis Equity Program. It served as a platform for the City and SCI Consulting Group to share insights, guidelines, and objectives related to the program. Participants had the opportunity to gain an in-depth understanding of the City's vision, goals, and strategies for promoting social equity in the cannabis industry.

Moreover, the workshops strived to encourage active engagement from the community by providing space for public comments and suggestions. Attendees were invited to share their thoughts, perspectives, and recommendations on ways the City could implement a Cannabis Equity Program. This feedback was deemed vital to ensure that the program aligned with the needs and aspirations of the community it intended to serve. Recordings of both workshops along with the presentation were uploaded to the City’s equity webpage for public access. 7 Stakeholder Interviews
Key stakeholders in the City were engaged through one-on-one interviews, serving as an additional method for collecting essential data. Two rounds of stakeholder meetings occurred between December 2024 through February 2025. In total, nine interviews were conducted, involving stakeholders from diverse sectors:
7 https://www.santamonica.gov/cannabis-social-equity
City of Santa Monica
Cannabis Equity Assessment
July 2025

 Cannabis business owners
 Community members impacted by the War on Drugs
 Prospective equity applicants
 Interested parties
Community-Led Discussions (Micro-grant)
Lastly, the City offered $500 micro-grants to support community members in hosting small, community-led events focused on cannabis social equity. The grants were intended to make these gatherings more inclusive and accessible by covering costs such as food, childcare, language interpretation, note-taking services, or other accommodations that help create welcoming spaces where all voices can be heard. Given the nature of the subject matter, it was important to provide an opportunity to hear from the community without government involvement. A total of seven grants were awarded, resulting in seven distinct community-led discussions that engaged 101 participants in total.

Summary of Feedback and Common Themes
The feedback provided from the outreach efforts underscores the multifaceted nature of challenges facing equity applicants in the cannabis industry. The participants highlighted several critical issues facing equity applicants in the cannabis sector, emphasizing the need for an inclusive and effective equity program tailored to local needs. Key themes included the significant financial, regulatory, and societal barriers that inhibit the entry and success of equity applicants in the industry.

Historical Harms and Ongoing Stigma
Many participants shared personal or second-hand experiences with the negative impacts of cannabis criminalization, which included accounts of arrests, incarceration, and long-term consequences stemming from cannabis-related offenses. These experiences often altered the trajectory of individuals’ lives, resulting in the loss of educational opportunities, employment barriers, and mental health trauma. The Pico neighborhood was repeatedly identified as a focal point of over-policing and community-level harm, with some stakeholders likening the experience to “living in fear.” Even post-legalization, stigma persists, particularly affecting communities of color and immigrant residents. Several individuals noted being judged or discriminated against for their cannabis use—especially for medicinal purposes—and called for greater public education to reduce stigma and increase awareness of the health benefits of cannabis.

City of Santa Monica
Cannabis Equity Assessment
July 2025

Barriers to Entry
Barriers to entering the legal cannabis industry were a major concern across all participants.

Financial obstacles were the most commonly cited challenge, including the cost of applying for a license, navigating regulatory requirements, and obtaining start-up capital. Challenges include difficulties in securing funding, navigating complex financial processes, and the lack of traditional banking services due to federal restrictions. High reliance on non-traditional financing methods, such as predatory lending or personal savings, poses a significant risk for long-term sustainability.

Many participants also pointed to the lack of accessible and culturally competent guidance on how to engage with the legal cannabis market. For individuals with past convictions, the licensing process felt especially exclusionary, often disqualifying those whom equity programs are intended to support.

Systemic Failures of Existing Equity Programs
There was strong skepticism about the effectiveness of existing cannabis equity programs across California. Participants expressed frustration with the lack of follow-through, insufficient community reinvestment, and the persistence of stigma even after legalization. Several participants shared negative experiences with equity programs in other California jurisdictions, citing broken promises, bureaucratic inefficiencies, and inequitable outcomes. Concerns were raised that Santa Monica might lack the capacity, staffing, or commitment to run a truly inclusive program. One participant said they were “fearful of trying to apply again” after repeated failure and disappointment.

Predatory Practices
Participants voiced strong concerns about the risk of predatory behavior targeting equity applicants. Many warned that without safeguards, individuals eligible for equity benefits could be exploited by more experienced or well-funded partners who offer financial backing or management support in exchange for majority control or ownership. These arrangements—often structured to appear compliant—can leave equity licensees as figureheads with little real power or profit. Stakeholders cited similar patterns in other cities, where equity programs were manipulated through “rent-a-person” models that undermined the spirit of equity and led to extractive partnerships. Participants stressed the need for strong oversight, clear ownership guidelines, and legal support to protect equity applicants from entering exploitative agreements out of desperation or lack of experience.

City of Santa Monica
Cannabis Equity Assessment
July 2025

Concerns Regarding Program Expansion and Licensing
Participants expressed significant concerns about Santa Monica expanding its adult-use cannabis program with unlimited licensing. Many feared that opening the market too broadly would lead to oversaturation, making it difficult for equity applicants and small businesses to compete against large, well-funded operators. There was a strong sentiment that unlimited licensing could dilute the purpose of the equity program, especially if equity applicants are not given early and prioritized access to the market. Participants urged the City to avoid repeating the mistakes of other jurisdictions, where equity efforts were undermined by lack of regulation and corporate dominance. Many recommended a phased approach, starting with a limited number of licenses reserved for equity applicants, to ensure meaningful inclusion and long-term success.

Concerns About Real Estate and Zoning
Participantsidentified real estate and zoning as major barriers to cannabis equity in Santa Monica.

High commercial rents, limited available properties, and landlord resistance make it extremely difficult for equity applicants to secure compliant locations. Several participants emphasized that Santa Monica’s limited commercial space, paired with high real estate costs, creates a nearimpossible landscape for small or equity-owned cannabis businesses. Participants also raised concerns that restrictive zoning could push cannabis businesses into high-cost or less accessible areas, further disadvantaging small and equity-owned operators.

Desire for Education, Transparency, and Inclusion
Participants requested ongoing community engagement, transparency in program development, and regular updates on progress. There was a call for better public education around cannabis laws, social equity goals, and safe consumption. Additionally, several discussions highlighted the importance of creating inclusive public spaces, such as consumption lounges, and ensuring the broader community feels informed and involved.

Suggested Recommendations and Equity-Focused Solutions:

Despite these challenges, participants offered clear and constructive recommendations for how Santa Monica could build an impactful and credible equity program. These included investing in outreach and education campaigns focused on cannabis licensing, record expungement, and financial empowerment. There was strong interest in support services such as business training, legal assistance, and access to capital through grants or low-interest loans. Reinvestment of cannabis tax revenue back into impacted communities—especially the Pico neighborhood—was viewed as essential.

City of Santa Monica
Cannabis Equity Assessment
July 2025

Lastly, participants emphasized the importance of designing a program that centers the voices and leadership of individuals directly harmed by cannabis prohibition, ensuring that equity licensees are not just tokenized but empowered with real ownership and decision-making authority.

City of Santa Monica
Cannabis Equity Assessment
July 2025

5. Best Practices
The following section reviews equity programs in several California jurisdictions including the cities of Oakland, Los Angeles, San Francisco, Long Beach, and Sacramento. This review provides a comparative analysis of various equity programs at a glance to establish best practices for Santa Monica to utilize. Each of these assessments highlight eligibility requirements for the equity program, available financial assistance for program participants, advantages related to licensing and permitting for participants, and other program benefits provided to equity applicants.

City of Oakland (2017)
Eligibility Criteria
To qualify for the local equity program, a local equity applicant must:
 Be a resident of Oakland;
 Have an annual income at or less than 80% of Oakland’s Average Medium Income (AMI) adjusted for household size; and
 Either: (i) Has lived in any combination of Oakland police beats 2X, 2Y, 6X, 7X, 19X, 21X, 21Y, 23X, 26Y, 27X, 27Y, 29X, 30X, 30Y, 31Y, 32X, 33X, 34X, 5X, 8X and 35X for at least ten of the last twenty years or (ii) Was arrested after November 5, 1996 and convicted of a cannabis crime committed in Oakland.

Financial Assistance
Loan Program:

The Equity Loan Program provides Interest-free loans to eligible cannabis equity applicants. This program is funded through their cannabis tax revenue and loan repayments are used to support forthcoming loans for equity applicants. Loan disbursements are structured into several tiers, each designed to support applicants in building and maintaining viable businesses. It is important to note that in September 2020, the loan term was extended from four to six years, allowing for more flexibility. As of June 2022, the loan tier amounts were established as follows:
 Tier 1 - Establish the Business: $5,000
 Tier 2 - Become Compliant: $10,000
 Tier 3 - Open the Business: $15,000
 Tier 4 - Start Operations: $25,000
 Tier 5 - Grow the Business: $60,000
City of Santa Monica
Cannabis Equity Assessment
July 2025

 Tier 6 - Expand Business: $35,000
Grant Program:

The City of Oakland's Cannabis Equity Grant Program utilizes funding from the Governor's Office of Business and Economic Development ("Go-Biz") to offer grants to entrepreneurs participating in Oakland's cannabis equity program. The grants are distributed in tiers, strategically structured to assist Equity Applicants in building sustainable and thriving businesses. If an Equity Applicant successfully fulfills the requirements of all five grant tiers, they become eligible to receive a maximum grant amount of $150,000 as outlined below:
 Tier 1 - Establish the Business: $5,000
 Tier 2 - Become Compliant: $10,000
 Tier 3 - Open the Business: $15,000
 Tier 4 - Start Operations: $25,000
 Tier 5 - Grow the Business: $60,000
 Tier 6 - Expand Business: $35,000
Workforce Development Grant:

The City’s Workforce Development Grant Program provides up to $50,000 for each equity applicant that recruits, trains, and retains a qualified and diverse workforce. This program is funded through a $1,000,000 grant received from Go-Biz. As of January 8, 2021, all funds available have been allocated to applicants for the Workforce Development Grant Program.

Licensing and Permitting
 Fee waivers and exemptions.
 Equity and general cannabis permits are issued on a 1:1 ratio.

Additional Program Services
 Technical assistance and training
 Pro bono legal services
 Cannabis Incubator Program
 Shared use manufacturing facilities
 Purchasing property grants
Staffing
The City of Oakland’s Cannabis Equity Program is administered by the Economic & Workforce Development Department. The City has also established the Cannabis Regulatory Commission (CRC), which is a citizen-led advisory body that provides recommendations to the City Council on cannabis licensure, taxation, and regulatory policies.

City of Santa Monica
Cannabis Equity Assessment
July 2025

City of San Francisco (2017)
Eligibility Criteria
To qualify as an Equity Applicant, you must:
 Apply as a person, not a company.
 Be one of the following:
o The business owner.
o Own at least 40% of the business and be the CEO.
o Own at least 51% of the business.
o A board member of a non-profit cannabis business where most of the board also qualify as Equity Applicants.
o An individual with a membership interest in a cannabis business formed as a cooperative.
 Meet at least three of the following six equity conditions:
o Have a household income below 80% of the average median income (AMI) in San Francisco for 2018.
o Have been arrested for or convicted of the sale, possession, use, manufacture, or cultivation of cannabis (including as a juvenile) from 1971 to 2016.
o Have a parent, sibling or child who was arrested for or convicted of the sale, possession, use, manufacture, or cultivation of cannabis (including as a juvenile) from 1971 to 2016.
o Lost housing in San Francisco after 1995 through eviction, foreclosure, or subsidy cancellation.
o Attended school in the San Francisco Unified School District for a total of 5 years from 1971 to 2016.
o Have lived in San Francisco census tracts for a total of 5 years from 1971 to 2016 where at least 17% of the households had incomes at or below the federal poverty level.

Financial Assistance
Grant Program:

San Francisco’s “Step by Step” grant program provides grants to eligible equity cannabis businesses for start-up and ongoing costs. Equity businesses can obtain grants for up to $55,000- $75,000. Grant funds may be used for the following eligible expenses:
 Rent  Regulatory compliance
City of Santa Monica
Cannabis Equity Assessment
July 2025

 Legal assistance
 Application and regulatory fees
 Testing of cannabis
 Furniture
 Fixtures and equipment
 Capital improvements
 Banking and escrow fees
 Accounting services
 Packaging and materials
 Marketing and advertising
 Tax liability of the cannabis business
Licensing and Permitting
 Fee waivers and exemptions.
 Priority processing of applications.

Additional Program Services
 Technical assistance and training
o Professional development
o Security consulting
o Permitting and grants services
 Pro bono legal services
Staffing
The City of San Francisco’s cannabis program is overseen by the Office of Cannabis, a dedicated agency for cannabis regulation, which was established in 2017 and ensures compliance with local and state laws and promotes public health, safety, and social equity.

City of Sacramento (2018)
Eligibility Criteria
 Classification 1: Lives or have lived in a low-income household in Sacramento AND: (a) Have been arrested in Sacramento for cannabis–related crime between 1980-2011 or (b) An immediate family member who meets the description above.  Classification 2: Lived in a low-income household in the following zip codes for five consecutive years between 1980 and 2011: 95811, 95815, 95817, 95820, 95823, 95824, 95826, 95828, 95818, 95838 and 95832.
 Classification 3: Businesses with no less than 51% ownership by Classifications 1 and 2 individuals.
 Classification 4: CORE Program Incubator
 Classification 5: Cannabis Social Enterprise with no less than 51% ownership by Classifications 1 and 2 individuals.

City of Santa Monica
Cannabis Equity Assessment
July 2025

Financial Assistance
Loan Program:

The CORE Capital Loan Program is a 6-year, zero-interest loan program offered to cannabis equity businesses, funded by grants from Go-Biz. Repayments from loans are reinvested into the program to provide ongoing loan opportunities for CORE participants. The maximum initial loan amount for first-time applicants is $50,000, provided they have a signed business lease for a location or own a premise. A verified CORE individual has the option to apply for $50,000 for each leased or owned location. Loan applicants can request Follow-on Loans in $50,000 increments.

Grant Program:

The CORE Grant Program is a noncompetitive, tiered grant process where the amount allocated to each tier is determined by the number of qualified applicants. Grant awards range from a minimum of $10,000 to a maximum amount determined by the total number of valid applications received during the application period. The program is funded through grant funds received by Go-Biz.

Qualifying Categories/Tiers:
 Business with no Business Operating Permit (Tiers 1-4) o Tier 1 - Applied for CUP
o Tier 2 - Has CUP (approved or existing – must be consistent with the use for proposed cannabis business)
o Tier 3 - Building Permits Issued
o Tier 4 - Certificate of Occupancy Issued
o Tier 4 B - Permitted shared-user that has Business Operating Permit of a permitted shared-use manufacturing facility that has both Business Operating Permit and Certificate of Occupancy
 Business with Business Operating Permit (Tier 5)
o Tier 5 - Business Operating Permit Issued
o Tier 5 B - Permitted shared-user that has Business Operating Permit of a permitted shared-use manufacturing facility that has both Business Operating Permit and Certificate of Occupancy
Licensing and Permitting
 Fee waivers and exemptions.
 Priority processing of applications.
 Exclusive access to any future storefront dispensary permits.

City of Santa Monica
Cannabis Equity Assessment
July 2025

Additional Program Services
 Technical assistance and training
 Cannabis Incubator Program
Staffing
The City of Sacramento has a dedicated Office of Cannabis Management (OCM), which operates under the City Manager’s Office. This office oversees the regulation, permitting, and policy development for cannabis businesses within the city.

City of Los Angeles (2017)
Eligibility Criteria
To be verified as a Social Equity Individual Applicant, an applicant must satisfy two of the three following criteria:
 Cannabis arrest or conviction in California for any crime relating to the sale, possession, use, manufacture, or cultivation of cannabis that occurred prior to November 8, 2016.  10 years of cumulative residency in a Disproportionately Impacted Area as defined by police reporting districts.
 Qualify as Low Income in the 2020 or 2021 calendar year.

Financial Assistance
Grant Program:

The Social Equity Entrepreneur Development Rental Assistance Grant Program (SEED Rental Grant Program), funded by Go-Biz, offers grants to equity applicants who have active cannabis applications and have secured leases or binding Letters of Intent. Retail equity applicants can receive $50,000 in grant funds distributed over three disbursements. Non-retail equity applicants may receive a single disbursement of $10,000 in grant funds.

Licensing and Permitting
 Fee waivers and exemptions.
 Priority processing of applications.
 Retail permit lottery.

City of Santa Monica
Cannabis Equity Assessment
July 2025

Additional Program Services
 Business, licensing, compliance, and technical assistance  Pro-bono and low-bono legal services program
Staffing
The City of Los Angeles has a dedicated Department of Cannabis Regulation (DCR), which oversees the City's commercial cannabis industry. Established following the legalization of adult-use cannabis in California, the DCR is responsible for regulating cannabis businesses, ensuring compliance with local and state laws, and promoting equitable participation in the industry.

City of Long Beach (2018)
Eligibility Criteria
An Equity Applicant must satisfy the following criteria:
 Be a natural person; and
 In the last year, have had an annual family income at or below 80% of the Los AngelesLong Beach-Glendale (LA County) Area Median Income (AMI), and a net worth below $250,000; and
 Have lived in a Long Beach census tract for a minimum of five (5) years, either consecutively or in total, where at least 51% of current residents have a household income at or below 80% of the Los Angeles Area Median Income; and  Was either: (1) during the period of 1971-2016, arrested for, convicted of, or adjudged to be a ward of the juvenile court for any crime under the laws of California or any other jurisdiction relating to the sale, possession, use, manufacture, or cultivation of cannabis; or (2) during the period of 1971-2016, has a parent, sibling, or child who was arrested for, convicted of, or adjudged to be a ward of the juvenile court for any crime under the laws of California or any other jurisdiction relating to the sale, possession, use, manufacture, or cultivation of cannabis.

Financial Assistance
Grant Program:

City of Santa Monica
Cannabis Equity Assessment
July 2025

The Cannabis Equity Direct Grants Program, funded by GO Biz, offers grants to local cannabis equity entrepreneurs. Grants are distributed at four key stages of the business license process, aiding Equity Applicants in establishing sustainable cannabis businesses. The grant amount varies depending on the type of cannabis business and the size of the facility if an Equity Applicant fulfills all milestones' requirements.

Grant Milestones:
 Milestone #1: Securing Your Business Location
 Milestone #2: Drawing Up Plans
 Milestone #3: Starting Construction
 Milestone #4: Opening Your Business
Licensing and Permitting
 Fee waivers and exemptions.
 Priority processing of applications.
 Application workshops.
 Exclusive access to any future storefront dispensary permits.

Additional Program Services
 Technical assistance and training.
 Community Reinvestment Program.
o Adult-use cannabis businesses must submit plans outlining their strategies for supporting and reinvesting in communities that have been most affected by the War on Drugs.
 Cannabis Equity Employment Program.
o Adult-use cannabis businesses must have equity employees working for at least 40% of the total annual work hours at the establishment.

Staffing
The City of Long Beach has a dedicated Office of Cannabis Oversight (OCO), which operates under the City Manager’s Office. Established following the passage of Measure MM in 2016 and the Adult-Use Cannabis Ordinance in 2018, the OCO is responsible for regulating and overseeing all commercial cannabis activities within the city.

City of Santa Monica
Cannabis Equity Assessment
July 2025

6. Findings
Each of the following findings are rooted in best practices from peer cities, data analysis, and community outreach and feedback. They present key takeaways to help formulate the recommendations in the following chapter for a successful equity program.

1. Unrestricted Permitting and Licensing May Have Consequences Lessons from other jurisdictions underscore the risks associated with rapid or unstructured cannabis market expansion. While unrestricted adult-use licensing can stimulate economic growth and broaden participation, it often results in market oversaturation, dominance by large corporations, and the displacement of small, community-rooted operators. These dynamics are particularly harmful to equity applicants, who frequently lack the financial resources, infrastructure, and political influence to compete. Without intentional policy design and protective measures, there is a high risk that equity licensees will be pushed out of the marketplace, undermining the program’s goals.

2. Program Eligibility Criteria Should Prioritize Those Most Harmed by Cannabis Enforcement
An effective equity program must prioritize those most impacted by historical cannabis criminalization. This includes individuals with past cannabis-related arrests or convictions, lowincome residents, and those living in communities disproportionately targeted by enforcement.

To ensure that opportunities reach those for whom the program is intended, Santa Monica should adopt clear, inclusive, and data-driven eligibility criteria. Considerations include:
 Documented cannabis arrest or conviction (self or immediate family).  Household income below 80% of Area Median Income (AMI).  Residency in a disproportionately impacted area or in the City.  Ownership and control of the applying business.
 Tiered eligibility to support varying levels of need.

City of Santa Monica
Cannabis Equity Assessment
July 2025

3. Application and Permitting Processes Present Barriers to Entry Complex and costly application processes can exclude otherwise eligible equity applicants. High permit fees, extensive documentation requirements, and lengthy timelines often favor wellcapitalized applicants. Streamlining and simplifying these processes, while maintaining accountability and integrity, will help reduce barriers and foster meaningful participation from equity entrepreneurs.

4. Systemic Barriers Limit Access to the Regulated Marketplace Even when eligibility criteria are met, equity applicants face persistent structural challenges, including lack of start-up capital, limited access to legal and technical assistance, and the lingering consequences of a criminal record. These barriers must be actively addressed through wraparound services, financial assistance, and targeted interventions that level the playing field.

5. Equity Applicants are Vulnerable to Exploitative Partnerships Many equity applicants enter the market with limited business experience and few financial resources, making them susceptible to exploitative arrangements. Stakeholders cited ongoing concerns with “rent-a-owner” schemes, where equity licensees are used to meet program requirements but hold no real control or long-term stake in the business. These practices dilute the intent of equity programs and can result in legal and reputational harm. Strong safeguards and vetting procedures are needed to ensure ownership is authentic, meaningful, and beneficial to the equity applicant.

6. Stakeholder Engagement and Education are Crucial to Program Success Broad-based outreach and public education are essential for fostering participation and reducing stigma associated with cannabis and the cannabis industry. Many residents, particularly in historically over-policed communities, may distrust government processes or be unaware of available opportunities. Others may still view cannabis through a criminal lens. Proactive communication strategies, especially those that engage trusted messengers, can build trust, encourage participation, and foster a more inclusive local cannabis economy.

City of Santa Monica
Cannabis Equity Assessment
July 2025

7. Past Convictions Have Long-Term Consequences
Despite statewide reforms, many individuals continue to experience the collateral consequences of cannabis-related convictions, including barriers to employment, housing, and financial aid.

While AB 1793 (Bonta, 2018) mandated automatic record sealing for eligible convictions, implementation gaps remain. The City should explore ways to partner with legal aid providers, the District Attorney’s Office, and community groups to ensure that individuals are aware of and can access expungement services.

8. Lack of Workforce Development Limits Equitable Participation Many disproportionately impacted individuals lack access to industry-specific training programs that could prepare them for success in the legal cannabis market. This shortage of educational and workforce development opportunities limits their ability to secure living-wage jobs or pursue entrepreneurial pathways. Expanding access to vocational training, mentorship, and apprenticeship programs is key to building a sustainable equity-centered cannabis workforce.

9. Sustainable Program Funding Is Critical to Success and Long-Term Effectiveness of the Program
Long-term success of the Cannabis Equity Program depends on sustained investment. Cities across California have struggled to operate equity programs due to inconsistent funding and inadequate staffing. Without sufficient resources, support services such as technical assistance, outreach, legal aid, and financial assistance cannot be delivered at the scale needed. The City should explore diverse funding streams including cannabis tax revenues, state grants, and philanthropic partnerships, to ensure the program’s viability.

10.Community Reinvestment is Key to Providing Communitywide Equity Program Benefits
Cannabis legalization presents a unique opportunity to reinvest in communities harmed by prohibition. By dedicating a portion of cannabis-related revenues to community-driven initiatives ( e.g. youth programming, job training, and reentry services) the City can begin to repair the harms of past enforcement while fostering economic resilience. Reinvestment strategies should be guided by input from impacted communities and aligned with broader equity goals.

City of Santa Monica
Cannabis Equity Assessment
July 2025

11.Ongoing Data Collection and Program Evaluation Are Essential to Program Success
Effective implementation requires robust data collection and evaluation. Monitoring key performance indicators (e.g. licensing outcomes, ownership patterns, employment statistics, and service utilization) will help the City track progress, identify gaps, and make informed adjustments. Transparency and accountability are essential to maintaining community trust and ensuring that the program evolves to meet changing needs.

City of Santa Monica
Cannabis Equity Assessment
July 2025

7. Potential Equity Program Elements
The following potential equity program elements provide a full menu of possibilities for Santa Monica’s equity program. The elements are grouped by themes to address the challenges and opportunities identified in this Equity Assessment. These program elements are designed to promote equitable access, protect equity participants, and build a sustainable and communitycentered cannabis program in Santa Monica.

Licensing Structure and Market Access
To prevent market conditions that undermine the goals of the equity program, the City could adopt a phased and controlled licensing approach that ensures equity applicants are given early, meaningful, and prioritized access to the regulated market.

Limit on Licenses with Equity Set-Asides
 Establish zoning parameters that naturally limit the number of retail licenses to prevent oversaturation.
 Reserve a specific number of retail licenses exclusively for equity applicants during the early phases of licensing and maintain priority access in future licensing phases.

Phased Market Entry
 Implement a staggered rollout of licenses, granting equity applicants a head start (e.g., 12–24 months) before opening the process to general applicants.  Use the early phase to provide technical assistance, funding, and permitting support to equity businesses to help them establish and stabilize.

Ongoing Market Impact Monitoring
 Create a system for monitoring market conditions, including equity applicant participation, market saturation levels, and business viability to inform future licensing decisions and program policies as needed.

Application and Permitting Process
To reduce bureaucratic and financial hurdles, the City should design a simplified, supportive permitting system for equity applicants:

City of Santa Monica
Cannabis Equity Assessment
July 2025

Streamlined Licensing Process
 Offer priority processing and expedited review for equity applicants with a dedicated staff member or cannabis department.
 Waive or defer application and license fees for qualified equity applicants.

Provisional Approval
 Allow provisional approval of licenses before securing a business location to help equity applicants attract investors and secure financing.
 Provide a time-limited window for provisional permit holders to finalize site selection and obtain full approval.

Workshops or Guidance
 Host permitting and compliance workshops to help applicants navigate the permitting process confidently and efficiently.

Equity Program Support Services
The City could implement comprehensive support services to remove entry barriers and promote equity applicant success. These services should address financial, administrative, business, and legal challenges through direct assistance and strategic partnerships.

Financial
 Cover training and certification fees to help applicants meet industry requirements.  Establish a loan or grant program to assist with start-up capital and ongoing business expenses.

Administrative
 Offer cannabis regulatory compliance training to ensure businesses meet local and state requirements.
 Establish pro bono legal assistance programs for business structuring, contracts, and compliance.

Business
 Creation of training curriculum or partnership with local academic institutions or businesses.
 General business development training.

City of Santa Monica
Cannabis Equity Assessment
July 2025

 Cannabis-specific business development training.
 Cannabis employment training.
 Apprenticeship/mentorship programs.

Legal
 Provide resources for expungement services to assist those with past cannabis convictions to get their records.
 Collaborate with legal aid organizations for workshops and case assistance.

Preventing Predatory Practices
Equity applicants are vulnerable to exploitative partnerships. The City could adopt safeguards to protect their ownership, autonomy, and financial interests:

Ownership Transparency
 Require disclosure of ownership and profit-sharing agreements during licensing.

Contract Review & Legal Support
 Implement a formal review process for equity ownership and investor contracts.  Provide standard templates for operating agreements and investment deals, including:
o Minimum ownership thresholds.
o Decision-making power.
o Buyout rights and succession.
o Management restrictions.
o Profit sharing.

Investor Vetting
 Develop a list or platform for pre-vetted, equity-aligned investors and partners.

Outreach and Education
The City should consider developing and implementing a comprehensive outreach and education strategy focused on raising awareness, restoring trust, and reducing stigma. Strategies to achieve these goals include:

City of Santa Monica
Cannabis Equity Assessment
July 2025

Community Outreach and Education
 Host public meetings, workshops, and listening sessions to provide information about the cannabis equity program and address community concerns.  Engage directly with impacted communities through local events, neighborhood organizations, and town halls.
 Develop culturally competent educational materials tailored to different communities, including multilingual resources.
 Utilize various media outlets to address misconceptions about cannabis businesses and expand outreach efforts to communicate the objectives of the equity program.

Partnerships and Collaborations
 Work with community-based organizations, advocacy groups, and business networks to enhance outreach efforts and build trust.
 Partner with legal aid groups, workforce development programs, and small business support organizations to provide direct services to equity applicants.  Involve trusted community leaders and influencers in outreach efforts to improve credibility and engagement.
 Connect individuals with expungement services at the District Attorney’s and Public Defender’s offices.

Social Media and Digital Outreach
 Provide real-time updates and program information on the cannabis website and social media channels.
 Create educational videos, infographics, and testimonials from equity applicants to highlight success stories and promote participation.
 Use targeted digital advertising to reach impacted communities and spread awareness of available resources.

Workforce Development and Employment Inclusion
To create long-term economic mobility for impacted individuals, the City could support job readiness and hiring pipelines within the cannabis industry:

Equitable Hiring
 Require licensed cannabis businesses to hire a designated percentage of employees from equity-eligible populations to promote economic inclusion.

City of Santa Monica
Cannabis Equity Assessment
July 2025

 Offer tax reductions, fee waivers, or other financial incentives to cannabis businesses that meet or exceed equity hiring benchmarks (i.e. 25% to 50% of workforce).

Creation of a Cannabis Training Program
 Develop a city-supported training initiative focused on cannabis cultivation, retail management, compliance, distribution, and manufacturing.

Partnerships to Leverage Available Resources
 Collaborate with colleges, workforce development organizations, and industry leaders to provide specialized entrepreneurship and job training programs.  Integrate business development training to help equity applicants navigate licensing, financial management, and operations.
 Connect equity applicants with statewide and national cannabis workforce training programs to maximize available resources and opportunities.

Community Reinvestment
The reinvestment of cannabis tax revenues back into the most affected neighborhoods could help address the impacts of cannabis criminalization for whole communities:

Targeted Investments
 Fund education, job training, legal aid, and housing support in impacted areas.  Provide resources for reentry programs and public health services.

Equity-Focused Business Ecosystem
 Support collaboration between cannabis equity applicants and ancillary businesses (e.g., construction, marketing, security, technology) that meet equity eligibility criteria, ensuring reinvestment stays within impacted communities.  Require or incentivize cannabis retail businesses to sell cannabis products from licensed cannabis equity businesses.
 Establish a Cannabis Equity Business Directory to connect equity cannabis operators with local, minority-owned ancillary service providers.

Sustainable Community Reinvestment through Cannabis Tax Revenue:
 Dedicate a percentage of local cannabis tax revenue specifically for community reinvestment in disproportionately impacted areas.

City of Santa Monica
Cannabis Equity Assessment
July 2025

 Establish a Community Reinvestment Fund to finance long-term social equity initiatives and economic empowerment programs.

Equity Program Funding Strategy
To ensure consistent and ongoing funding for the Cannabis Equity Program, the City could pursue a multi-source funding strategy that combines state grants, local tax revenue, and alternative funding streams.

Leverage State Grant Opportunities
 Continue applying for funding through the GO-Biz Cannabis Equity Grants Program for Local Jurisdictions, which offers up to $3,000,000 in Type 2 grants for program administration and equity applicant support.
 Ensure compliance with grant requirements, including the 1:1 matching funds contribution for awards exceeding $500,000 and restrictions on administrative and technical assistance allocations.
 Explore other state and federal grant opportunities that support economic development and social equity initiatives.

Establish a Dedicated Cannabis Tax Fund
 Allocate a portion of local cannabis tax revenue to sustain the equity program, reducing reliance on external grants.
 Structure tax allocations to cover equity applicant grants, fee waivers, workforce development programs, and technical assistance.

Explore Alternative Funding Sources
 Partner with private investors, social impact funds, and philanthropic organizations to create a community reinvestment fund that supports equity businesses.  Explore public-private partnerships to fund technical assistance, job training, and business development programs.

Ongoing Evaluation and Transparency
Consider active monitoring and data collection of the equity program to gain insights into its performance, identify areas that may need improvement or adjustment, and make informed decisions to enhance the program's overall effectiveness. Continue to monitor and update the equity program:

City of Santa Monica
Cannabis Equity Assessment
July 2025

 Monitor and share progress of the Equity Program;
 Monitor and share trends in the emerging legal cannabis industry;  Identify areas for course correction and/or unexpected consequences; and  Demonstrate an ongoing commitment to data-informed decision-making and strategic planning.

The following data metrics can be incorporated into the application, permitting, and permit renewal process:
 Types of drug-related offenses
 Demographic information
 Income status
 Race
 Ethnicity
 Gender
 Sexual identity
 Residency status
Ownership structure
 Workforce characteristics:
o Total number of employees
o Number of local employees
o Total number of equity employees
o Employment Status
 Equity program-specific data:
o Number of equity applicants to apply
o Number and types of services provided to equity applicants o Number of equity program applicants to receive licenses o Amount of grant funding provided to equity applicants City of Santa Monica
Cannabis Equity Assessment
July 2025

8. Recommendations for Santa Monica’s Equity Program
City Council has expressed interest in implementing a focused and equitable program that balances access, oversight, and community benefit. These Santa Monica-specific recommendations respond directly to the City’s scale, market conditions, and resources while aligning with the broader goals of social equity, community reinvestment, and local economic inclusion. The goal is to create a lean, high-impact equity program that delivers meaningful benefits to those disproportionately affected by cannabis enforcement while remaining practical and sustainable.

As a relatively small city of only 8.5 square miles, Santa Monica faces different constraints and opportunities than larger cities like Los Angeles, Oakland, or Long Beach. While many cannabis equity policy frameworks draw from statewide best practices and lessons from other jurisdictions, it may be necessary for Santa Monica to implement a more tailored approach to cannabis equity.

Equity Program Eligibility Criteria
It is recommended that the City adopt clear eligibility standards based on cannabis-related conviction history, low-income status, and Santa Monica residency (current or former), as these qualifiers aim to address those who have been historically shown to be the most impacted as described earlier in the report.

Recommendation: Conviction History
Prioritize individuals who have been arrested or convicted for cannabis-related offenses.  Minimum eligibility should include individuals with a past cannabis-related arrest or conviction.

Options to expand eligibility:
 Expand eligibility beyond Santa Monica to include arrests or convictions anywhere within California to reflect the broad impact of criminalization.  Include immediate family members (parents, siblings, children, or spouses) of individuals with cannabis-related arrests or convictions, recognizing the intergenerational consequences of cannabis enforcement.

Rationale:

City of Santa Monica
Cannabis Equity Assessment
July 2025

Research confirms that Black/African American and Hispanic/Latino communities have been disproportionately criminalized. Restricting eligibility to Santa Monica arrests would exclude many individuals who were impacted but later moved due to displacement, gentrification, or economic hardship. Including family members helps the program reach those indirectly affected.

Recommendation: Low-Income Status
Require applicants to meet a clearly defined low-income threshold to ensure resources benefit those most in need.
 Set eligibility at or below 80% of the Area Median Income (AMI).

Rationale:

Establishing clear financial criteria prevents the program from being exploited by individuals who do not face significant economic barriers. A well-defined low-income threshold ensures resources are allocated to those who need them most. A threshold of 80% of the Area Median Income (AMI) is a standard used by other cannabis equity programs across the state.

Recommendation: Residency Consideration
Ensure the program benefits both current and former Santa Monica residents who have been impacted by cannabis enforcement and the War on Drugs.
 Residency requirements should consider both current and former Santa Monica residents who lived in disproportionately affected areas.  Residency should be measured cumulatively rather than consecutive years, to avoid penalizing those displaced due to gentrification or economic instability.  Possible residency thresholds:
o Minimum of five years – cumulative or consecutive (Long Beach Model) o Five consecutive years (Sacramento Model)
o Cumulative of ten years (Oakland Model)
 Options to expand eligibility:
o Expand eligibility to those who currently or previously attended school in Santa Monica.
o Expand eligibility to those who currently or previously owned a business in Santa Monica.

Rationale:

City of Santa Monica
Cannabis Equity Assessment
July 2025

Prioritizing applicants who have lived in the most impacted neighborhoods (Figure 12 ‘Disadvantaged Census Tracts’) may increase the program’s effectiveness. A lack of this requirement may not ensure people of color and/or less than a high school education are benefitting from the program.

Recommendation: Ownership Consideration
Implement an equity ownership percentage threshold that balances protecting equity applicants while maintaining investment flexibility.
 Recommend requiring an equity ownership range between 40% to51%, with the equity applicant always maintaining majority share ownership which allows flexibility while ensuring equity applicants maintain decision-making power.  Option to expand support services:
o Programs to help equity applicants navigate ownership agreements and avoid predatory partnerships.

Rationale:

Setting ownership at 40% to51% ensures equity applicants benefit from the program while allowing flexibility in investment structures. Many California equity programs require at least 51% equity ownership to ensure that social equity partnerships retain control over their businesses and are not exploited by outside investors. However, requiring a strict 51% threshold may also discourage or limit opportunity for outside investors who provide essential funding. Legal assistance will protect applicants from predatory investors seeking to take advantage of the program.

Core Program Elements and Services
These are the minimum essential program elements and services the City should implement immediately. They focus on lowering barriers to entry for equity applicants while keeping having a streamlined and efficient administrative process.

Controlled Market Entry
 Implement a phased licensing timeline that provides equity applicants with early access (e.g., 12–24 months) to establish themselves before general licenses are issued.  Implementation Consideration:
 A phased licensing approach will have an impact on the timeline to get the first round of businesses permitted and is dependent on the length of time established for early access. Additionally, as permits will be limited based on zoning constraints, early access for equity applicants may encourage predatory partnerships.

City of Santa Monica
Cannabis Equity Assessment
July 2025

Financial
 Offer application and permit fee waivers or deferrals for qualified equity applicants.  Implementation Consideration:
 Offering application and/or permit fee waivers has financial implications that could result in loss of revenue to the City.

Application and Licensing
 Provide equity applicants with expedited application processing and review.  Host one or two workshops, either led by the City or a partner organization, to walk applicants through requirements, process, and timelines.  Allow provisional approval of licenses before securing a business location to help equity applicants attract investors and secure financing, with a time-limited window to finalize site selection and obtain full approval.
 Access to a digital resource hub with templates, checklists, and FAQs.  Require disclosure of ownership and profit-sharing agreements during licensing.

Administrative, Legal, and Technical Assistance
 Connect equity applicants with existing business development and cannabis industry resources.
 Refer equity applicants to pre-vetted legal aid groups and small business assistance providers, and workforce development organizations to administer direct services to equity applicants.
 Collaborate with the County District Attorney’s Office and Public Defender for expungement workshops.

Outreach and Program Information
 Continue to update and utilize the City’s cannabis equity webpage on the City’s website to provide clear program information online in multiple languages.  Targeted outreach to historically impacted communities using digital platforms, flyers, and community-based partnerships.

Employment and Product Inclusion
 Require licensed cannabis businesses to hire a designated percentage of employees from equity-eligible populations to promote economic inclusion.  Offer incentives to cannabis businesses that meet or exceed equity hiring benchmarks (i.e. 25% to 50% workforce).

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 Require or incentivize cannabis retail businesses to sell cannabis products from licensed cannabis equity businesses.

Program Monitoring and Evaluation
 Conduct annual program evaluations that monitor and share progress of the Equity Program.
 Monitor emerging legal cannabis industry trends and course correct as needed.  Monitor customer satisfaction and emerging needs with the equity program through surveys.

Community Reinvestment
 Dedicate a percentage of local cannabis tax revenue specifically for community reinvestment in disproportionally impacted areas.
 Establish a Community Reinvestment Fund to finance long-term social equity initiatives and economic empowerment programs.
 Explore other state and federal grant opportunities that support economic development and social equity initiatives.

Expanded Services with State Grant Funding
Subject the availability of State funding, if the City receives Type 2 funding from the California Cannabis Equity Grants Program for Local Jurisdictions administered by GO-Biz, the City could significantly expand its equity program beyond baseline services above. Under current grant program guidelines, the City may apply for up to $500,000 in grant funds without providing a local one-to-one funding match.

Up to 10% of the grant may be used for city administrative costs and an additional 10% may be allocated to consultant services, such as providing technical assistance or grant support. The remaining 80% must be distributed directly to equity applicants in the form of grants or other eligible direct financial assistance. The following are potential program enhancements that may be feasible with this funding.

Direct Financial Assistance
 Start-up Grants or Fee Waivers: Provide micro-grants ($5,000–$25,000 range) to equity applicants to cover local or state licensing fees, professional services, or first-year operating expenses.
 Lease Assistance or Rent Subsidies: Offer limited-term subsidies to help equity applicants secure compliant locations in Santa Monica.

City of Santa Monica
Cannabis Equity Assessment
July 2025

Expanded Legal and Technical Support
 One-on-One Professional Services Vouchers: Offer subsidized access to vetted legal, financial, and technical consultants (e.g., for corporate formation, tax planning, or security planning).
 Compliance Readiness Checks: Fund pre-inspection walkthroughs to help applicants meet local code and Department of Cannabis Control (DCC) requirements before final inspections.

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Cannabis Equity Assessment
July 2025

Appendix A: Cannabis Equity Assessment Survey (English) City of Santa Monica
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Appendix B: Cannabis Equity Assessment Survey (Spanish) City of Santa Monica
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EXHIBIT B

CANNABIS EQUITY PROGRAM MANUAL
City of Santa Monica
Cannabis Equity Program September 2025
DRAFT Cannabis Equity Program
Table of Contents

1. Program Purpose

2. Definitions

3. Program Eligibility

4. Program Benefits and Services

5. Program Administration, Monitoring and Evaluation

1. Program Purpose
The Cannabis Equity Program (“Program”) seeks to reduce the barriers of entry and participation for individuals that have been negatively impacted by the disproportionate enforcement of cannabis related crimes by providing them access into the legal cannabis industry. The Program aims to recognize and address the ongoing negative social impact associated with the disproportionate enforcement of cannabis policies on Black, Indigenous, and people of color (BIPOC) and low-income communities in the City. Long-term impacts from the criminalization of cannabis include social stigma of criminal conviction and incarceration, family and community disintegration, permanent loss of property, disqualification from employment opportunities, reduced earnings potential, exclusion from public benefits, and inability to vote in public elections.

As a relatively small city of only 8.5 square miles, Santa Monica faces different constraints and opportunities than larger cities like Los Angeles, Oakland, or Long Beach. While many cannabis equity policy frameworks draw from statewide best practices and lessons from other jurisdictions, it was appropriate for Santa Monica to implement a more tailored approach to cannabis equity.

At the direction of City Council, this Program implements a focused and equitable program that balances access, oversight, and community benefit. The program elements respond directly to the City’s scale, market conditions, and resources while aligning with the broader goals of social equity, community reinvestment, and local economic inclusion. The overarching goal is to create a lean, high-impact equity program that delivers meaningful benefits to those disproportionately affected by cannabis enforcement while remaining practical and sustainable.
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Cannabis Equity Program September 2025

2. Definitions
Except for as provided herein, for purposes of the Program, the words and phrases defined in Chapter 6.200 of the Santa Monica Municipal Code shall have the same meaning herein.

Further, the following words and phrases shall have the meanings respectively ascribed to them by this section:
a) “Applicant” means an individual or business who makes a formal application to be admitted in the Program.
b) "Business" means a firm, organization, association, partnership, business trust, corporation, company, or like entity.
c) "Cannabis Equity Program" or ''the Program" means the City of Santa Monica Cannabis Equity Program.
d) "Program participant" or "participant" means an individual or a business that has been accepted into the Program.
e) "Immediate family member" means an individual who had a parent, legal guardian, child, spouse, or dependent, or was a dependent of an individual who was arrested for, convicted of, or adjudged to be a ward of the juvenile court for any non-violent crime under the laws of California or any jurisdiction relating to the sale, possession, use, cultivation, manufacture, or transport of cannabis. f) "Individual" means a person.
g) "Low-income individual" means an individual who currently (at the time of licensing) lives in a household with a household income that is at or below 80 percent of the Area Median Income (AMI) for the county of residence, as determined by the United States Department of Housing and Urban Development or its successor agency, and net worth below $250,000.

3. Program Eligibility for Equity Applicants
The City’s eligibility standards are based on cannabis-related conviction history, low-income status, and Santa Monica residency (current or former), as these qualifiers aim to address those who have been historically shown to be the most impacted as described in Santa Monica’s Cannabis Equity Assessment (July 2025).
a. Conviction History. Prioritize individuals who have been or have immediate family members who have been arrested or convicted for cannabis-related offenses:
 Individuals with a past cannabis-related arrest or conviction in compliance with Article 6 of the Santa Monica Municipal Code.
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Cannabis Equity Program September 2025
 Immediate family members (as defined herein) of individuals with cannabisrelated arrests or convictions, recognizing the intergenerational consequences of cannabis enforcement.

Rationale:

The Equity Assessment data from 1993-2023 confirms that Black/African American and Hispanic/Latino communities have been disproportionately criminalized.

Restricting eligibility to Santa Monica arrests would exclude many individuals who were impacted but later moved due to displacement, gentrification, or economic hardship. Including immediate family members helps the program reach those indirectly affected.
b. Low-Income Status. Require applicants to meet a clearly defined low-income threshold to ensure resources benefit those most in need.
 Set eligibility at or below 80% of the Area Median Income (AMI).

Rationale:

Establishing clear financial criteria prevents the program from being exploited by individuals who do not face significant economic barriers. A well-defined low-income threshold ensuresresources are allocated to those who need themmost. A threshold of 80% of the Area Median Income (AMI) is a standard used by other cannabis equity programs across the state.
c. Community Ties. Ensure the program benefits both current and former Santa Monica residents, students, and business owners who have been impacted by cannabis enforcement and the War on Drugs.
 Cumulative of three non-overlapping years in any of the following:
o Those who currently or previously resided in Santa Monica; or o Those who currently or previously attended school in Santa Monica-Malibu Unified School District; or
o Those who currently or previously owned a business in Santa Monica.

Rationale:

Prioritizing applicants who have lived in the most impacted neighborhoods (Figure 12 ‘Disadvantaged Census Tracts’) may limit the program’s effectiveness and reach.

Requirements should consider both current and former Santa Monica residents who lived in disproportionately affected areas and should be measured cumulatively rather than consecutively to avoid penalizing those displaced due to gentrification or 4 City of Santa Monica
Cannabis Equity Program September 2025
economic instability. Focusing on individuals who attended K-12 schools in Santa Monica is more likely to reflect longer-term residency and stronger community connections. By contrast, Santa Monica College students often represent a more transient population, many of whom reside in other cities during or after their enrollment, which may not align as closely with the program’s intent of addressing local impacts.
d. Ownership. Require equity ownership majority that balances protecting equity applicants while maintaining investment flexibility.
 Require an equity ownership to have majority share which allows flexibility while ensuring equity applicants maintain decision-making power.

Rationale:

Setting a majority ownership requirement ensures equity applicants benefit from the program while allowing flexibility in investment structures. Many California equity programs require at least 51% equity ownership to ensure that social equity partnerships retain control over their businesses and are not exploited by outside investors. However, requiring a strict 51% threshold may also discourage or limit opportunity for outside investors who provide essential funding. Legal assistance will protect applicants from predatory investors seeking to take advantage of the program.

The equity applicant will need to sign documentation attesting that they meet the above equity program eligibility criteria.

4. Program Benefits and Services
A Program participant shall be entitled to receive the following benefits and services:
a. Core Program Elements and Services. These are the minimum essential program elements and services the City should implement immediately. They focus on lowering barriers to entry for equity applicants while having a streamlined and efficient administrative process.
• Financial:
o Application and permit fee waivers or deferrals for qualified equity applicants.
• Application and Licensing:
o Provide equity applicants with expedited application processing and review.
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o Exemption from minimum distance requirement from other cannabis uses and limits to number of cannabis uses per block.
o Allow provisional approval of licenses before securing a business location to help equity applicants attract investors and secure financing, with a time-limited window to finalize site selection and obtain full approval. o Require disclosure of ownership and profit-sharing agreements during licensing to ensure equity applicants are protected.
• Administrative, Legal, and Technical Assistance:
o Connect equity applicants with existing business development and cannabis industry resources.
o Refer equity applicants to pre-vetted legal aid groups and small business assistance providers, and workforce development organizations to administer direct services to equity applicants.
o Collaborate with the County District Attorney’s Office and Public Defender for expungement workshops.
• Outreach and Program Information:
o Continue to update and utilize the City’s cannabis equity webpage on the City’s website to provide clear program information online in multiple languages.
o Work with City’s DEI Office to market the Equity Program. o Targeted outreach to historically impacted communities using digital platforms, flyers, and community-based partnerships.
b. Expanded Program Services with State Grant Funding. Subject to the availability of State funding, if the City receives Type 2 funding from the California Cannabis Equity Grants Program for Local Jurisdictions administered by GO-Biz, the City could significantly expand its equity program beyond baseline services above. Under current grant program guidelines, which are subject to change,theCitymay apply for up to $500,000 in grantfunds without providing a local one-to-one funding match.

Up to 10% of the grant may be used for city administrative costs and an additional 10% may be allocated to consultant services, such as providing technical assistance or grant support. The remaining 80% must be distributed directly to equity applicants in the form of grants or other eligible direct financial assistance. The following are potential program enhancements that may be feasible with this funding.
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Cannabis Equity Program September 2025
• Direct Financial Assistance:
o Start-up Grants or Fee Waivers: Provide micro-grants ($5,000–$25,000 range) to equity applicants to cover local or state licensing fees, professional services, or first-year operating expenses.
o Lease Assistance or Rent Subsidies: Offer limited-term subsidies to help equity applicants secure compliant locations in Santa Monica. • Expanded Legal and Technical Support:
o One-on-One Professional Services Vouchers: Offer subsidized access to vetted legal, financial, and technical consultants (e.g., for corporate formation, tax planning, or security planning).
o Compliance Readiness Checks: Fund pre-inspection
walkthroughs to help applicants meet local code and
Department of Cannabis Control (DCC) requirements before final inspections.

5. Program Administration, Monitoring and Evaluation
The Program will be executed administratively in compliance with the administrative guidelines in Article 6 of the municipal code.

The City will evaluate, monitor and share progress of the Program, including number of participants and participant success, measured by the number of participants either ready to obtain or that have obtained a cannabis business operating permit. The City may expand the eligibility and benefits of the program. The evaluation of the Program should include any ongoing barriers to entry and participation, evaluations of the Equity Study, and recommended solutions as needed to advance equity.