ACTION:
____________________________
Clerk/Secretary
Department: City Clerk Item No: D1
Prepared by: Kathy Valdez, City Clerk Meeting Date: February 27, 2024 Approved by: John Conley, City Manager Agenda Location: Discussion SUBJECT: COMMERCIAL CANNABIS EQUITY ASSESSMENT REPORT
RECOMMENDATION:
1.Adopt City Council Resolution No. 2024- , accepting the City of Vista Cannabis Equity Assessment.
2.Provide direction to staff on the development of a Cannabis Equity Program.
CORRELATION TO CITY COUNCIL GOALS: Economic Development PRIOR ACTION: On June 27, 2023, adopted City Council Resolution No. 2023-123, awarding a contract to SCI Consulting Group for Cannabis Equity Assessment Services (Vote: 5-0).
On February 28, 2023, adopted City Council Resolution No. 2023-19, authorizing State of California Cannabis Equity Act grant funding (Vote: 5-0).
On November 15, 2022, City Council Resolutions No. 2022-166, authorizing the submittal of an application for the State of California Cannabis Equity Act Grant funding (Vote: 4-1, Ritter opposed).
On August 9, 2022, City Council discussed a commercial cannabis cultivation social equity program and accepted Option One (delaying the implementation of cannabis cultivation until a study is completed to develop a social equity component to the application process) and directed staff to return with information on the scope and cost of a study (Vote: 5-0).
STATEMENT ON THE SUBJECT: The City received a grant from the California Governor's Office of Business and Economic Development’s (GO-Biz) Cannabis Equity Grants Program for Local Jurisdictions to complete an assessment to support the development of a local cannabis equity program. SCI Consulting Group (SCI) was selected by the City through a competitive RFP process to conduct the assessment.
The primary purpose of the Equity Assessment is to examine the impact of cannabis criminalization in the City of Vista and to identify barriers that have prevented communities and individuals from participating in the legal cannabis industry. The Equity Assessment utilized a data-driven analysis to identify communities that have been disproportionately impacted by cannabis criminalization, including data on arrests, poverty rates, educational attainment levels, and other indicators of the impact of cannabis enforcement.
Furthermore, the Equity Assessment reviewed the characteristics of the existing cannabis industry to understand the barriers to entry faced by affected communities within the City.
AGENDA
REPORT
CITY COUNCIL
COMMUNITY DEVELOPMENT COMMISSION
SUCCESSOR AGENCY
BUENA SANITATION DISTRICT
JOINT POWERS FINANCING AUTHORITY
Approved above recommendation, adopted City Council Resolution No. 2024-25. Provided direction to staff.
Vote: 5-0
MEETING DATE: February 27, 2024 PAGE 2
SUBJECT: COMMERCIAL CANNABIS EQUITY ASSESSMENT REPORT
The goal of the Equity Assessment is to inform the development and implementation of a cannabis equity program in the City, which is a set of policies, programs, and/or initiatives designed to assist disproportionately affected communities in entering the legal cannabis industry and succeeding as entrepreneurs.
Outreach:
To facilitate the development of the Equity Assessment, SCI and City staff engaged in extensive community outreach efforts. The primary objective was to gain a comprehensive understanding of the needs and goals of the community set to benefit from a future cannabis equity program. This outreach involved the use of one online survey (both in English and Spanish), two (2) community meetings, and interviews with key stakeholders, all of which were aimed at gathering valuable insights and recommendations for the program.
Assessment findings:
Cannabis-related arrest data was obtained from the San Diego County Sherrif’s Department (SDCSD) for years 2014 to 2023. The San Diego Association of Governments (SANDAG) and the Automated Regional Justice Information System have a prevailing policy to retain member agency data, including crime-related information, for a duration of 7 years. As a result, the SDCSD was unable to furnish data preceding the 7- year retention period. Nevertheless, historical arrest data for the San Diego County Region dating back to 1989 was acquired from SANDAG to supplement the analysis.
Between 2014 and 2023, a total of 685 cannabis-related arrests occurred in the City. To assess the impact of cannabis-related arrests on different demographics in the City, the arrest percentages were compared to the total population of each group within the City. The data reveals that Black/African American individuals were disproportionately arrested compared to their representation in the City’s population.
Analysis of the supplemental data acquired from SANDAG of total arrest rates per 1,000 population by ethnicity revealed a disproportionate impact on Black/African American and Hispanic populations across the region.
To identify communities within the City that have been disproportionately affected by historical cannabis criminalization, a geospatial analysis of arrest locations was conducted, considering three key indicators:
the presence of people of color populations, low-income populations, and levels of educational attainment by census tract. Historically, racial and ethnic minority groups have faced higher arrest rates for cannabis- related offenses, and individuals with limited financial resources encounter obstacles in accessing the regulated cannabis industry. Educational attainment is also crucial, as those with lower education levels may lack the resources needed for successful industry entry. The Assessment evaluated these indicators, along with the location and concentration of cannabis-related arrests, and identified the north-central region of the City as a disproportionately affected community.
Assessment Recommendations:
SCI Consulting Group provided the following recommendations for the development and implementation of a cannabis social equity program:
1.Conduct additional stakeholder and public outreach, along with educational efforts, to inform the development of the City's equity program.
2. Adopt regulatory changes to provide licensing opportunities for equity ownership.
3.Develop eligibility requirements to serve those who were disproportionately impacted by cannabis enforcement.
4.Evaluate and improve application and permitting process to ensure equity applicant success and incentivize ongoing support.
5.Develop equity program services/programs that address and mitigate barriers to entry into the legalized marketplace.
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MEETING DATE: February 27, 2024 PAGE 3
SUBJECT: COMMERCIAL CANNABIS EQUITY ASSESSMENT REPORT
6.Raise awareness about cannabis expungement opportunities.
7. Create and or incentivize workforce development opportunities.
8.Secure and provide sustainable funding for the equity program.
9.Establish a community reinvestment program to help repair communities impacted by past cannabis-related criminalization.
10.Continue to monitor, collect data, and improve and update equity program.
Next Steps:
Staff is seeking City Council direction on key components to be included in the City’s cannabis equity program, including:
1)Should the program provide a preference to equity applicants or should a certain number/percentage of new cannabis business licenses be limited to equity applicants? 2)Should the program include fee waivers or deferrals?
3)Should the program provide grants or loans?
Based on City Council direction, staff will develop a cannabis equity program for the City Council’s consideration and adoption. Staff intends to have the draft cannabis equity program available for public review and comment a minimum of 15 days prior to the meeting. If City Council desires, a community meeting to solicit input on the draft program guidelines may be scheduled prior to bringing the item for approval.
Once the City adopts a Social Equity program, the City would become eligible to seek Type 2 grant funding through the Cannabis Equity Grants Program for Local Jurisdictions. The Cannabis Equity Grants Program for Local Jurisdictions application period is available from early November through mid- December on an annual basis. The City can seek financial support of up to $3,000,000 through the Type 2 grant, to fund and administer its equity program. Grant awards exceeding $500,000 require a 1:1 matching funds contribution from the City during the grant term. The guidelines specify that no more than 10 percent of the grant award can be allocated for administration and no more than 10 percent can be used for direct technical assistance.
FISCAL IMPACT: There is no fiscal impact associated with the acceptance of the cannabis equity assessment report. Staff will identify potential funding sources when the cannabis equity program is presented to the City Council for adoption.
EXHIBITS:
1.City Council Resolution No. 2024- , accepting the City of Vista Cannabis Equity Assessment
2.Cannabis Equity Assessment
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RESOLUTION NO. 2024-
A RESOLUTION OF THE CITY COUNCIL OF THE CHARTERED CITY OF
VISTA, CALIFORNIA, ACCEPTING THE CITY OF VISTA CANNABIS EQUITY
ASSESSMENT
The City Council the City of Vista does resolve as follows:
1. Findings. The City Council hereby finds and declares the following:
A. The California Cannabis Equity Act of 2018 (“Equity Act”) established by Senate Bill 1294 allows for direct assistance to local jurisdictions’ cannabis equity programs that can, in turn, provide assistance to local equity applicants
B. On February 28, 2023, the City accepted Governor of the State of California’s Office of Business and Economic Development (Go-Biz) grant funds to conduct a cannabis equity assessment.
C. On June 27, 2023, SCI Consulting Group was awarded a contract to conduct and prepare the Cannabis Equity Assessment for the City of Vista.
D. The completed Cannabis Equity Assessment presents findings and recommendations for the development of a cannabis equity program.
2. Action.
The City Council accepts the City of Vista Cannabis Equity Assessment, as set forth in Exhibit A.
3. Adoption. PASSED AND ADOPTED at a meeting of the City Council of the City of Vista held on February 27, 2024, by the following vote:
AYES:
NOES:
ABSTAIN:
APPROVED AS TO FORM:
WALTER CHUNG, CITY ATTORNEY
By:
JOHN FRANKLIN, MAYOR
ATTEST:
KATHY VALDEZ, CITY CLERK
By:
APPROVED
Walter C. Chung
20240214141547
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EXHIBIT 1
CITY OF VISTA
Cannabis Equity Assessment
February 2024
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EXHIBIT 2
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Acknowledgements
The City of Vista extends its sincerest appreciation to the following individuals and entities whose contribution has made the creation of the Cannabis Equity Assessment possible:
City Council
John B. Franklin, Mayor
Katie Melendez, Deputy Mayor
Joe Green, Council Member
Corinna Contreras, Council Member
Dan O'Donnell, Council Member
City Staff
Kathy Valdez, City Clerk
Angie Baggett, Management Analyst- Grants Writer
San Diego County Sheriff’s Department
Diana Lopez, Senior Crime and Intelligence Analyst, Vista and Fallbrook Stations State of California
Gavin Newsome, Governor
Go-Biz Grants Team
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Table of Contents
Introduction ............................................................................................................... 1 Purpose of Cannabis Equity Assessment ................................................................................... 1
1. Cannabis Equity Analysis ..................................................................................... 3 Methodology ............................................................................................................................. 3 Limitations of the Equity Analysis ............................................................................................. 3 Cannabis Enforcement History .................................................................................................. 4 City of Vista Demographics ....................................................................................................... 6 City of Vista Cannabis-Related Arrests ...................................................................................... 6 City of Vista Cannabis-Related Arrests by Race/Ethnicity ......................................................... 7 Impact of the War on Drugs in the San Diego Region ............................................................... 8 Identification of Disproportionately Affected Communities ................................................... 10 Disproportionately Affected Communities Findings ............................................................... 15 Conclusions Regarding Disproportionately Affected Communities ........................................ 17
2. Overview of Cannabis-Related Businesses and Activities ................................... 18 City of Vista Cannabis Legislative History ................................................................................ 18 Allowable Land Use Zones ....................................................................................................... 18 Taxation: .................................................................................................................................. 19 Fees: ........................................................................................................................................ 19 Current Cannabis Businesses................................................................................................... 20 Expansion of Cannabis Permits and Activities ......................................................................... 21
3. Barriers to Entry ................................................................................................ 24 Financial Barriers ..................................................................................................................... 24 Technical Barriers .................................................................................................................... 26 Criminal Barriers ...................................................................................................................... 28
4. Community Outreach and Feedback .................................................................. 29 Online Survey .......................................................................................................................... 29 Community Meetings .............................................................................................................. 29 Stakeholder Interviews ............................................................................................................ 30 Summary of Feedback and Common Themes ......................................................................... 30
5. Best Practices ................................................................................................... 33 City of Oakland - Cannabis Equity Program (2017) ................................................................. 33 02/27/2024 D1 Page 7 of 86
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San Francisco – Office of Cannabis - Equity Program (2017) .................................................. 34 City of Sacramento - Cannabis Opportunity Reinvestment and Equity (C.O.R.E.) Program 2018) ...................................................................................................................................... 36 City of Los Angeles – Cannabis Social Equity Program (2017) ................................................. 38 City of Long Beach – Cannabis Equity Program (2018) ........................................................... 38 City of San Diego – Socially Equitable Cannabis Program (2024 – Proposed) ........................ 40
6. Findings and Recommendations ........................................................................ 42
1. Stakeholder and Public Outreach and Education ......................................................... 42
2. Adopt Regulatory Changes to Provide Opportunities for Equity Ownership ............... 43
3. Equity Program Eligibility Criteria ................................................................................. 43
4. Equity Program Application and Permitting ................................................................. 45
5. Equity Program Benefits and Services .......................................................................... 46
6. Raise Awareness of Expungement Opportunities ........................................................ 47
7. Workforce Development Opportunities ...................................................................... 48
8. Equity Program Funding ............................................................................................... 48
9. Community Reinvestment ............................................................................................ 49
10. Program Data Collection, Monitoring, and Updates .................................................... 50 Appendix A: The City of Vista Cannabis Equity Website ............................................. 51 Appendix B: Cannabis Equity Assessment Survey (English) ........................................ 52 Appendix C: Community Meeting Invitations ............................................................ 77 02/27/2024 D1 Page 8 of 86
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List of Figures
Figure 1 – Distribution of Race/Ethnicity, City of Vista (2021) ........................................................ 6 Figure 2 – Cannabis-Related Arrests by Year, City of Vista (2014-2023) ......................................... 7 Figure 3 – Cannabis-Related Arrests by Race/Ethnicity, City of Vista (2014-2023) ......................... 7 Figure 4 – Population Percentage vs. Arrest Percentage, City of Vista (2014-2023)....................... 8 Figure 5 – Cannabis-Related Arrests by Year, San Diego Region (1993-2015) ................................ 9 Figure 6 – San Diego Regional Arrest Rates / 1,000 - Ethnicity ..................................................... 10 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 – Disadvantaged Census Blocks ..................................................................................... 16 Figure 11 – Cannabis Business Application Fees............................................................................ 20 Figure 12 – Cannabis Business Regulatory Compliance Fees ........................................................ 20 Figure 13 – Operational Cannabis Businesses ............................................................................... 21 02/27/2024 D1 Page 9 of 86
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Introduction
Long-standing and persistent obstacles to general business opportunities for affected communities that exist broadly within the United States are even more severe regarding cannabis- related businesses, largely because of the long-term consequences of cannabis enforcement associated with the racial targeting from the War on Drugs. The devastating impact of the cannabis prohibition era in California has been felt throughout the State, especially for Black, Indigenous, People of Color (BIPOC). These communities have borne a disproportionate burden from arrest, convictions, and collateral consequences following convictions. The long-term consequences of cannabis enforcement coupled with generational poverty, education gaps, and additional barriers to entry, make it extraordinarily difficult for affected individuals to enter the regulated cannabis industry.
The California Cannabis Equity Act, signed into law in late 2018, is a legislative initiative aimed at mitigating the enduring harm caused by the failed war on drugs. The primary focus of the act is to promote equitable ownership and employment opportunities within the cannabis industry. To implement this goal, the law established a state program designed to support municipalities with equity program development. This program facilitates the provision of loans, grants, and other forms of assistance to cannabis entrepreneurs throughout the California.
In order to administer the Cannabis Equity Grants Program effectively, the Department of Cannabis Control (DCC), formerly known as the Bureau of Cannabis Control, engaged in an interagency agreement with the State Governor’s Office of Business and Economic Development GO-Biz). This collaborative effort is directed at aiding local jurisdictions in their initiatives to support equity applicants and licensees within their respective programs.
Purpose of Cannabis Equity Assessment
The primary purpose of this Cannabis Equity Assessment (“Equity Assessment”) is to examine the impact of cannabis criminalization in the City of Vista (“City”) and to identify barriers that have prevented communities and individuals from participating in the legal cannabis industry. This Equity Assessment utilizes a data-driven analysis to identify communities that have been disproportionately impacted by cannabis criminalization, including data on arrests, poverty rates, educational attainment levels, and other indicators of the impact of cannabis enforcement.
Furthermore, the Equity Assessment also reviews the characteristics of the existing cannabis industry to understand the barriers to entry faced by affected communities within the City. 02/27/2024 D1 Page 10 of 86
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The goal of this Equity Assessment is to inform the development and implementation of a cannabis equity program in the City, which is a set of policies, programs, or initiatives designed to assist affected communities in entering the legal cannabis industry and succeeding as entrepreneurs. It is important for the City’s cannabis equity program to be designed and implemented in a way that is transparent, accessible, and fair, and that considers the specific needs and challenges directly faced by impacted communities within the City. 02/27/2024 D1 Page 11 of 86
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1. Cannabis Equity Analysis
Methodology
This Equity Assessment analyzes historical cannabis-related arrest statistics in the City of Vista as they relate to low-income and minority communities to identify communities disproportionately affected by cannabis enforcement. Historical cannabis-related arrest data, provided by the San Diego County Sherrif’s Department (“SDCSD”), were overlaid on census tract data to identify spatial and demographic disparities in cannabis-related arrests and to determine arrest “hot spots” within the City. Finally, low-income census tracts and neighborhoods were mapped to determine whether a nexus exists between the identified arrest hot spots and low-income populations in order to identify communities disproportionately affected by cannabis enforcement.
Cannabis-related arrest data was obtained from the SDCSD for years 2014 to 2023. The San Diego Association of Governments (SANDAG) and the Automated Regional Justice Information System have a prevailing policy to retain member agency data, including crime-related information, for a duration of 7 years. As a result, the SDCSD was unable to furnish data preceding the 7-year retention period. Nevertheless, historical arrest data for the San Diego County Region dating back to 1989 has been acquired from SANDAG to supplement this analysis.
Demographic data used in this analysis was sourced from the 2017-2021 American Community Survey (ACS) 5-Year Estimates. The ACS 2017-2021 5-year Summary was specifically chosen to align with the demographic indicator data acquired from the United States Environmental Protection Agency Environmental Justice Screening and Mapping Tool, which also relies on the ACS 2017-2021 5-year Summary.
Limitations of the Equity Analysis
As previously noted, the Equity Assessment utilizes cannabis-related arrest records spanning the years 2014 through 2023 in the City of Vista. It's important to acknowledge that the relatively small size of the arrest data sample constrains the precision of this study. Consequently, this analysis cannot uncover long-term impacts, trends, or patterns associated with cannabis enforcement in the City.
Nonetheless, this analysis leverages available location data on cannabis-related arrests that occurred between 2014 and 2023 to investigate areas where high arrest rates intersect with economically disadvantaged neighborhoods. Despite these limitations, this Equity Analysis offers a data-driven approach for identifying communities that have borne a disproportionate burden of cannabis enforcement.
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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 sales 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 then- President Richard Nixon during the Summer of 1971.
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.”1
And most importantly, Nguyen and Reuter showed that although 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 1 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 02/27/2024 D1 Page 13 of 86
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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 de- criminalization.
In 1996, Californians passed Proposition 215, the Compassionate Use Act, which allowed for the uses 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 of 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.
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.”2
2 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
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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 – Hispanics citizens accounted for nearly 42% of those arrests, followed by Blacks citizens, at 22%, with White citizens at 21%.
City of Vista Demographics
Figure 1 below shows the City of Vista 2017-2021 5-Year demographic estimates. For people reporting one race alone, 65.4 percent were White; 50.2 percent were Hispanic or Latino; 4.9 percent were Asian; 3.1 percent Black or African American, 1.0 percent were American Indian and Alaska Native; 0.9 percent were Native Hawaiian and Other Pacific Islander. An estimated 17.2 percent reported two or more races.
Figure 1 – Distribution of Race/Ethnicity, City of Vista (2021) City of Vista Cannabis-Related Arrests
From 2014-2023, there were a total of 685 cannabis-related arrests with 2023 reflecting only a partial year. Cannabis-related arrests reached the highest in 2015, with a total of 138 arrests respectively. Since the last peak in 2019, there has been a notable and consistent reduction in arrests. This trend can be largely attributed to the widespread adoption of decriminalization policies across the State of California. Moreover, a significant milestone in this movement was the enactment of Proposition 64, which legalized the recreational consumption of cannabis for adults.
Race/Ethnicity Population Percent
White Alone 64,488 65.4%
Hispanic or Latino 49,560 50.2%
Two or More Races 16,935 17.2%
Asian Alone 4,797 4.9%
Black or African American Alone 3,094 3.1%
American Indian and Alaska Native Alone 1,030 1.0%
Native Hawaiian and Other Pacific Islander Alone 857 0.9% Source: U.S. Census Bureau, 2017-2021 American Community Survey 5-Year Estimates 02/27/2024 D1 Page 15 of 86
Figure 2 -Cannabis-Related Arrests by Year, City of Vista (2014-2023) 160
C/1 140 138
C/1 ... ci:: ci:: 120
100 ci:: ...
80 60
40 20
0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
-Number of Arrests
Source: San Diego County Sherrif's Department
City of Vista Cannabis-Related Arrests by Race/Ethnicity Figure 3 below, displays the cannabis-related arrests by race/ethnicity. From 2014-2023, White populations accounted for the highest percentage of cannabis-related arrests (64.5%), followed by Hispanic/Latino (27.3%), and Black/African American (5.8%).
Figure 3 -Cannabis-Related Arrests by Race/Ethnicity, City of Vista (2014-2023) Arrests Population
Race/ Ethnicity (2014-2023}1 (2021}2
Total Percent Total Percent
White 442 64.5% 64,488 65.4%
Hispanic or Latino 187 27.3% 49,560 50.2%
Black or African American 40 5.8% 3,094 3.1%
Asian 5 0.7% 4,797 4.9%
Other 4 0.6% 7,450 7.6%
Native Hawaiian and Other Pacific Islander 4 0.6% 857 0.9% 1 Source: San Diego County Sheriff's Department
2 Source: U.S. Census Bureau, 2017-2021 American Community Survey 5-Year Estimates City of Vista
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SCIConsultingGroup
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To understand the impact of cannabis-related arrests on different demographics in the City, the percentage of arrests were compared to the total population of each demographic. The data shows that Black/African American individuals were arrested at a higher rate compared to their representation in the city's population. Specifically, Black/African American individuals make up
3.1% of the City's population but accounted for 5.8% of cannabis-related arrests. This disproportionate arrest rate is depicted in Figure 4.
Figure 4 – Population Percentage vs. Arrest Percentage, City of Vista (2014-2023) Source: San Diego County Sherrif’s Department
Source: Source: U.S. Census Bureau, 2017-2021 American Community Survey 5-Year Estimates Impact of the War on Drugs in the San Diego Region
Supplemental data was acquired from the San Diego Association of Governments (SANDAG) to conduct an analysis of the War on Drugs' impact in the San Diego region. The data was aggregated from two SANDAG publications, namely "Arrests in the San Diego Region" and "Law Enforcement Response to Crime in the San Diego Region," spanning the years 1993 to 2015. Notably, the SANDAG data lacked specific details on cannabis-related arrests across demographic and ethnic groups. As a result, the analysis focused on examining the total arrest rates by ethnicity to assess the broader impact of the War on Drugs in the region.
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Figure 5 provides a breakdown of cannabis-related arrests in the San Diego region spanning the years 1993 to 2015. During the period from 1993 to 2006, the number of arrests exhibited fluctuations, ranging between 4,000 and 6,000 arrests. Subsequently, from 2007 to 2010, there was a steady increase in arrests, reaching nearly 8,000 in the year 2010. Notably, a pivotal change occurred in 2010 when Senate Bill 1449 was signed into law. This legislation reduced the charge for the possession of up to one ounce of marijuana from a misdemeanor to a civil infraction, resulting in a significant reduction in arrests across the region and the State.
From 1993-2015, cannabis-related arrests, on average accounted for roughly 11% of all drug- related arrests in the San Diego region.
Figure 5 – Cannabis-Related Arrests by Year, San Diego Region (1993-2015) Source: SANDAG, Arrests in the Region Reports: 1993-2015 Subsequently, an analysis of the total arrest rates per 1,000 population by ethnicity was conducted to gain insights into the impact of the War on Drugs in the San Diego region, as illustrated in Figure 6 below. The findings reveal a disproportionate impact on Black/African American and Hispanic populations across the region. In 1991, the adult Black/African American arrest rate, when compared to White, stood at a ratio of 5.67:1. However, by 2015, this ratio decreased to 2.13:1. Similarly, the Hispanic population experienced a ratio of 2.59:1 in 1991, which reduced to 1.05:1 in 2015. These figures underscore the disparities in the impact of the War on Drugs, particularly affecting Black/African American and Hispanic communities in the San Diego region.
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Figure 6 – San Diego Regional Arrest Rates / 1,000 - Ethnicity Source: The City of San Diego Cannabis Equity Report, SANDAG, Arrests in the Region Reports: 1993-2015 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. Based on the analysis conducted in the previous section, it is evident that BIPOC populations, particularly African American populations, have historically been subject to a disproportionate rate of cannabis- related arrests in the City. Research shows us that arrests have long-term consequences and can limit an individual's opportunities for employment, education, and housing, which can prevent them from securing a stable financial future. These long-term consequences, coupled with the high financial barriers of the cannabis industry, make it extraordinarily difficult for affected individuals to enter the regulated cannabis industry.
To identify the disproportionately affected communities, three key indicators were examined by census tract: people of color populations, low-income populations, and educational attainment levels. Historically, individuals from racial and ethnic minority groups have experienced disproportionately higher rates of arrests for cannabis-related offenses, while those with limited financial resources encounter substantial obstacles when attempting to participate in the regulated cannabis industry. Educational attainment levels are also essential indicators, as individuals with lower levels of education are less likely to have access to the resources needed to enter the industry successfully. By assessing these three indicators along with the location and concentration of cannabis-related arrests, provides a comprehensive understanding of the disproportionately impacted communities in the City.
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People of color, low-income, and low educational attainment populations were identified and mapped by census tract, aided by data obtained from the United States Environmental Protection Agency's (EPA) environmental justice mapping tool, EJSCREEN. This environmental justice mapping tool leverages nationwide demographic and environmental data to assist organizations and governmental agencies in pinpointing low-income communities. EJSCREEN sources its data from the U.S. Census Bureau’s American Community Survey (ACS) 2017-2021 5-year Summary.
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.
As illustrated in Figure 7, the census tracts in the north-central region and the westernmost census tract of the City have the highest concentration of non-White residents. These tracts encompass a population consisting of between 50% and 100% non-White residents.
Low-Income Populations
Figure 8 provides a visual representation of the percentage of low-income households in each of the City’s census tracts. Low-income households are defined as those with household incomes at or below twice the federal poverty level. The City, for the most part, exhibits a low concentration of poverty, with the majority of its census tracts having 25% or less of their households falling into this category. Census Tract 195.02, located in the north-central region of the City, has the highest concentration of low-income households at 54%.
Educational Attainment
Educational attainment refers to the highest level of education an individual has achieved. Figure 9 provides a visual representation of the percentage of individuals aged 25 or older in each census tract within the City who have not attained a high school diploma.
The City generally demonstrates elevated levels of educational attainment, with most census tracts having 75% of residents who have completed high school. However, exceptions are found in the north-central and western regions of the City, where the highest proportions of individuals without high school diplomas, ranging from 25% to 50%, are clustered. 02/27/2024 D1 Page 20 of 86
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Figure 7 – People of Color as a Percentage of Population 02/27/2024 D1 Page 21 of 86
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Figure 8 – Low-Income Households as a Percentage of Population 02/27/2024 D1 Page 22 of 86
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Figure 9 – Educational Attainment
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Disproportionately Affected Communities Findings
To pinpoint the areas in the City that have been most impacted by cannabis criminalization, the data was examined and ranked based on three key indicators using a color-coded system. The indicators were ranked from high to low impact and color-coded as red, orange, yellow, and green. The areas marked in red were considered to have the highest impact, followed by those in orange, then yellow, and finally green.
As depicted in Figure 10, the census tracts situated in the north-central region of the City exhibit the highest proportions of non-White residents, along with elevated rates of low-income populations and lower rates of high school diploma holders. Specifically, the highest percentages of cannabis-related arrests were recorded in census tracts 195.03 and 192.06, accounting for 16% and 8%, respectively. Notably, these two tracts are both located within the north-central region of the City. Hence, this region of the City is identified as the most "Disproportionately Affected" given the convergence of factors such as high rates of cannabis-related arrests, a significant non- White population, and a prevalence of low-income individuals.
Note:
In the examination of cannabis arrest locations, a noteworthy observation was made regarding the occurrence of 330 arrests at Vista High Schools and middle schools. Given that multiple census tracts are encompassed within the school attendance zones, it was deemed necessary to exclude these specific arrests from the analysis to ensure a more accurate representation of the broader community impact. Increased police presence or specific law enforcement strategies at schools could skew the data and introduce potential biases.
Green Minimal Impact
Yellow Low Impact
Orange Moderate Impact
Red High Impact
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Figure 10 – Disadvantaged Census Blocks
Census Tract Number of
Arrests
Percent of
Arrests
People of
Color % Low Income % Not Completed
High School
195.03 55 16% 69% 37%19%
192.06 27 8%83% 38%28%
197.02 25 7%41% 20%12%
196.02 24 7%52% 23%20%
194.06 24 7%61% 26%12%
199.04 22 6%42% 23%5%
195.02 21 6%88% 54%41%
185.19 20 6%80% 29%28%
194.04 19 5%84% 36%32%
192.10 14 4%60% 39%26%
196.01 14 4%53% 24%18%
193.03 13 4%53% 23%19%
199.02 13 4%63% 21%14%
197.01 10 3%62% 19%10%
195.01 12 3%89% 43%45%
194.05 8 2%69%25%9%
194.03 5 1%60%15%14%
192.05 7 2%73%17%21%
200.17 7 2%65%40%24%
199.05 4 1%52%15%5%
192.03 3 1%48%18%11%
192.09 2 1%36% 17%8%
198.10 1 0%32%36%7%
198.05 1 0%56%37%15%
198.11 1 0%51%15%3%
200.19 0 0%51%25%13%
192.08 0 0%29%24%10%
199.03 0 0%50%17%8%
198.09 0 0%30%11%5%
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Conclusions Regarding Disproportionately Affected Communities The assessment findings highlight certain census tracts in the City facing economic and social disadvantages. An examination of cannabis-related arrest records reveals a notable disparity, particularly impacting Black/African American individuals who bear a disproportionate burden.
Their arrest rates are nearly twice as high as their representation in the City’s overall population.
Additionally, a broader analysis of historical arrest records across the San Diego Region reinforces the earlier discovery, indicating a significant impact of the War on Drugs on Black/African American and Hispanic residents.
This imbalance has far-reaching consequences, including the perpetuation of generational poverty, educational disparities, and financial barriers that hinder participation in the regulated cannabis industry. To mitigate these disparities and ensure a level playing field, we strongly recommend the implementation of a cannabis equity program. Such a program would facilitate fair access to opportunities in the cannabis industry workforce and promote entrepreneurship, addressing the underlying issues and fostering greater inclusivity in this sector. 02/27/2024 D1 Page 26 of 86
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2. Overview of Cannabis-Related Businesses and Activities City of Vista Cannabis Legislative History
Before the legalization of medicinal cannabis businesses in Vista, the City experienced a prolonged period of non-permitted dispensaries operating within its boundaries during the Prop 215 collective era. In 2016, there was a citizens' initiative proposing the allowance of medicinal retail cannabis businesses, but it did not qualify for the ballot. In response to the proliferation of illegal cannabis businesses, the City of Vista took action in 2017, shutting down over 45 illegal cannabis businesses and three growing operations3.
A significant turning point occurred in November 2018 when Vista voters approved Measure Z, a citizen's initiative that authorized up to 11 medical cannabis storefront retailers. The measure established a regulatory framework allowing one retailer per 10,000 population or portion thereof, resulting in a total of 11 authorized retailers at the time. Following this approval, in December 2019, the City Council passed ordinances permitting testing laboratories, a limited number of distributors and manufacturers, and cannabis delivery from licensed cannabis storefront retailers in Vista. The allocation of cannabis licenses was specified, allowing a maximum of two cannabis manufacturer licenses (Type 6 or Type 7) and two cannabis distributor licenses Type 11), with no limits imposed on cannabis testing laboratory licenses.
In 2021, the City further expanded its cannabis regulations to include adult-use cannabis businesses. However, in 2022, the City Council decided to postpone the adoption of a cultivation ordinance, which would have allowed for up to three cultivation permits. This postponement was enacted to provide time for the development of a social equity component before proceeding with the cultivation ordinance.
Allowable Land Use Zones
In accordance with the cannabis policy of the City of Vista, commercial cannabis operators are permitted to establish themselves in specific zoning districts, contingent upon the approval of the necessary land use permits and the nature of the intended cannabis activity. 3 Macone-Greene, C. (2018, June 28). Vista Oks Ballot Measure to regulate cannabis sales. The Coast News Group. https://thecoastnews.com/vista-oks-ballot-measure-to-regulate-cannabis-sales/ 02/27/2024 D1 Page 27 of 86
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Commercial Districts: (Retail)
Retail cannabis businesses may only be located in Commercial zones (C-1, C-2, and C-3, Research Light Industrial zones (RLI), Mixed Use zones (MU), Industrial Park zones (IP), or Light Manufacturing zones (M-1) as designated in the Vista Municipal Code. Retail cannabis businesses are prohibited in residential zones (R-1, R-1-B, and R-M).
Testing Laboratories, Distribution, Manufacturing (Cannabis Enterprise Businesses)
The location of a cannabis enterprise must: (1) be within the Research Light Industrial Zone (RLI Zone)
Taxation:
On November 6, 2018, Vista voters approved Measure AA (Vista Municipal Code Chapter 7.10) implementing a Cannabis Business Tax for the City. The City has the authority to levy a cultivation tax, originally set at a maximum rate of $14 per square foot of canopy space, with an annual adjustment based on the Consumer Price Index (CPI) beginning July 1, 2020. As of now, the current maximum cultivation rate stands at $16.76. Additionally, the ordinance imposes a gross receipts tax capped at 8% on cannabis manufacturing and distribution activities, 10% medicinal retail, 12% on adult-use retail, and 3.5% on cannabis testing.
The current tax rates are outlined as follows:
Manufacturing: 4% of gross receipts
Distribution 2% of gross receipts
Testing: 1% of gross receipts
Medicinal and Adult-use Retail: 7% of gross receipts
Cultivation: $16.76 per square foot of Canopy Space.
Fees:
The City has established a cannabis fee structure for the processing of applications and regulatory compliance. Below are adopted fee schedules:
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Figure 11 – Cannabis Business Application Fees
Figure 12 – Cannabis Business Regulatory Compliance Fees Current Cannabis Businesses
Figure 13 below provides an overview of the current cannabis business operating in the City.
Initially, the City had 11 licensed adult-use and medicinal retailers operating in the City, pursuant to VMC Chapter 5.94. However, as of November 28, 2023, one retailer has ceased operations. As outlined in VMC Section 5.94.090, the maximum number of retail cannabis businesses is capped at one per 10,000 residents (or fraction thereof) based on the last Federal Census or Department of Finance population estimates, whichever is higher. Given that Vista's population has dipped below 100,000 since the implementation of Measure Z, the City does not plan to reopen the application process for reissuing permits until the population exceeds 100,000 residents.
Despite the authorization of distribution, manufacturing, and testing businesses in 2019, no Cannabis Business Operators permit for any of these activities have been issued. Presently, the City has a business that has submitted an application for both a manufacturing and distribution permit. However, there are currently no applicants for the remaining manufacturing and distribution spots, with one each still available.
Fee Name Amount
Initial Application for Medical Cannabis Retail 9,368.00$ Initial Application for Cannabis Enterprise businesses 4,318.00$ Application for Renewal 329.00$
Application for Transfer/Change in Business Ownership 662.00$ Application for Relocation 2,330.00$
Application for Change in Business Management 269.00$
Appeals 500.00$
Fee Name Amount
Cannabis Retail (without delivery) Business Operator Permit 11,128.00$ Cannabis Business Operator Permit (all others)19,967.00$ 02/27/2024 D1 Page 29 of 86
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Figure 13 – Operational Cannabis Businesses
Expansion of Cannabis Permits and Activities
To establish a cannabis equity program, the City must allocate additional permits exclusively reserved for equity applicants. Currently, there is one (1) distributor permit and one (1) manufacturing permit available. The City faces the decision of reserving these permits explicitly for equity applicants or potentially increasing the total number of permits available for distribution and manufacturing activities. Furthermore, the City could explore broadening the spectrum of cannabis activities by including cultivators, microbusinesses, and shared-use manufacturing facilities in its considerations for permit allocations. These activities are discussed in detail below.
Cultivation
Cannabis cultivation refers to the process of growing cannabis plants, including harvesting, drying, curing, and trimming. There are three main categories of cannabis cultivation licenses issued by the State, which are determined by two key factors: the type of production and lighting utilized, and the number of plants grown or the size of the canopy. These license types are categorized as:
Outdoor cultivation: cultivators who grow cannabis outside without using any artificial lighting on mature plants.
Indoor cultivation: cultivators who grow cannabis in a permanent structure using artificial lighting.
Mixed-light cultivation: cultivators who grow cannabis using a combination of natural and artificial lighting in a greenhouse, hoop-house, glasshouse, or other similar structure.
Type Operational Cannabis
Businesses
Retail w/ Delivery 7
Retail 3
Distribution 0
Manufacturing 0
Testing Lab 0
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In addition to the cannabis cultivation licenses described above, the State also issues licenses for cannabis nurseries and processors.
Nursery: A cannabis nursery license allows a business to cultivate clones, immature plants, and seeds used for propagation. Nurseries can only sell plants and cannot produce cannabis flower or other cannabis products. Nurseries may also provide clones, immature plants, or seeds to other licensed businesses.
Processor Licenses: A cultivation processor license allows a business to only trim, sift, cure, dry, grade, package or label cannabis.
Local jurisdictions have the authority to ban or allow different types of cannabis cultivation, including indoor, mixed-light, and outdoor cultivation, within their boundaries. Some local municipalities have chosen to ban outdoor cultivation and mixed-light cultivation due to concerns about odor, potential impacts on nearby communities, and other land use considerations.
Cultivation in urban areas is almost always limited to indoor facilities due to available properties and other land use considerations. In urban areas like Vista, cultivation is predominantly restricted to indoor facilities.
In recent years, the California cannabis cultivation sector has faced some unprecedented challenges. The saturation point of cannabis cultivation market has been exceeded, creating restricted space for both existing licensed growers and newcomers to the market. The surplus in cultivated cannabis has resulted in substantial drops in wholesale prices, posing a considerable challenge for small-scale cultivators to remain competitive. As a result, gaining access to the fiercely competitive cultivation sector involves significant risks and requires substantial capitalization and a well-defined strategy to market their products. Nevertheless, the establishment of a comprehensive cannabis equity program can significantly contribute to overcoming barriers and facilitating a more seamless entry into the cultivation sector. This involves a combination of financial support, technical assistance, as well as innovative regulatory measures and strategic partnerships aimed at assisting equity brands in gaining access to retail shelf space.
Shared-U se Manufacturing
In 2018, the State of California Department of Public Health (CDHP) introduced a new manufacturing license known as "Type S - Shared Use Manufacturing." This license category is designed for manufacturers who operate within shared-use facilities, enabling multiple businesses to manufacture products from a single space. Drawing a parallel to the food industry, shared-use manufacturing is similar to shared-commercial kitchens where various businesses can rent a common facility to produce consumable goods such as brownies, cakes, cookies, and other items.
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One notable advantage of shared-use manufacturing is its ability to lower the barrier to entry for individuals who may lack the capital to establish their own facilities. This is made possible by allowing businesses to rent space from larger manufacturing centers that are already in operation.
The concept of shared-use manufacturing holds the potential to diminish barriers further by enabling multiple businesses to collectively share the costs associated with building and maintaining a manufacturing facility. Notably, cities such as Oakland, Sacramento, and Long Beach have incorporated the Type S license into their equity programs.
Microbusinesses
A cannabis microbusiness is a vertically integrated cannabis business that can engage in multiple commercial cannabis activities, including cultivation (up to 10,000 total square feet), manufacturing (non-volatile/infusion), distribution, and retail. A microbusiness is required to conduct at least three of the four activities listed above.
This licensing structure not only provides valuable opportunities for cannabis equity entrepreneurs but also empowers owners and operators to manage a small-scale, vertically integrated cannabis business. Controlling the production process allows companies to make their products at a lower cost and cut out the middleman. Another advantage is the ability to streamline operations and cut overhead costs, including rent and utilities, by conducting multiple activities within the same premises or location.
While the microbusiness model in the cannabis industry offers several advantages, it also comes with its own set of challenges. Firstly, the initial capital investment can be higher and more expensive compared to other business models. Additionally, operating a microbusiness necessitates operators specializing in all vertical sectors, both operationally and in adhering to regulations for all activities involved. One notable constraint is the limited availability of retail permits in the City, which restricts the ability of a microbusiness to include the retail component as part of its operations.
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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 start-up 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 cannabis- related arrests and convictions, such as barriers to employment, education, and housing, as well as ongoing criminalization of cannabis in some states. 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.
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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 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.
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 industry.
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. 02/27/2024 D1 Page 34 of 86
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L icensing 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 can 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. Some examples of technical barriers that may be encountered in the cannabis industry include:
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.
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Legal and R egulatory
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, too often, equity-based programs intended to support disproportionately affected communities’ access into the cannabis business have also struggled to be well-known within these communities. Additional outreach is needed.
Distrust of G overnment
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 takes into account 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.
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. 02/27/2024 D1 Page 36 of 86
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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.
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4. Community Outreach and Feedback
In addition to the analysis conducted in Section 1 above, outreach and education are an essential element 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, public community meetings, and surveys, which helped provide policy recommendations to guide the City with the development of its equity program.
Online Survey
In July of 2023, 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. Survey results reveal that 57% of participants express a desire for the implementation of a cannabis equity program in Vista. The complete findings of the survey, with responses from a total of 78 individuals, are detailed in Appendix B of this report.
Community Meetings
To better understand the perspective of the community in regard to developing a local cannabis equity program in the City, the City and SCI Consulting Group hosted two community meetings.
These meetings are detailed below:
Community Meeting #1 (October 17, 2023 from 6-8pm at the Morris B. Vance Community Room)
Community Meeting #2 (December 6, 2023 from 6-8pm via Zoom) The primary purpose of these meetings was twofold: to disseminate crucial information about the City's forthcoming Cannabis Equity Assessment and to actively seek public input and gather valuable perspectives on the community's needs, opportunities, and obstacles in the development of the City’s 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.
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Moreover, the meeting strived to encourage active engagement from the community by providing a space for public comments and suggestions. Attendees were invited to share their thoughts, perspectives, and recommendations on ways the City could enhance and broaden the existing 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. A recording of the second meeting, available in both English and Spanish, were uploaded to the City's equity webpage https://www.cityofvista.com/city-hall/city-manager/cannabis-equity-assessment) .
Stakeholder Interviews
Key stakeholders in the City of Vista were engaged through one-on-one interviews, serving as the primary method for collecting essential data. The interviews aimed to gain insights into the community, identify opportunities and challenges, and pinpoint key areas of interest relevant to the City's Cannabis Equity Program. Two rounds of stakeholder meetings occurred, spanning from November 9, 2023, through August 30, 2023, and from December 8 through January 8. In total, 7 interviews were conducted, involving stakeholders from diverse sectors:
Current cannabis operators
Prospective equity applicants
Community members impacted by the War on Drugs
Local non-profit organizations
Local medical cannabis and cannabis equity activists
Summary of Feedback and Common Themes
The feedback provided by the interviewees underscores the multifaceted nature of challenges facing equity applicants in the cannabis industry. The interviewees collectively emphasize the need for comprehensive and inclusive cannabis equity program that addresses financial, technical, and educational barriers, as well as support for the sustainable success of equity applicants in the industry. Participants also underscore the importance of clear eligibility criteria, direct grant funding, and accountability mechanisms to ensure the equity programs' effectiveness and impact. Below is a summary of the oral testimony and comments received from the stakeholder interviews and community meetings regarding the City’s Cannabis Equity Program.
Barriers to Entry and Financial Challenges:
Financial challenges were consistently cited as major barriers to entry into the cannabis industry.
This includes difficulties in securing funding, navigating complex financial processes, and addressing capital barriers. Strategies to alleviate these financial burdens were a key focus in the feedback.
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Direct Grant Funding and Financial Support
Direct grant funding is highlighted as a key component of effective equity programs. The need for upfront grants and direct financial support is stressed across interviews. Interviewees believe that such funding is essential to help equity applicants cover initial costs and establish a foothold in the industry.
Mentorship and Technical Assistance
Stakeholders unanimously stressed the need for mandatory technical assistance and training programs for equity applicants. Technical assistance is a crucial service that would contribute to the success of equity applicants. The goal is to provide essential skills and knowledge to navigate the complexities of the cannabis industry.
Eligibility Criteria:
Most stakeholders suggested that applicants should be required to be residents of the City of Vista. Additionally, stakeholders put forth the idea of implementing a low-income criterion for equity applicants. This condition is designed to assist individuals who encounter financial obstacles when entering the cannabis industry. Another proposal suggested giving preference to legacy operators who were previously engaged in the cannabis industry but were compelled to exit due to regulatory changes.
Ownership Share and Predatory Investors/Partners:
Stakeholders emphasized the importance of equity applicants maintaining a controlling share in their businesses. This ensures that equity applicants have genuine ownership and control over their operations. The issue of predatory investors taking advantage of equity applicants was a recurring concern. Addressing this issue was seen as critical to ensuring the genuine ownership and control of businesses by equity applicants.
License Transferability:
A collective desire was expressed to permit the transfer of licenses after a designated period.
Stakeholders deliberated on the possibility of enabling equity applicants to sell their licenses, subject to specific conditions, including a defined time period and the requirement that the transfer or sale be to another equity applicant. This concept is intended to offer flexibility and alternatives for equity applicants, potentially enhancing the long-term viability of their businesses.
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Equity Program Failures:
Stakeholders across the board expressed dissatisfaction with equity programs, highlighting various shortcomings. These included loopholes in eligibility processes, predatory practices by investors, and a lack of infrastructure for success. The consensus was that equity programs need significant improvements to ensure the genuine empowerment of equity applicants.
Community Reinvestment:
The importance of community reinvestment emerged as a central theme. One stakeholder proposed innovative models where a percentage of profits from specialized equity licenses would contribute to a community reinvestment fund. This fund, managed by an elected community board, could be used for various community development initiatives. Additionally, full community reinvestment was suggested, with requirements for equity applicants to engage with ancillary businesses meeting the City's equity criteria and setting workforce requirements.
Public-Private Partnerships
Several stakeholders proposed the idea of public-private partnerships as a potential solution. For example, a head-starting program involving the City and other stakeholders in a public-private partnership was proposed. This model aims to create a clearinghouse to protect equity applicants from exploitation and ensure the availability of capital. 02/27/2024 D1 Page 41 of 86
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5. Best Practices
The following section reviews equity programs in several jurisdictions, including Oakland, Los Angeles, San Francisco, Long Beach, Sacramento, and San Diego. These reviews aim to compare equity programs and establish the best practices for equity programs. 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 additional program benefits provided to equity applicants.
City of Oakland - Cannabis Equity Program (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 percent of Oakland 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's 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
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Tier 6 - Expand the 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 the 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.
Permitting Ratio: 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 of Property Grants
San Francisco – Office of Cannabis - Equity Program (2017) Eligibility Criteria
To qualify as an Equity Applicant, you must:
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Apply as a person, not a company.
Have net assets below established limits for each household. This means you will not qualify as an Equity Applicant if your 1-person household has net assets over $193,500.
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 startup 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
Legal assistance
Application and regulatory fees
Testing of cannabis
Furniture
Fixtures and equipment
Capital improvements
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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
City of Sacramento - Cannabis Opportunity Reinvestment and Equity (C.O.R.E.) Program (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 5 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& 2 individuals.
Classification 4: CORE Program Incubator
Classification 5: Cannabis Social Enterprise with no less than 51% ownership by Classifications 1& 2 individuals.
Financial Assistance
Loan Program:
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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 grants funds received by Go-Biz.
Qualifying Categories/Tiers:
Business with No BOP (Tiers 1-4)
o Tier One - Applied for CUP
o Tier Two - Has CUP (Approved or Existing – must be consistent with the use for proposed cannabis business)
o Tier Three - Building Permits Issued
o Tier Four - Certificate of Occupancy Issued
Business with BOP (Tier 5)
o Funding can be used for any regulated cannabis business purposes:
inventory, equipment, rent, marketing, etc.
Licensing and Permitting
Fee waivers and exemptions.
Priority processing of applications.
Exclusive access to any future storefront dispensary permits.
Additional Program Services
Technical assistance and training
Cannabis Incubator Program
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City of Los Angeles – Cannabis Social Equity Program (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
Additional Program Services
Business, Licensing, Compliance and Technical Assistance Pro-bono and Low-bono Legal Services Program
City of Long Beach – Cannabis Equity Program (2018)
Eligibility Criteria
A SEED equity applicant must satisfy the following criteria:
Be a natural person; and
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In the last year, have had an annual family income at or below eighty percent (80%) of the Los Angeles-Long 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 fifty-one (51%) of current residents have a household income at or below eighty percent (80%) of the Los Angeles Area Median Income; and
Meet at least one of the following criteria:
o During the period of 1971-2016, 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; or
o Has a parent, sibling, or child who, during the period of 1971-2016, 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:
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
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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.
City of San Diego – Socially Equitable Cannabis Program (2024 – Proposed) Draft Eligibility Criteria
To qualify as an Equity Applicant, you must meet the following eligibility criteria:
Have been as an individual or have had an immediate family member, (i.e. parent, sibling, spouse, or child), or a legal guardian convicted or arrested, after January 1, 1980, for a crime involving the sale, possession, use, manufacture, or cultivation of cannabis.
An eligible applicant must also meet two of the five of the following criteria:
o Be a current or former resident of the City of San Diego who has lived in the following community plan areas for at least five years cumulative residency between 1980 and 2016: Barrio Logan, Linda Vista, Southeastern San Diego, Encanto Neighborhoods, Greater Golden Hill, Greater North Park, City Heights, College Area, Eastern Area, or San Ysidro.
o Have a household income below 80% of the Area Median Income in San Diego County, as defined by the U.S. Department of Housing and Urban Development for the San Diego Standard Metropolitan Statistical Area, in either the preceding year or current year of submitting an equity verification application or is eligible to get financial aid through a program like CalFresh, MediCal, CalWORKs, Supplemental security income, or Social Security disability.
o Have lost housing in the City of San Diego through eviction, foreclosure, or subsidy cancellation any time after 1994.
o Have attended school in San Diego County for at least five years between 1971 and 2016.
o Have been placed in the foster care system in San Diego County between 1971 and 2016.
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Licensing and Permitting
Proposed Cannabis Outlet SEED Overlay Zone
o Reducing some of the strict sensitive use restrictions and distance requirements for new SEED cannabis outlets and production facilities 18 new retail SEED cannabis outlets
Allowing SEED cannabis outlets as a Limited Use and allowing applicants to qualify for the program prior to securing a cannabis outlet location Waiving or reducing licensing, permitting and inspection fees Application assistance
Additional Program Services
Cannabis SEED Incubator Program
Technical assistance and training
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6. Findings and Recommendations
The following section presents key findings from this Equity Assessment and presents recommendations regarding policy options to enhance and improve equitable access and ensure diversity and inclusion in the cannabis industry. To support policymakers in shaping and executing the City's cannabis equity program, we have formulated the subsequent recommendations.
1. Stakeholder and Public Outreach and Education
Finding #1: Additional stakeholder and public outreach, along with educational efforts, can inform the development of the City's equity program, raise awareness, and diminish social stigma.
Incorporating and actively involving local stakeholders in the development of a cannabis equity program is essential for the success of the initiative. The diverse perspectives and input from stakeholders, particularly representatives from impacted communities, contribute invaluable insights during the decision-making process. The collaborative involvement of stakeholders ensures that the equity program is tailor-fit to address the specific needs and concerns of the communities it aims to benefit.
Additionally, the transition from an illicit to a regulated, legal cannabis market is hampered by distrust in government, especially for those who have been victimized by cannabis enforcement and by those enforcing government laws. Restoring trust between disproportionately affected communities and the government is essential to the success and effectiveness of a local equity program. Furthermore, the negative stigma surrounding cannabis use and cannabis business ownership by people of color and minorities presents additional barriers due to the fact that these individuals are often times perceived as criminals and drug dealers, rather than entrepreneurs.
Recommendation:
Consider developing and implementing outreach and educational campaigns focuses on increasing awareness, restoring government trust, and destigmatizing cannabis use and business ownership. There are several strategies that can be used to increase awareness of a cannabis equity program and promote its goals and objectives:
Community outreach and education: Engaging with affected communities and providing education and information about the cannabis equity program can help to increase understanding and participation in the program. This can be done through community meetings, workshops, and other forms of outreach and engagement. 02/27/2024 D1 Page 51 of 86
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Media and public relations: Using the media and public relations strategies to promote the cannabis equity program can help to raise awareness and understanding of the program among a wider audience. This may include press releases, media interviews, and other forms of public communication.
Partnerships and collaborations: Partnering with other organizations and groups that share the same goals and objectives as the cannabis equity program can help to amplify the program's message and reach. This may include collaborating with community- based organizations, advocacy groups, or other stakeholders.
Social media and online presence: Establishing a strong online presence through social media and other online platforms can help to promote the cannabis equity program and reach a wider audience. This may include creating a website or social media accounts and regularly updating them with information about the program and its activities.
2. Adopt Regulatory Changes to Provide Opportunities for Equity Ownership Finding #2: The City has a limited number of permits available for prospective cannabis applicants.
To establish a cannabis equity program, it is recommended the City consider allocating additional permits exclusively reserved for equity applicants. Currently, there is one (1) distributor permit and one (1) manufacturing permit available.
Recommendation
Reserve remaining distributor and manufacturing licenses for equity applicants and/or increase the total number of permits available for distribution and manufacturing activities.
Consider allowing new cannabis activity use types such as cultivation, microbusinesses, and shared-use manufacturing.
Allocate new retail permits for equity applicants should they become available in the future.
3. Equity P rogram E ligibility C riteria
Finding #3: Equity program eligibility criteria should focus on the inclusion of populations and communities disproportionately impacted by cannabis enforcement. 02/27/2024 D1 Page 52 of 86
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Analysis of cannabis-related arrest data indicates BIPOC populations have been subjected disproportionately by cannabis enforcement. Furthermore, the analysis determines there is a nexus between areas of high concentrations of low-income populations, education attainment levels, and an elevated number of cannabis arrests. Careful consideration should be placed on establishing the eligibility criteria. First and foremost, the eligibility requirements should focus on serving the communities and populations that were disproportionately affected by cannabis enforcement. The requirements should be adequately structured and defined to capture the majority of individuals who have been previously impacted by the war on drugs.
It is recommended that the City consider the following criteria:
Cannabis conviction or arrest history
Immediate family member with a cannabis conviction or arrest history Low-income status
Residency
Ownership
Eligibility Tiers
Recommendation: Conviction History
Consider prioritizing individuals who have been previously arrested or convicted for cannabis- related offenses. At a minimum, having a previous cannabis-related arrest is recommended to be required for eligibility. Rather than limiting cannabis-related-arrests and convictions to those that occurred in Vista, arrests or convictions within the State could also be considered for eligibility.
This approach recognizes that convictions have a profound impact on an individual no matter where they occurred. Furthermore, it is recommended that this criterion is also applicable to having an immediate family member with a cannabis conviction or arrest history as well.
Recommendation: Low-income Status
Low-income status is a common eligibility requirement used by many equity programs developed elsewhere in the State. Establishing a defined low-income status helps to limit participation for those in need of assistance. Typically, this is based on a certain percentage of annual family income that is below the Area Median Income (AMI), such as at or below 80 percent of the AMI.
Low-income status can be confirmed and verified with federal and state income tax returns, payroll stubs, social security benefit letters (i.e. Medi-Cal/CalWORKs, supplemental security income, or social security disability)
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Recommendation: Residency Consideration
To ensure the City's program benefits Vista residents, who have been impacted by cannabis enforcement and the War on Drugs, the City could implement a residency requirement. At a minimum, the City’s equity program can be available to both current and former Vista residents.
Similar to other equity programs established in California, the residency requirement can be based on cumulative years of residency or a minimum. For example, the City of Long Beach requires a minimum of 3 years, the City of Sacramento requires 5 consecutive years, and the City of Oakland requires no less than 10 years. In addition, residency requirements could be extended to include individuals who have attended school in Vista or own a business in Vista.
Recommendation: Ownership Consideration
The City could consider requiring an ownership percentage threshold that enables equity applicants to benefit from ownership yet be flexible enough to accommodate various ownership structures. Social equity programs established elsewhere in the State often require at least 51% ownership, which ensures equity applicants maintain majority ownership and decision-making power, and thus providing protection from being taken advantage by potential investors or business partners. However, requiring 51% ownership may unintentionally reduce the interest of outside investors and, consequently, act as a barrier to equity applicants. It is recommended that the City consider an ownership percentage between 40%-51%. Nonetheless, a certain amount of oversight and resources, such as legal assistance, is recommended to be available to equity applicants.
Recommendation: E ligibility Tiers
The City can consider establishing a tiered eligibility structure to provide proportional benefits to equity applicants. Under a tiered structure, more valuable services can be provided to individuals who have been impacted the most, but also optimizes the use of limited resources.
4. E quity P rogram A pplication and P ermitting
Finding #4: The equity program application and permitting process can be structured to ensure equity applicant success and incentivize ongoing support.
Recommendation:
To improve equity applicant success and incentivize ongoing support for equity applicants, the City can consider the following:
Priority Applications and Permit Processing: Consider a prioritized permit process for equity applicants for a quicker approval process.
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Permit Caps: Consider allocating a dedicated number of cultivation permits exclusively for equity-eligible applicants. Furthermore, explore the possibility of granting additional cannabis enterprise permits specifically designated for equity-eligible applicants.
Provisional Approval: Consider allowing for provisional approval of permits, prior to an applicant securing a location to operate, to allow equity applicants to overcome financial barriers. Provisional approval may incentivize potential investors to provide capital investments and assist the applicant with finding a location to operate.
Amnesty Program: Consider an amnesty program to encourage existing nonconforming businesses, operating without required permits and licenses, to transition to the legal market.
5. Equity Program Benefits and Services
Finding #5: Access to the regulated cannabis marketplace is hindered by financial, technical, and criminal obstacles.
Recommendation:
The City could explore providing a variety of services provided to equity applicants to mitigate and address the barriers to entry identified in Section 3 of this report.
Barriers Recommendations
Financial • Loan or grant program for start-up capital and ongoing business expenses
Fee deferral program or reduced application fees
Coverage of fees associated with training or certification programs
Administrative/
Technical
Application assistance and permitting workshops
Cannabis regulatory compliance training
Pro bono legal assistance
Business Acumen • Creation of training curriculum or partnership with local academic institutions or businesses
General business development training
Cannabis-specific business training
Cannabis employment training
Apprenticeship/mentorship programs
Leverage existing resources and partnerships
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6. R aise A wareness of E xpungement O pportunities
Finding #6: A criminal history can limit an individual’s ability to gain employment, apply for government assistance, and/or obtain a loan.
In September 2018, former Governor Jerry Brown enacted AB 1793, widely known as the "Bonta Bill," which introduced an automatic sealing process for cannabis-related criminal records. This legislative measure mandated the State Department of Justice to review records spanning over 40 years, aiming to deliver justice to individuals previously arrested, convicted, or sentenced for charges rendered obsolete by cannabis legalization. Sealed records become inaccessible to entities like employers and schools.
Complying with AB 1793, the San Diego County District Attorney's office submitted eligible cases to local courts. In February 2021, a San Diego Superior Court judge reclassified approximately 26,000 felony cannabis convictions to misdemeanors and dismissed around 1,000 misdemeanor convictions. Despite reclassification, the court system has been sluggish in updating individual records.
To aid San Diego County residents in mitigating convictions or expunging criminal records, the County's Office of the Public Defender established the Fresh Start program. This initiative offers a thorough review of an individual's criminal record by an experienced attorney, who then recommends an action plan for record cleanup. Those with cannabis-related criminal backgrounds must be aware of the Fresh Start program, reaching out to the County to initiate the review process.
Recommendation:
To increase awareness of expungement opportunities, it is recommended that the City consider collaborating with both the County of San Diego's Fresh Start Program and the San Diego Public Defender's Office to enhance the identification and processing of cannabis expungement cases.
Additionally, the City could employ various strategies to inform residents about the existence of the County’s Fresh Start program and encourage participation. Some effective communication methods include:
Official Website and City Newsletter: Ensure that information about the Fresh Start program is prominently featured on the City's official website and newsletter.
Social Media Campaigns: Leverage social media platforms such as Facebook, Twitter, and Instagram to share regular updates about the Fresh Start program.
City Council Meetings: Present updates and information about the Fresh Start program during City Council meetings.
Multilingual Outreach: Provide information in multiple languages to ensure inclusivity and reach a wider audience.
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7. Workforce Development Opportunities
Finding #7: Disproportionately impacted face a shortage of training opportunities for high- quality, well-paying jobs in the cannabis industry.
In the cannabis industry, a common barrier to success is a lack of training for high-quality, well- paying jobs. As the cannabis industry continues to grow, there is an immediate need for skilled and knowledgeable employees. By advancing workforce development opportunities in the cannabis industry, equity programs can help to increase the participation and success of affected communities in the industry.
Recommendation:
The City could consider advancing workforce development opportunities in the cannabis industry.
Some potential strategies for advancing workforce development in the cannabis industry include:
Require all cannabis businesses to provide equitable employment (i.e. requiring cannabis businesses to hire a certain percentage of individuals that qualify as equity applicants).
Provide incentives, such as a reduction in taxes or fees, for existing cannabis businesses to encourage equity hiring. This model is used by the City of Stockton4.
Creation of a cannabis training program.
Establish partnerships with existing curriculum developers to assist with entrepreneurship and workforce development.
Leverage existing cannabis training programs.
8. Equity Program Funding
Finding #8: Ensuring the success and effectiveness of an Equity Program is contingent upon securing sustainable and sufficient funding.
Sufficient funding plays a pivotal role in ensuring the success and effectiveness of the City's Equity Program. Equally important is the necessity for the City to establish an infrastructure with adequate staffing, comprised of individuals who are well-trained and educated, to provide support and guidance to equity applicants as they navigate the complex application and permitting process. It's worth noting that shortcomings in this supportive infrastructure have proven to be a stumbling block for several other municipalities across the State that have embarked on the implementation of similar equity programs. 4 https://www.stocktonca.gov/business/cannabis_business/index.php 02/27/2024 D1 Page 57 of 86
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Recommendation:
It is recommended that the City continue to leverage grant opportunities through the GO-Biz’s Cannabis Equity Grants Program for Local Jurisdiction. The Cannabis Equity Grants Program for Local Jurisdictions application period is available from early November through mid-December on an annual basis. Based on the most recent FY 2023-24 grant solicitation, jurisdictions can seek financial support of up to $3,000,000 through the Type 2 grant, to fund and administer its equity program. It's essential to note that grant awards exceeding $500,000 necessitate a 1:1 matching funds contribution from the City during the grant term. In addition, the guidelines specify that no more than 10 percent of the grant award can be allocated for administration, and no more than 10 percent can be used for direct technical assistance.
However, relying solely on State grants is not a sustainable approach. Therefore, it is recommended that the City consider diversifying its funding sources, which may include allocating funds from cannabis tax revenue or exploring alternative financial avenues.
9. Community Reinvestment
Finding #9: Community reinvestment can help to repair communities impacted by past cannabis-related criminalization.
In the City, the cannabis industry presents a unique opportunity to address historical inequities through targeted community reinvestment. This approach is pivotal in recognizing and rectifying the disproportionate impact of past cannabis prohibition on certain communities. This translates into a thoughtful allocation of excess cannabis-generated revenues back into the community, specifically in areas most affected by prior stringent cannabis laws. This strategy not only fosters economic growth but also promotes social justice, as it directly addresses the lingering consequences of previous disparities in cannabis-related arrests and convictions.
Recommendation:
The City could consider reinvestment in numerous forms, such as funding educational programs, supporting local healthcare initiatives, improving housing options, providing reentry services, and creating vocational training opportunities, particularly in the field of legal cannabis operations.
In addition to directing local cannabis revenues towards traditional community reinvestment avenues, a forward-looking strategy suggests a comprehensive approach that encourages equity applicants to actively collaborate with ancillary businesses who meet the same equity eligibility criteria. Ancillary businesses may include those involved in construction, marketing, technology, security, and other supportive services. By fostering partnerships between cannabis equity applicants and ancillary businesses that meet eligibility criteria, there is an opportunity for the cannabis industry to actively contribute to the revitalization of impacted communities. 02/27/2024 D1 Page 58 of 86
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10. Program Data Collection, Monitoring, and Updates
Finding #10: Collecting data and maintaining ongoing monitoring of the equity program can contribute to enhancing and updating the program, thereby ensuring its effectiveness.
Recommendation:
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:
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 to ensure Vista’s strong transition to a legal cannabis industry The following data metrics can be incorporated into the application, permitting and permit renewal process:
Number of equity applicants to apply
o Types of drug related offenses
o Income status
o Race
o Ethnicity
o Gender
o Sexual identity
o Residency status
o Ownership structure
Workforce characteristics
o Total number of employees
o Number of local employees
o Employment Status
Equity program-specific data
o Number of applicants eligible for equity program
o Number and types of services provided to equity applicants o Number of equity program applicants to receive licenses 02/27/2024 D1 Page 59 of 86
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Appendix A : The City of Vista Cannabis Equity Website
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Appendix B : Cannabis Equity Assessment Survey (English) 02/27/2024 D1 Page 61 of 86
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Cannabis Equity Assessment
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Cannabis Equity Assessment
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Cannabis Equity Assessment
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Cannabis Equity Assessment
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Cannabis Equity Assessment
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Appendix C : C ommunity Meeting Invitations
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