Sacramento is poised to allow 10 new cannabis dispensaries in an effort to fix long-standing equity issues in the city’s retail pot market.
Of the city’s 30 dispensaries, none are owned by black men and women, demographics that were disproportionately arrested during the War on Drugs, Malaki Amen, executive director of the California Urban Partnership, has said.
To address that, the City Council in 2018 approved the creation of the Cannabis Opportunity Reinvestment and Equity (CORE) program. For those who meet certain income, zip code and other requirements, the program waives thousands of dollars in fees and prioritizes applicants for permits.
Although permits for cultivation, manufacturing, and delivery are available, there is no way for a CORE graduate to open a dispensary, which most want to do. About 117 people recently graduated from the program.
Councilman Larry Carr proposed the city get rid of the cap altogether. If his colleagues won’t agree to that, he suggested the city allow 30 new permits so half the shops in the city would be owned by CORE participants.
“There are 30 licenses granted. Equity will be when there are 30 CORE licenses granted,” Carr said.
He said he would accept a minimum of 10 new permits, however, and Councilman Allen Warren agreed.
Councilmen Jeff Harris and Eric Guerra raised concerns with allowing too many new shops, suggesting the city should start with three.
Mayor Darrell Steinberg, looking for a compromise, suggested the city allow 10 new permits spread out over two years.
Amen said he would prefer the city allow 10 new permits a year. That’s the amount the city currently has the staff and resources to process, said Assistant City Manager Leyne Milstein.
“I appreciate concerns across the board from the mayor and council and yet I still have concerns about tip-toeing toward equity when we’ve been down this road for five years now,” Amen said, referring to when the city first started discussing equity issues in the city’s cannabis market. “We’re at a point not only where the city has to build trust with communities damaged by the War on Drugs, but we really have to be intentional about opening up this market.”
MARIJUANA DISPENSARY SCANDAL, FBI INVESTIGATES
The discussion followed reports by The Sacramento Bee that revealed a man who was indicted in October with Rudy Giuliani’s associates in a campaign-finance scheme co-owns a Sacramento dispensary. His business partners own a total of nine of the city’s 30 shops under the “Kolas” brand. In 2011, the business partners only owned two, city applications show. City code bars owners from selling or transferring permits.
Although city staff had been checking since 2014 to make sure at least one name remains in the application from the previous year, dispensaries have been allowed to add new names of owners, then over time, remove the names of original owners. The council in November amended city code to prohibit people with an ownership interest in a storefront dispensary from obtaining an ownership interest in another dispensary.
In addition, the FBI has been investigating whether pot business owners in Sacramento have bribed local officials in exchange for favorable treatment.
Ashby said the city’s priority should be fixing the problems that allowed the business partners to accumulate so many permits.
“I don’t understand how one person came back with (so many) when we very clearly, every member of this dais said that’s not gonna happen … and it happened anyway,” Ashby said Tuesday, holding up a copy of the article. “All the ones that were monopolized could’ve gone to women and minority-owned businesses.”
After The Bee stories were published in October, the council passed a moratorium on dispensary transfers, which lasts until March 11. The mayor called for a new city audit and for a new employee to be hired in the city auditor’s office to focus solely on the cannabis department.
The council approved the creation of that position Tuesday.
“I’m confident that we are beginning to build the checks and balances so if there is a problem that raises eyebrows, we know about it and we can act,” Steinberg said.
