Prospects for a Successful Oakland Cannabis Licensing Program Brighten

The Oakland City Council met on Monday November 14 on Oakland’s cannabis licensing program and its most controversial aspect, the equity program. As detailed below, the Council made good progress in working towards a licensing program that would make licenses broadly available without an equity bottleneck, and create City revenue that can be used to support the community and address drug-war harms. It looks as though a majority of Council members now support such a model.

BACKGROUND:  HOW DID WE GET HERE?

For basic background, please check out the previous coverage of the adoption of the licensing ordinance and its equity component and the long process of developing of proposed amendments to it.  

In advance of the November 14 meeting, council members Kalb, Guillen, and Campbell Washington made public proposed amendments to the two licensing ordinances, sections 5.80 (for dispensaries and delivery services) and 5.81 (for everything else). Council member Kaplan also made some proposed amendments public, which are not addressed to the controversial aspects of the equity program. Both the Kalb/Guillen/Campbell Washington proposal and Kaplan amendments were summarized here.

GIBSON MCELHANEY PROPOSED AMENDMENTS

At the meeting on November 14, Council Member Gibson McElhaney circulated her own memorandum. Significantly, Gibson McElhaney proposed changes to Kalb/Guillen/Campbell Washington revised ordinances. Gibson McElhaney’s proposal makes three key changes.  First, they would allow individuals with a California conviction for marijuana-related offenses at any time to be eligible for the equity program, whereas the Kalb proposal is limited to offenses in the last 10 years.   

Second, Gibson McElhaney’s revisions would allocate all of the city revenue from medical and recreational cannabis gross receipts taxes to the equity cannabis fund. 

Third, Gibson McElhaney’s change how money allocated to the equity program would be spent, with an emphasis on restorative justice and spending in census tracks in Oakland with the greatest levels of poverty.

BROOKS, REID, AND GALLO PROPOSED THEIR OWN AMENDMENTS

Also at the meeting on November 14, Council Member Brooks (supported by Reid and Gallo) circulated a new written proposal. It would make a number of changes to the cannabis licensing ordinance. The most important components of the proposal are as follows.

First, the proposal adds a five-year residency requirement for any Oakland cannabis licenses (in addition to a two-year residency in specific police bears to qualify for an equity license). 

Second, the Brooks proposal imposes new restrictions on existing cultivation or manufacturing businesses. Under the proposal, those businesses could either (1) pay all back taxes, interest, and civil penalties of $10,000 per day, and be “grandfathered” or (2) close the preexisting facility and apply for a license at a new location. The back taxes, interest, and penalties would establish an equity fund paid for by the back taxes, interest, and penalties, and distributed for job training, loans for start-up cannabis businesses, and community beatification.

Third, the Brooks proposal would allow business owned 40% by an equity-eligible individual to apply for an equity license. That is down from, 50% under the current law. 

Fourth, the Brooks proposal would make operating without a license subject to civil penalties, and expressly permit destruction of unlicensed commercial medical cannabis.

COUNCIL VOTES 4-3 TO DIRECT STAFF TO PREPARE AMENDMENTS BASED ON KALB AND KAPLAN PROPOSALS

After discussion and public comment, the City Council on November 14 took action as follows.  Council Member Kalb moved to direct the city staff to prepare revised ordinance based on the Kalb group's proposal, as modified by Kaplan's revisions "to the extent not in conflict with" Kalb's proposal or "in violation of state law." Kalb's motion also requested the Department of Race and Equity prepare a equity analysis of the various proposals. This material is to be complete as soon as possible to allow for a meeting in January. That motion passed 4-3, with Kalb, Guillen, Campbell Washington, and Kaplan voting in favor. Brooks, Reid, and Gallo opposed; they also offered their own motion to direct staff in line with their proposal, which was defeated 4-3. Gibson McElhaney had left the meeting and did not vote on either motion.

WHAT'S NEXT

Based on the comments and voting at the meeting, as well as the content of Gibson McElhaney’s written proposal, it seems that revisions along the lines of the Kalb/Guillen/Campbell Washington proposal are likely to pass. 

Crucially, in addition to Kalb, Guillen, and Campbell Washington, both Kaplan and Gibson McElhaney appeared to support eliminating the 1:1 equity licensing requirement. Both Kaplan and Gibson McElhaney proposed revisions to the Kalb proposal, but neither suggested resinstaating the 1:1 ratio requirement that would, in effect, limit the number of non-equity licenses available and risk leaving many potential businesses unable to obtain a license. Instead, both Kaplan and Gibson McElhaney appear to support granting licenses broadly in order to create revenue for the City which can be used in a variety of ways to support and facilitate a vibrant, diverse industry that benefits Oakland and Oaklanders. 

Update:  Oakland's final licensing program was adopted on March 28, 2017, and we've got the details.