Oakland City Council Returns to Cannabis Licensing and Reveals the Equity Incubator Program

After a long pause, the Oakland City Council is set to return to cannabis licensing on March 7.  New materials prepared by city staff were recently made public, including the memorandum prepared by Darlene Flynn, director of the City's Department of Race and Equity, as well as proposed revisions to the City's cannabis licensing ordinances.  As always, those materials are now here available on California Legalized; just click this link.  (For more background on the City's previous legislation and the contentious issues around Oakland's equity program, check out our previous updates.)

Oakland City Hall

What Cannabis Businesses Need to Know About Oakland's New Proposed Legislation

The new proposed legislation would make major changes to Oakland's proposed licensing regime.  A follow-up post will provide additional details, but the key takeaways for businesses considering applying for a license in Oakland are as follows.

1. Equity Eligibility Has Been Adjusted

To be equity eligible, a for profit company must be owned 50% or more by equity-eligible people.  For a collective or non-profit, the governing board must be controlled by equity eligible people. A person is equity eligible if their income is 80% or less of Oakland's median income and either (i) has been convicted of a cannabis crime committed in Oakland after November 5, 1996 or (ii) has resided in an expanded list of police beats for five of the past ten years.  The list of police beats is now 2X, 2Y, 6X, 7X, 19X, 21X, 21Y, 23X, 26Y, 27X, 27Y, 29X, 30X, 30Y, 31Y, 32X, 33X, 34X, and 35X.  This adds several zones in West Oakland, along the waterfront near 880, and in the Fruitvale area.  You can find details on the boundaries of police beats on Oakland's website.

2 Limited Non-Equity Licenses Will Be Available During the Initial Phase

During the first phase of applications, at least 50% of licenses must be held by equity applicants, meaning that the city will grant licenses on a 1:1 basis to equity and non-equity applicants.   The initial phase ends when the equity assistance program is set up and funded.  That length of time is unknown, but will likely be at least several months.

3. Operating an Equity Incubator Is an Express Lane to a License

The legislation would create an opportunity for a business that is not equity eligible to receive first priority for a license by operating a equity incubator.  An incubator would provide an equity-eligible company at least 1,000 feet of free space for at least 3 years for a cannabis business, along with necessary security and other requirements for obtaining licensing. 

4. Non-Equity Licensing, Other than for Dispensaries, Will Widely Open Up Once the Equity Assistance Program is Launched

For licenses other than dispensaries, after the Equity Assistance Program is set up and funded, there is no limit on the number of non-equity licenses than can be granted.  At that point, there should be a free flow of licenses to those applicants that meet the requirements.

For dispensaries, at least one half of all dispensary licenses would be issued to equity applicants in each calendar year.  As a result, if there are not sufficient equity applicants meeting the requirements, it could limit the number of licenses granted.  

5. The Equity Assistance Program Offers Significant Benefits

For equity-eligible applicants, the City will offer waiver of license fees, no-interest loans, and technical assistance through consultants.  These will be funded with $3.4 million in initial funds, and recouped through the tax on cannabis businesses.  

6. Zoning Near Schools Has Shifted to Path-of-Travel Measurement

There is one technical change in the legislation that will have a big effect on eligible zoning.  Most cannabis businesses are not permitted within 600 feet of schools unless the City Administrator provided a waiver. Previously, this 600 feet distance was measured by the shortest line between the cannabis parcel and the school's parcel. The new legislation would change that to a path-of-travel measurement door to door.  This would allow a number of parcels to be eligible that previously were ineligible under Oakland's zoning code, without obtaining a waiver.

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

California Legalized's sponsor, the Ringgenberg Law Firm, represents cannabis businesses in licensing, business transactions, intellectual property, and other matters, and is available to help businesses analyze opportunities for licensing under Oakland's proposed legislation.