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Report: Los Angeles Social Equity Program Misses Mark

Minority Cannabis Business Association says the city’s position as one of the largest cannabis markets means its “programs and market rollouts will likely be adopted by others in the industry.”

Jun 28, 2019 6:55AM EDT Business

Julia Barajas @Julia_P_Barajas

LA native, graduated from Columbia Journalism School after working in education for several years. Her work has also appeared in La Opinión, the Columbia Journalism Review, and La Prensa Gráfica.

A leading cannabis organization said in a report released on Thursday that Los Angeles’ social equity efforts are falling short.

The Minority Cannabis Business Association (MCBA), one of several keeping tabs on Los Angeles’ social equity program, indicated that its decision to commission an evaluation of Los Angeles’ program is rooted in the city’s highly influential position as one of the largest cannabis markets, whose “programs and market rollouts will likely be adopted by others in the industry.”

The report examines ten key areas, “all of which have been determined to play a major role in the ultimate success or failure of these programs.” These include what the MCBA refers to as “accessibility factors” (the application process, eligibility, expungements, restricted licenses, shareholder/ownership requirements) and “environment factors” (educational services, incubator program, real estate/cap limit, government responsiveness, and community reinvestment fund).

The MCBA’s report, which the association describes as “a snapshot of Los Angeles’ social equity program as of May 1, 2019,” gives high marks to the city’s eligibility criteria for social equity applicants. According to the association, the criteria is “expansive” enough to “permit the majority of individuals harmed by the War on Drugs access to the program.”

In the MCBA’s view, however, Los Angeles’ generally missed the mark in all other areas. For instance, although the MCBA praises Los Angeles for having a 1:1 ratio between social equity applicants and their counterparts, the association takes issue with the “several hundred licenses” given to businesses, “effectively capturing the market, before the social equity program was implemented.” (To date, the city has issued 186 “temporary approvals to engage in cannabis activity.”)

When weighing the aforementioned “environment factors,” the MCBA determined that, “As the program currently exists, it does not promote the long-term success of applicants,” something the Los Angeles Department of Cannabis Regulation’s executive director herself has recently acknowledged.

The MCBA also takes issue with the city’s lack of a community reinvestment fund, calling for at least two percent of cannabis-related tax revenue to be earmarked for programs that benefit regions that were subject to disproportionate enforcement.

In its recommendations for improvement, the association also indicated that “When the need for new license types arise (i.e. consumption lounges or cannabis licenses for restaurants), initial licenses [should be] reserved for social equity applicants.” The MCBA also suggests that the city “Provide funding to develop financial literacy and other business courses” to ensure the success of social equity applicants.

Moving forward, the MCBA will evaluate Denver, Colorado’s program, as part of its ongoing “social equity conversations.”