The California Cannabis Equity Act of 2018
At the beginning of March 2019, the Bureau of Cannabis Control (“BCC” or the “Bureau”) announced that between March 1, 2019 and April 1, 2019, it is accepting applications for grant funding authorized by the California Cannabis Equity Act of 2018 (Senate Bill 1294). The intent of the Cannabis Equity Act is to “direct assistance to local jurisdictions’ commercial cannabis equity programs that provide assistance to local equity applicants or local equity licensees.”
“This grant funding will be awarded to cities and counties to assist equity applicants and licensees through equity programs that focus on inclusion and support of persons in the cannabis industry who are linked to populations or neighborhoods that were negatively or disproportionately impacted by cannabis criminalization.” The Bureau has been appropriated $10 million to award to eligible local jurisdictions, and all grant funds will be distributed by June 30, 2019, in increments of at least $100,000, “unless a lesser grant amount is requested.”
How Can Locality Applicants Use the Grant Funding?
Grant funds are eligible for uses such as:
- providing direct technical assistance to local equity applicants and local equity licensees;
- providing a loan or a grant to a local equity applicant or local equity licensee to assist the applicant or licensee with startup and ongoing costs;
- assisting in the administration of local equity programs;
- tiered fees or fee waivers for cannabis-related permits and licenses;
- assistance in paying state regulatory and licensing fees;
- assistance with regulatory compliance;
- and other purposes related to assisting local equity applicants and local equity licensees in the local jurisdiction to gain entry to, and successfully operate in, the state’s regulated cannabis market.
BCC Equity Grant Funding Requirements
The application for grant funding requires the locality applicant to disclose:
- the details of the locality’s equity program;
- whether the local jurisdiction has identified a local equity applicant or licensee that can be assisted through grant funding;
- the number of existing and potential local equity applicants in the local jurisdiction;
- the number of local equity licensees in the local jurisdiction,
- and the number of state commercial cannabis licenses in the jurisdiction.
Applicants will also have to disclose the proposed use of funding, including all activities that the grant funds will be used for and the amount of the expenditure for each activity. (“The total expenditures should equal the total request grant funds amount.”)
Moreover, every eligible local jurisdiction that receives grant funding will be required to “demonstrate that the grant funds were expended for eligible uses and consistent with the activities identified in their application” and any funds that are not used as required may be required to be returned to the Bureau. You can find more information about the Equity Grant Program here.
Existing Cannabis Social Equity Programs in California
Within Northern California, three major cities have adopted cannabis equity programs: San Francisco, Oakland, and Sacramento. In Southern California, Los Angeles has adopted a cannabis social equity program.
To illustrate, in San Francisco, the Equity Program is intended to address the impacts of the War on Drugs; individuals meet the criteria of an Equity Applicant based on residency, income, criminal justice involvement, and housing insecurity. The City is first reviewing and approving applications from cannabis equity applicants, then cannabis Equity Incubators (businesses that support Equity Applicants by providing rent-free space or technical support), and then general applicants.
Similarly, in Oakland, the Equity Program seeks to minimize barriers to cannabis licensing for Oakland residents who have been the most victimized by the war on drugs. Individuals qualify as an Equity Applicant based upon income, and cannabis convictions or residence in a police beat with a disproportionately higher number of cannabis-related arrests. During Oakland’s initial permitting phase, the City is committing to issuing at least half of all permits to Equity Applicants. Equity Incubators (businesses that provide an Equity Applicant with three years of free rent for a minimum of 1,000 square feet for the Equity Applicant’s business operations, and any required security measures) will also receive permitting priority over other general applicants.
The East Bay Express has reported that San Francisco, Oakland, Sacramento, and Los Angeles will all seek to obtain grant funding authorized by the California Cannabis Equity Act. It remains to be seen how each locality will allocate the grant funds received (if any), but we at Rogoway Law certainly hope that it will help strengthen the Equity Programs and streamline permitting for Equity Applicants in these localities.
AN IMPORTANT POST-PUBLICATION UPDATE:
On March 29, 2019, The Bureau of Cannabis Control (“BCC”) released a “Notice of Cancellation” of the Local Equity Grant Program Notice of Funding Availability. The Notice of Cancellation from the BCC reads as follows:
On March 1, 2019, the Bureau of Cannabis Control (Bureau), released a Local Equity Grant Program Notice of Funding Availability (NOFA) and opened the application period for grants pursuant to the California Cannabis Equity Act of 2018.
Effective immediately, the Bureau cancels the NOFA and will no longer be proceeding with the application period.
The Bureau intends to review and revise the grant program guidelines, then release a new NOFA for the grant program.