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California Announces Financial Assistance for State’s Social Equity Program

by Sarah Cawthon April 30, 2020

On April 21, 2020, California’s Office of Business and Economic Development and the Bureau of Cannabis Control announced $30 million in grant funding through the Cannabis Equity Grants Program for Local Jurisdictions.

Cannabis prohibition and criminalization has had a devastating impact on populations and communities across California. Individuals convicted of a cannabis offense typically have a more difficult time entering the adult-use cannabis industry due, in part, to a lack of access to funding, business space, technical support and regulatory compliance assistance.

Therefore, social equity programs are an integral part of the cannabis industry in California and throughout the United States. These programs were enacted to ensure that minorities, economically disadvantaged individuals and those who have been disproportionately affected by marijuana convictions and the war on drugs are provided with opportunities to be directly involved in the legal cannabis industry.

In 2018, while several municipalities in California already had their own social equity programs, Gov. Jerry Brown passed Senate Bill 1294, which established a state program to assist more municipalities throughout the state with equity ordinances in providing loans, grants and technical assistance to assist with licensing and application fees, rent and workforce training to would-be entrepreneurs and employees within the cannabis industry.

The bill emphasized that the legislature’s intent in creating this state-wide program was to “ensure that persons most harmed by cannabis criminalization and poverty be offered assistance to enter the multibillion-dollar industry as entrepreneurs or as employees with high-quality, well-paying jobs.”

In October 2019, California divided $10 million from the state’s Bureau of Cannabis Control to help social equity programs in ten municipalities in the state. Both Los Angeles and Oakland were the top recipients and received $3.5 million between them. The funding was included in the 2019 budget in hopes that these additional funds would help local jurisdictions with the implementation of equity programs that have struggled because of lack of funding and under-staffing.

This year, in 2020, the state will be providing $30 million in grant funding for cannabis entrepreneurs. The funding was awarded to 16 different municipalities and counties to support their social equity programs. The grant solicitation was released on February 5, 2020, with applications due on March 9. Grant agreements should now be executed no later than June 1, 2020, with the grant term lasting one year from the date the funds are disbursed.

Eligible local jurisdictions were able to submit one of two application types. The first was designed to provide assistance in the development of a local equity program, while the second would provide assistance to licensees to gain entry to, and successfully operate in, the state’s legal cannabis marketplace. 

Nearly $29 million of the grant funding went to local governments that already have established social equity programs in place including in Long Beach, Los Angeles, Oakland, Sacramento, San Francisco, Humboldt and Mendocino counties. The other recipients each received $150,000 or less to help develop social equity programs, which included localities such as Clearlake, Coachella, Palm Springs, San Jose, Santa Cruz, Stockton as well as Lake, Monterey and Nevada counties. 

“Cannabis prohibition and criminalization had a devastating impact on populations and communities across California. Individuals convicted of a cannabis offense and their families suffer the long-term consequences of prohibition and criminalization,” a report regarding the grant program states. “These individuals have a more difficult time entering the newly created adult-use cannabis industry due, in part, to a lack of access to capital, business space, technical support, and regulatory compliance assistance.”

After the legal recreational cannabis market opened in California on January 1, 2018, the Sacramento City Council established the Cannabis Opportunity Reinvestment and Equity (CORE) program to assist individuals who were harmed by the disproportionate enforcement of cannabis-related crimes. The CORE program is designed to reduce the barriers of entry into the local cannabis industry through training, mentoring, financial and technical support. The new funding will allow the city to reimburse eligible participants for up to $25,000 for some startup costs.

“When it comes to the local cannabis industry, the City of Sacramento has been working diligently to level the playing field for anyone who wants to start a new business,” said Davina Smith, head of the city’s Office of Cannabis Management. “This new funding will go a long way in creating more fairness and equity and helping to right historic wrongs.”

Additionally, the state recently enacted tax-related assistance to help businesses affected by the coronavirus pandemic. The assistance includes relief from tax interest and penalties and an extension on the following items until July 31: 

  •     State tax return filings and payments under $1 million
  •     Tax appeal requests
  •     First-quarter tax filings for businesses under $1 million in annual taxes 

 

Interested in California Marijuana Business Opportunities?

If you’re interested in opening a marijuana business in California, you will first need to select a local municipality that has opted in to allow the type of marijuana business you are interested in establishing.

For complete information and details on how to apply for a marijuana business license in California, download our California Application Guide & Checklist. The guide provides step-by-step instructions on over 100 action items to complete prior to submitting your application for a marijuana business license. You’ll be able to learn about business application topics from real estate and financial planning to staffing and team building activities.