.Will Oakland’s Legal Weed Industry Leave People of Color Behind?

In the wake of the War on Drugs, state laws and industry culture are preventing Black and Latino folks from entering Oakland's burgeoning, hugely profitable cannabis market.

On a Tuesday evening in January, people gathered at SoleSpace in downtown Oakland for a panel titled, “Shades of Green: The State of Cannabis in California for People of Color.” Supernova Women — a recently formed organization led by female entrepreneurs of color working in cannabis — organized the event, and it brought out an avid, intergenerational crowd of mostly Black and brown folks with varying levels of interest and experience working in the industry.

The impetus behind the gathering was the fact that currently, Oakland finds itself at a critical juncture in the roll out of its regulatory policies regarding medical marijuana. While there are only eight licenses for cannabis dispensaries in the city at present, on April 26 the city council is scheduled to vote on whether to approve eight more licenses per year, starting this year, creating additional opportunities for entrepreneurs who have been operating in the underground market to go legit. The city is also considering implementing other cannabis licenses that would legitimize grow operations, delivery services, edibles and topicals companies, testing labs, and other marijuana-related businesses that are currently operating in a legal gray area.

The women behind Supernova are Sunshine Lencho, an attorney who offers legal services to cannabis businesses; Amber Senter, chief operations officer at Magnolia Wellness, one of Oakland’s eight existing dispensaries; and Nina Parks, who owns Mirage Medicinal, a cannabis delivery service based in San Francisco. The three women formed an alliance after crossing paths at various networking events for cannabis entrepreneurs, where they said they often found themselves to be the only women of color in the room. Concerned with social justice and the welfare of their communities, they founded Supernova as a way to advocate for people of color in the industry at a time when the legal weed market’s major players — both in Oakland and nationally — are overwhelmingly white and male.

But they face serious challenges in their goal of integrating the medical cannabis industry. Advocates note that Blacks and Latinos have been and continue to be disproportionately criminalized in all aspects of the US criminal justice system, from racial profiling in arrests to harsher sentencing in the court system. As a result, people of color who operate underground marijuana businesses are understandably wary about coming out of the shadows. While many white cannabis entrepreneurs pride themselves in being outlaws, for many people of color, blatantly breaking the law is not an option. “I would never be able to say to my brother or sister to be an outlaw with the police, when I know the experience of what an interaction with police can lead to,” said one of the speakers, Lanese Martin, who is Black and is the founder of CannaBizWatch, a watchdog organization advocating for a progressive cannabis policy. The audience met her statement with knowing nods.

Despite recent reforms, law enforcement statistics show that police and prosecutors continue to target people of color for drug crimes in hugely disproportionate numbers. Blacks and Latinos are convicted for marijuana-related felonies — such as possession with intent to sell, which is still a felony in the state — at much higher rates than their white counterparts, even though studies show that Black and white people use marijuana at about the same rates. According to the report “Crime in California,” which was released by the state attorney general’s office in July 2015, 18 percent of arrestees for marijuana-related felonies in 2014 in the state were Black even though, according to the 2010 census, only about 6 percent of California’s population is Black. Meanwhile, white people constituted 31 percent of arrestees even though they made up more than 40 percent of the state population in 2010.

The costs associated with launching a legal cannabis business also present disproportionate challenges for people of color. Depending on the type of marijuana business one wants to start, the total costs needed to pay for product, branding, operations, and licensing fees can range from several thousand to several hundred thousand dollars. And because marijuana is still federally illegal, taking out a small business loan is not an option — which presents a significant barrier to entry for those who don’t have disposable income or cash savings.

Another major factor that could prevent many cannabis entrepreneurs of color from going legit is Senate Bill 643, one of the bills that make up California’s new Medical Marijuana Regulation and Safety Act (MMRSA). SB 643 allows state and local licensing boards to deny cannabis business licenses to people with felony records, including those with drug felony convictions. As a result, a large number of folks who were ensnared by the War on Drugs are at risk being systematically excluded from a burgeoning, hugely profitable new market.

According to the BuzzFeed report “How Black People Are Being Shut Out of America’s Weed Boom,” published last month, only about 1 percent of cannabis club owners nationwide are Black. In Colorado, where the weed industry has produced a huge tax revenue surplus for the state, galvanized its tourism industry, and earned an estimated $700 million in profits in the first year of legalization — 2014 — there is only one pot shop owned by a Black woman among hundreds that have opened.

In short, white men, who are the least likely to be targeted by the US criminal justice system for drug crimes, despite the fact that they use drugs as much as people of color, and who are the most likely to have access to personal savings and private investors, have effectively cornered the lawful marijuana market in states that have legalized it. And the people of color who have been instrumental in supplying the nation’s underground marijuana market for decades remain marginalized.

Nonetheless, Lencho, Senter, and Parks remain hopeful about Oakland and their prospects for increasing the number of people of color in the local medical weed industry. They note that cannabis regulation in Oakland is still in its nascent stages, and the legal marijuana industry here is still being established. They created Supernova to galvanize people of color interested in joining the legal cannabis industry, and to help the people who have historically been growing and selling cannabis or making topicals and edibles underground.

But advocates say that if the institutional barriers prohibiting the very people most heavily affected by the War on Drugs are not addressed, and people of color who have historically earned income in the marijuana trade in the underground market are not able to legitimize their businesses, then a similar fate to that of the tech industry will befall the cannabis industry. The enormous profits that cannabis will generate in California in coming years will mostly enrich our society’s most privileged group.

“We decided that it was important that we form an organization that filled what was clearly a need to bridge the gap between women of color who are active in the industry and our communities,” said Lencho, in a separate interview following the panel. “It’s hard for us to focus on the business case for cannabis when, at the same time, people who look like us are still going to jail in the hundreds here in Oakland. The public perception is that cannabis is this thing that is about to be regulated, and it’s a free-for-all here in California, and Oakland is like the Amsterdam of the West. But the reality is very different depending on what you look like. It was important for us to bring a voice to that and also create a space where that can be discussed.”

According to the 2013 ACLU study, “The War on Marijuana in Black and White: Billions of Dollars Wasted on Racially Biased Arrests,” the War on Drugs was a major factor in causing the US prison population to increase by 52 percent between 1990 and 2010. In addition, the number of people arrested for marijuana offenses during that time period soared by 188 percent.

But arrests and incarceration for marijuana impacted some communities more than others. In 2010, Black people were 3.72 times more likely to be arrested for marijuana possession than their white counterparts — a disparity that increased by 32.7 percent between 2001 and 2010.

Of course, all those drug arrests failed to curb the use of recreational marijuana. According to the 2010 National Survey on Drug Use and Health, 39.3 percent of Americans reported having used marijuana in their lifetimes, and 17.4 percent of them had used it the past month. And, as the ACLU found in its study, Blacks and whites use cannabis at roughly the same rates. Yet despite the similarities in marijuana consumption rates, the disparities in arrests remain pronounced on a national scale. In the American West, according to the ACLU, the disparity is not as wide, though it is still substantial: Blacks are twice as likely to be arrested for marijuana possession than whites.

Although Proposition 47, approved by California voters in 2014, downgraded six nonviolent offenses from felonies to misdemeanors, selling any amount of marijuana remains a felony. Marijuana cultivation is also still a felony for people who are not cannabis patients, and even those who have doctors’ recommendations are only allowed to grow for personal use and are prohibited from distributing the plant to others. The reason that some of California’s weed delivery services and grow operations are legal is because state law allows exceptions for licensed, non-profit cannabis patients’ collectives to provide marijuana-related services to their members. And because state laws are vague about how those collectives should operate, a wide variety of cannabis businesses have popped up that are technically in compliance with the state law, though often unregulated by local governments, as is the case in Oakland.

Endria Richardson, one of the speakers from the Supernova panel and a staff attorney at the nonprofit Legal Services for Prisoners with Children, argues that California’s new medical marijuana regulations will block large numbers of Blacks and Latinos from prospering from the state’s rapidly expanding medi-weed industry. SB 643, which Governor Jerry Brown signed into law last October as part of MMRSA, states that individuals with felony convictions for the sale, possession for sale, manufacture, transportation, or cultivation of a controlled substance can be denied licenses by the state to distribute medical pot. Richardson said that state officials could use MMRSA, which takes effect in 2018, to shut people out of the medical pot industry simply because they engaged in growing or selling marijuana before it was legalized and were caught and convicted.

Under MMRSA, individuals who want to open cannabis businesses will be required to obtain licenses from the state as well as the city in which they’re operating. Traditionally, the City of Oakland has only prohibited people from obtaining medical cannabis dispensary licenses if they have been convicted of serious or violent crimes — but not marijuana-related offenses. But when the state sets up its licensing regime by 2018, even if the City of Oakland doesn’t use drug-related felonies to deny people licenses, the State of California could still do so — prohibiting those individuals from operating even if the city government approves. These state regulations could feasibly override Oakland’s more progressive policies, which could erect a significant barrier to entry for people who have been criminalized by the War on Drugs.

The state’s more conservative stance on felony drug convictions reflects the US Department of Justice’s eight guidelines for state regulation of medical marijuana. These official guidelines stipulate that states are responsible for preventing state-authorized marijuana activity from being used a pretext for trafficking other drugs, as well as preventing revenue from state-regulated marijuana sales from going to criminal enterprises. But when applied on a practical level, this policy is contradictory because it denies people the right to sell marijuana legally simply because they’ve sold marijuana before it was legalized. And this policy implies that people who have been involved in marijuana sales are involved in other criminal activity, which is not always the case.

If state licensing agencies fail to take into consideration the details of the felony conviction, how long ago it was, and what the person has done since then to rehabilitate him or herself, then the implementation of MMRSA could bar a significant number of people who were unfairly targeted during the War on Drugs — many of them Black and Latino — from operating cannabis businesses legally, according to advocates. If that were to happen, the distribution of wealth from Oakland’s cannabis industry would not be equitable. “You basically will see communities that haven’t been as impacted by prohibition gaining the most from legalization,” Richardson said.

Because landlords and employers can still use felony convictions to discriminate against people for jobs and housing and, until recently, drug-related felonies barred many Californians from receiving food stamps and cash assistance, Prop 47 represented a crucial step in helping perpetrators of victimless crimes move on from their pasts. But in terms of making the medical marijuana industry more equitable, Richardson said it hasn’t gone far enough.

“There are still a lot of drug-related crimes that are still felonies,” said Richardson. “Possession with intent to sell is still a felony, and that can be charged just based on the amount of drugs you had, whether you had paraphernalia on you, or whether the drugs you had were separated into separate baggies rather than having one baggy, or if the officer just felt like you were gonna sell them.”

Richardson added that the state’s medical cannabis industry will continue to remain segregated until there are no barriers to licensing for people with felony convictions. “I think that’s the most important thing that can even the playing field a little bit more.”

Felicia Shaw, who owns the topicals company Mystic Herbal Body Care and is an instructor of topical applications at Oaksterdam University, echoed Richardson’s sentiments in a recent phone interview. Shaw, who is Black, began as an underground marijuana grower before transitioning into making cannabis-infused topicals for pain relief, which she now sells at dozens of cannabis clubs throughout the Bay Area. Though her business complies with state and local laws, she said that, given the history of criminalization of Black and Latino people for drug possession, she understands why cannabis entrepreneurs of color would not feel comfortable coming forward to apply for licenses, let alone lobbying local and state governments for more equitable policies.

“I’m sure you know Black people and Mexican people have been the ones being arrested and have served the most harsh time for selling weed over the years,” she said. “So you would think, ‘Wow, this is an opportunity we would all jump on.’ But it’s actually the opposite because we get targeted [by the police] a lot more for pull-overs and stuff like that.”

Shaw also said that many Black and Latino marijuana business operators are afraid to expose themselves to local and state licensing authorities because of the drug war’s impact on their communities. “Why would we want to come out of the darkness and into the light where we can get even more picked on?”

She continued, “Because people of color are usually targeted by police, I keep [my business] low-key. I make enough money so that I can pay my bills and enjoy my life and still be free.”

Claudia Mercado, an Oakland entrepreneur who was born in Mexico and raised in Oakland’s Fruitvale district, said in an interview that many Latinos with working-class backgrounds similar to hers have justifiable fears about entering the legal cannabis business.

“If you think about the black market in East Oakland, it’s going to be hard for people to come out because there’s a cost to going legit,” she said. “And if you’ve been making decent money to get by on the black market, why do you wanna go legit, what’s the incentive? If you’ve been persecuted for so long, what is going to give you the confidence to step out? Who’s going to guarantee you’re not going to get busted, and that you’re gonna be okay if you’ve lived your life in fight or flight mode?”

Mercado has an MBA degree from Mills College and has built her business acumen working in corporate America. She said this has helped her navigate the legal gray areas of the medical marijuana business. She now works in marketing and business development for the topicals company Sweet Releaf, and she recently incorporated a patients’ collective with another colleague in San Francisco to help her legitimize her grow operation.

The purpose of the Supernova panel was to educate the public about the legal issues at play surrounding cannabis regulations and the options available for people to enter the industry. But it also turned into an informal networking event, with people volunteering different skillsets related to their work in the cannabis industry. One woman asked if anyone wanted to pool resources to rent a commercial kitchen for making edibles and topicals. People offered resources for legal advice and leads on warehouse spaces for cultivation. Though the networking portion of the event was unplanned, organizers Senter, Lencho, and Parks welcomed it.

According to the founders of Supernova, networking is a vital part of running a cannabis business. Entrepreneurs often help one another by sharing information on upcoming legislation and city council meetings, business advice, and safety precautions for dealing with large amounts of cash and lucrative product.

“You can’t Google how to run a dispensary,” said Andrea Unsworth, who owns the cannabis delivery company StashTwist and is also the chairwoman of the Bay Area chapter of the cannabis entrepreneurship organization Women Grow. Unsworth, who is Black, said that opening a delivery service was one way for her to operate legally, given Oakland’s current cap of eight storefront dispensary licenses. But running her business has not been easy, as she often fears for the safety of her drivers and questions whether law enforcement would be on her side if something bad were to happen.

But attending networking events can be costly. While the Supernova panel was free, according to Lencho, the admission price to attend a mainstream cannabis conference is typically in the hundreds of dollars. As a result, the attendees at cannabis networking events tend to be overwhelmingly wealthy and white. Those who don’t have the time or money to attend them are essentially missing out on vital sources of information.

“I’ve been going to local hearings in Berkeley and Oakland,” said Lencho, “and the only reason you know they’re happening is because you’re tapped into the industry and people are reminding you about the schedule of events, and you have people who are telling you about the upcoming conferences. If you have no idea that this is happening, which I think is the case with the vast majority of people living in this area, you’re going to wake up in 2018, you’re going to hear about these licensing applications, and you’re going to be like, ‘Wait, what? I didn’t even know this was going on.'”

Cannabis networking events also provide entrepreneurs with the chance to make business connections: Topicals makers and growers can meet dispensary owners, for instance, which would improve their chances of getting their products in clubs. If networking events are structured in such a way that is not accessible to low-income folks, many people of color will effectively be barred from the industry.

“I’m not assuming that all people of color are low-income, or living check-to-check, but if you’ve been around weed [on the underground market], chances are you’re not very affluent,” said Claudia Mercado. “And finding the time to attend those meetings is very time-consuming.”

While felony convictions likely will prohibit many people from becoming licensed to start their own cannabis businesses, one would think that a way for them to still profit from the cannabis industry would be through getting a job at a local dispensary. According to Andrew Silva, a San Francisco attorney who works with local cannabis businesses to make sure they’re in compliance with state and local laws, dispensaries typically pay above the minimum wage.

“People with felonies are currently being employed by dispensaries, and it’s a really good resource for them, because they pay well,” said Silva, who used to make a living working at cannabis dispensaries before starting his law practice.

However, the cannabis entrepreneurs of color interviewed for this story echoed the sentiment that most of the cannabis clubs in Oakland — with the exception of places like Purple Heart, which is Black-owned, and Magnolia Wellness, which has a reputation for having a diverse staff — and around the Bay Area tend to have majority-white staff, even in entry-level positions.

Shaw, owner of Mystic Herbal Body Care, said that since she began selling her product at local dispensaries in 2009, she has seldom encountered people of color in managerial positions at dispensaries — a trend she often sees reflected in the racial makeup of the rest of the staff. Shaw said that she has applied to numerous dispensary jobs that she considered herself obviously qualified for — since she is an experienced grower, topicals maker, and business owner — but she has frequently been rejected. She has often wondered whether racially biased hiring practices were the reason.

“It’s very disturbing, and it bothers me a lot, because Black and Mexican people might not be able to start the business, but we sure need jobs,” she said. “And it would be great to do something in the cannabis industry, where you don’t have to get drug tested and you get to deal with something that’s so fun and be part of this whole movement. It kind of breaks my heart. … Unless it’s a Black-owned club, you usually don’t see any Black people working there, not even budtenders.”

Debby Goldsberry, executive director of Magnolia Wellness, said in an interview that she prides herself in the fact that her staff at Magnolia, including its six-person leadership team, is diverse in terms of ethnicity, age, and gender. Because West Oakland, where Magnolia Wellness is located, has a large population of people of color, Goldsberry said that many of her employees started out as patients, which is a central reason why her staff reflects the community Magnolia serves. “If you’re hiring right and you’re job-posting right, you’re creating jobs that match your community — that’s the fix,” she said.

However, Goldsberry has run into roadblocks when attempting to reach unemployed people from Oakland’s most vulnerable communities. Many nonprofits that help people find employment are prohibited from advertising dispensary jobs because those nonprofits receive federal funding, and cannabis is illegal under federal law. But Goldsberry said she’s working with the City of Oakland to develop solutions to make sure her job postings reach Oakland’s economically marginalized communities.

“We’d like to see the medical marijuana program employ previously unemployed Oaklanders,” she said. “I think it’d be incredible if we looked at the unemployment metrics of Oakland in a year or two years and found that the numbers have gone significantly down because we’ve employed people into the medical marijuana industry.”

As for the City of Oakland, it requires that at least 50 percent of a dispensary’s staff be Oakland residents, and that half of those residents come from census tracts with high unemployment rates. However, the city can’t legally hold private businesses accountable for racially diverse hiring.

What needs to change, then, is the cannabis industry’s culture, advocates say. According to Claudia Mercado, because of the insular nature of cannabis networking events and the lack of outreach from white-owned cannabis businesses to local communities, implicit biases go unchecked when it comes to hiring.

“If you think about the tech industry, it’s a good ol’ boys club,” said Mercado. “The weed industry is the same. If you’re not besties with the dispensary owners, or you don’t fit the profile of the budtenders who buy the weed, they could easily discriminate [against] you.”

The Oakland City Council is scheduled to determine on April 26 whether to approve eight more dispensary permits per year, as well as new license types that would help regulate cannabis delivery services, edibles kitchens, testing labs, and commercial grow operations, creating potential opportunities for entrepreneurs of color to enter the local market. But with venture capitalists and tech moguls interested in cannabis’ profitability (billionaire and early Facebook investor Sean Parker is a central backer of California’s recreational, adult-use 2016 ballot initiative, the Control, Regulate and Tax Adult Use of Marijuana Act), there will likely be well-connected, moneyed individuals vying for Oakland’s limited number of storefront dispensary licenses. According to a study by Arcview Market Research, the nationwide legal cannabis industry grew in 2014 from $1.5 billion to $2.7 billion — a figure that has certainly piqued the interest of wealthy investors.

But City of Oakland officials are currently pursuing different options for making sure that the city’s cannabis industry is as equitable as possible under the current laws. “As of last quarter, 2015, 50 percent of all dispensary employees are Oakland residents,” said Gregory Minor, one of Oakland’s Assistant City Administrators who handle cannabis policy. “But it’s part of a broader conversation of providing equity, employment opportunities for Oakland residents, and then, also, specifically for victims of the War on Drugs. And to make sure they’re not left out of this growing industry, we’re looking at a variety of measures, whether it’s mandates for local hiring or incentive-based tax relief if you hire former parolees or probationers.”

One option the city is pursuing to increase equity in the cannabis industry is to create pathways for formerly incarcerated individuals to get medical marijuana jobs. “We’d like to create a pipeline for those who were incarcerated by the drug war to have opportunities — career opportunities — in this industry, to the best of our ability, so that we can repair the damage done by the misguided federal War on Drugs,” said Assistant City Administrator Joe DeVries, who is also helping craft Oakland’s marijuana regulations.

Under Measure Y, which passed in 2004 (and was renewed in 2014 as Measure Z), a portion of Oakland taxpayer money goes to social programs intended to prevent recidivism in formerly incarcerated people, and the city already has a pool of former inmates to work with through employment organizations such as Oakland Unite. “If we can take this industry that’s offering well-paid jobs to workers who don’t necessarily have to have college degrees, we can take these folks who were sent to jail as part of the drug war and help — you know, since we already work with this population in the city and the city taxpayers pay for that work,” said DeVries. “We’re going to be meeting with the people who do that work to see if we can plug them directly into jobs with these new businesses by giving these businesses tax credits to hire [formerly incarcerated individuals].”

DeVries and Minor are also pushing to create a policy to give tax incentives or licensing fee reductions to cannabis businesses that employ formerly incarcerated individuals, especially those who have been imprisoned for cannabis offenses. They said the value of these incentives would be determined by how long the formerly incarcerated individual stays employed at the business — a stipulation meant to encourage businesses to invest in training.

But while, as Minor pointed out, these policies look good on paper, the city must be adequately staffed to track cannabis industry hiring practices, and to make sure specific companies are in compliance with city regulations and incentives. This is a major challenge in Oakland, a city with limited resources.

If the city council approves policies to regulate cannabis businesses that are not dispensaries — such as grow operations, delivery services, testing labs, and edibles and topicals manufacturers — there will be considerably more opportunities for entrepreneurs of color, especially if there is no limit on licenses for marijuana businesses that are not brick-and-mortar storefronts. Richardson, the attorney working with Legal Services for Prisoners with Children, suggested that the city should look into adopting policies that would encourage people to start cannabis businesses with alternative ownership models, such as worker-owned cooperatives. “Those can decrease the barriers to ownership for people who have less capital to start with and open up their own shops,” she explained.

But above all else, the biggest factor that could limit the same people the War on Drugs preyed upon from entering the legal cannabis business is the potential ban on people with drug-related felonies from obtaining state licenses. If folks from low-income areas who have traditionally supplemented their incomes with marijuana sales aren’t able to enter the industry legitimately, then once marijuana is fully legalized for adult recreational use, there will be major, widespread job loss in the underground economy as the burgeoning mainstream marijuana industry, dominated by whites, takes over the market.

And according to Columbia University professor Sudhir Venkatesh, a scholar on gang activity who was quoted in the April 2015 article “The Racist End to the War on Drugs” on Salon.com, people who are displaced from the underground cannabis industry may be pushed into more dangerous sectors of the economy, resulting in an uptick of other illegal activity, which would further fuel the prison industrial complex.

But not all of Oakland’s policies on cannabis have been written, and the city is examining marijuana regulations with what Karen Boyd, spokesperson for the City Administrator’s Office, described as a “lens of equity.”

When SB 643 takes effect in two years, it will empower the state to deny licenses to people with felony drug convictions. But in the meantime, DeVries and Minor said that they do not recommend that the City of Oakland deny licenses based on marijuana-related felonies. However, it will ultimately be up to the Oakland City Council to determine the specifics of Oakland’s new licensing requirements when it meets on April 26. Minor and DeVries also said that they plan to further review the city’s background check requirements for cannabis licenses to address policies that could disproportionately affect communities of color, which they believe were unfairly criminalized during the War on Drugs.

Because MMRSA won’t be fully implemented until 2018, local regulations will take precedence until the state rolls out its own licensing process. And because Oakland has historically been a leader in medical marijuana policy, DeVries and Minor said that they are confident that if the City of Oakland approves enough cannabis licenses under its more progressive policies before 2018, it is possible that Oakland will influence the way state policy is implemented in regards to felony drug convictions. “If we have a robust licensing system in place, then the state should honor that,” said DeVries.

Andrea Unsworth of StashTwist said that it is also helpful that Oakland has a culture of conscious consumers who understand the value of supporting businesses owned and staffed by people of color and women. And according to the organizers of Supernova, it is a vital time for cannabis entrepreneurs of color to join forces and advocate for their interests to change the industry’s culture, and lobby for more equitable state and local regulations. Since I met Lencho, Senter, and Parks at their first panel at SoleSpace in January, Supernova has hosted several other educational panels that are free and open to the public in order to better educate local communities of color about their rights, job opportunities, and upcoming legislation.

“Once the regs come out, we’re going to read them, we’re going to analyze them, we’re going to report them to our constituents,” said Lencho. “And we’re going to do the feedback to the people writing the regulations so they can understand, and they can have a record of how these things are impacting us. So five years from now we’re not going to turn around and be like, ‘How did that happen?'”


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