Update: On Tuesday evening, City Council decided to postpone their vote for another few weeks while they decide on the best way to award the 10 licenses. Some councilmembers raised concerns about licenses potentially not going towards businesses who were in the best position to succeed, so the council will consider making it an application process to acquire a retail license with emphasis on CORE members.
Sacramento’s majority-white cannabis industry could soon get a facelift. City council will vote Tuesday to approve 10 marijuana storefront licenses for minority-owned businesses.
Currently, Sacramento has 30 storefront marijuana dispensaries. Less than five are minority-owned, and none are owned by African Americans. However, a city program created in 2019, which was aimed at providing opportunity to people of color who have disproportionately been affected by old marijuana laws, could bring new life into the industry.
“Between the regulatory compliance issues and the lack of banking and capital through traditional arenas, it’s made it very difficult” for people of color to get into the industry, according to Davina Smith, the city’s Cannabis Manager said. “So you really have to have minimum $300,000 to open the most basic cannabis business in the city of Sacramento.”
For the past year, the Cannabis Opportunity Reinvestment and Equity Program (CORE)has been helping participants with navigating regulatory hurdles and has had grants to help mitigate some of the costs associated with starting up a business.
But up until now, the city has had a cap on 30 cannabis storefronts, so all program participants have had to create delivery or cultivation businesses. The city’s vote to give out 10 new licenses could open a new opportunity for these business owners.
“Retail really runs the market, because retail can decide on who gets shelf space and who gets the attention. They can decide who they want to work with and ...who they want to have on the shelves,” Khalil Ferguson, the economic development chair for the United CORE Alliance said. “They’re the primary space of that market when it comes to buying cannabis.”
Ashtyn Gibson is a business owner who has gone through the CORE program to create King City Collective, a marijuana delivery service. But now she’s excited to have the opportunity to secure retail space as well.
“It’s a lucrative industry but it is very difficult for licensing, and one of those things that does prevent people from getting licensed is their record,” Gibson said. She said she was formerly convicted of a cannabis-related crime, but the CORE program helped her expunge her record and set up her delivery business.
“For you to still be able to be in a position to earn equity for this type of business or investors who understand that, CORE definitely allowed that to happen,” she added.
While her business is currently delivery-only, she’s very much looking forward to applying for a storefront if the city makes those licenses available.
“We can only do delivery at the moment,” Gibson said, but added that if she received a retail license, she’d be looking at retail space downtown. “For what we’re trying to create, the environment and experience for people, downtown would be golden for us.”
There is some concern about opening storefront space during a pandemic, when cannabis delivery sales have been rivaling those of physical marijuana stores. But the city has said cannabis sales have not seen too much of an impact since March.
Advocates say that even though storefronts might not be popular right now, they can help with business owners securing investors.
“I would say it would be a good thing [to have a storefront], especially if you’re looking to be attractive to investors and have access to capital,” Brenda Davis, program director with the Greater Sacramento Urban League said. “Investors like to see something that they can look at and say, ‘Yeah, there it is, here’s what it’s doing.’”
If approved by city council Tuesday, the CORE program will give out the licenses through a lottery process to five of their constituents in October, and another five in 2021. The new businesses could open up in the next two years.
Ferguson said that he hoped the city will also consider other initiatives to encourage people of color to get into all aspects of the cannabis industry, because while 10 new storefronts is a start Sacramento will still need to do more to diversify the industry.
“If we even get into the numbers, this would only be 10 out of 40, one-fourth, it’s still heavily dominated by white operators,” Ferguson said.
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