City of Seattle - City Council - Committee - Finance and Housing - Committee Meeting
(March 2, 2022) - City Equity Policies

The committee heard about social equity programs in three California cities and a Colorado county before asking panelists how a potential Seattle program might improve equity outcomes.

Here are some observations from the Wednesday March 2nd Seattle City Council Finance and Housing Committee (City of Seattle - City Council - Committee - Finance and Housing) Committee Meeting.

My top 6 takeaways:

• City Councilmember and Committee Chair Teresa Mosqueda opened the meeting topic by reviewing the group’s interest in small business development, social equity, and worker considerations (audio - 4m, video).
  • The committee began looking into the topic of social and worker equity in the city’s cannabis sector during an information session on February 16th. Mosqueda indicated an interest in learning more and possibly proposing legislation on the matter.
  • Mosqueda started off the conversation by telling the committee there would be a “robust” review of several other municipal cannabis equity efforts. She referenced the prior meeting’s feedback from workers and stakeholders about how “the opportunity to open up small businesses is either being shared or not being shared.” 
  • Having “heard loud and clear that reform is needed,” Mosqueda noted prior stakeholder encouragement to focus on “three Rs”: reform, redistribution, and restoration. She promised another meeting on the subject to bring together the “business community, community organizations, and additional workers to talk through some policy concepts.”
  • Mosqueda noted their “really esteemed panel" featured:
    • Gregory Minor, City of Oakland City Administrator Assistant
    • Abbey Borchers, City and County of Denver Department of Excise and Licenses Policy Analyst 
    • Sarah Woodson, Color of Cannabis Founder and Executive Director
    • Tamika Drew, Biko Flower Founder
    • Davina Smith, City of Sacramento Office of Cannabis Management Program Manager
    • Larissa Wohl, City of Sacramento Cannabis Opportunity Reinvestment and Equity (CORE) Administrative Analyst
    • Lydia Edwards, City of Boston City Councilor, was unavailable when called upon but Mosqueda claimed that city leaders had “been working to improve” their cannabis regulations and equity programs.
      • Edwards won a special election for the Massachusetts State Senate in January 2022 and was succeeded on the council by Gabriela ‘Gigi’ Coletta after another special election on May 3rd.
  • Mosqueda asked committee members to hold their questions until they’d heard from all the presenters.

• Gregory Minor, Assistant to the Oakland City Administrator, discussed one of the country’s longest running efforts to bring social equity to the cannabis sector (audio - 6m, video).
  • Oakland had a history of cannabis progressivism. Voters passed Measure Z in 2004, the first adult-use cannabis legalization approved by an American jurisdiction.
    • A cannabis-friendly neighborhood of downtown Oakland was nicknamed Oaksterdam. The area was the former home to Oaksterdam University, a cannabis vocational school established in 2007 by medical cannabis activists. Find out more about the Oaksterdam area.
  • Welcoming Minor, Mosqueda brought up that she would be speaking with other Oakland residents following the meeting. Minor established that the city equity program was started in 2017 before offering some “big picture lessons.”
  • Minor’s impression of California’s successful 2016 legalization measure was that it was “legalizing the status quo” with elements passed by voters in Colorado and Washington in prior years. Calls for officials to apply a social justice lens to the emerging regulated market were voiced once the ballot measure passed, he noted, citing “former Councilmember Desley Brooks” as the first to question “who is it that’s going to benefit from the legalization of cannabis?” Minor compared this with a quote he’d heard from a colleague, “Organizations move in the direction of the questions they ask.”
  • Minor said a more "understated" part of the program's history was that his early efforts did “things the wrong way” before finding “a better approach.” He’d overseen city cannabis business licensing since 2014, when he collaborated with “a former City of Seattle colleague of yours, Darlene Flynn” who was responsible for “Race and Equity” issues for Oakland officials. Minor described the two of them as creating an “initial version” of an equity program with “no analysis behind it, and so as soon as it was passed there were efforts to…repeal it.” According to him, the issue divided council members, who asked Minor and Flynn to produce a “race and equity analysis.” It proved difficult to set a goal and Minor said they settled on trying “to promote business ownership and employment opportunities to those disproportionately impacted by the war on drugs.” They looked at Oakland specific data around cannabis policing, demographics, poverty, and other factors, he said, along with identifying barriers to industry access and possible mitigation strategies. With goals set and data to back it, subsequent program changes would need to be explained within the context of city leaders’ equity goals, mentioned Minor. Oakland already had a Cannabis Regulatory Commission preceding the equity program to engage with community members which proved helpful, he noted.
    • Check out an October 2017 powerpoint presentation from Minor on Cannabis Industry Opportunities and Challenges. 
  • Minor commented that other California cities set up similar efforts before a statewide program was created under the 2018 California Cannabis Equity Act. Minor laid out how the statewide program had made funding available including grants to local governments, fee waivers for equity applicants, and allowances for shared manufacturing facilities. He reported that Oakland was an equity grant recipient, and that the funds helped with “permitting priority,” a “revolving loan program,” plus technical assistance, workforce development, and grants directly to equity businesses.
    • Criticism of the California equity program had been raised in some media coverage and by an existing trade association.
  • Minor encouraged the committee to continue to "ask critical questions" on the topic while setting “a clear goal up front" for their intended outcomes. He saw “unique opportunities" in cannabis, like stronger “permitting authority” and a stable “source of revenue.”

• Abbey Borchers, City and County of Denver Department of Excise and Licenses Policy Analyst, and Sarah Woodson, Color of Cannabis Founder and Executive Director, expounded upon cannabis equity "reform, redistribution, and restoration" work underway by local officials and stakeholders (audio - 12m, video, presentation). 
  • Borchers informed the committee that while Colorado’s system had state officials licensing businesses and managing “matters of statewide concern” like packaging and labeling standards, Denver required a local cannabis license and propagated rules about “the time, place, and manner” of cannabis commerce as well as matters “of local concern” like cannabis business distance buffers and advertising.
    • Prior to working for Denver, Borchers served as Deputy Director of Marijuana Policy under former governor John Hickenlooper. In August 2017, she talked about her cannabis role and the impact of legalization in the governor's office with the Colorado Business Roundtable.
  • Explaining that there were 943 active cannabis businesses countywide, covering both medical and adult use, Borchers remarked that beyond cannabis production, processing, and retail there were licensed testing facilities, transporters, research & development, and one hospitality business, Tetra Lounge. She indicated “three more” hospitality businesses were being reviewed.
    • The presentation indicated these businesses accounted for “35% of the state’s marijuana licenses. Denver is home to 12% of the state’s population.”
  • Denver officials started their equity review in 2019 by hiring Analytic Insight, she said. The company reviewed the existing cannabis sector including the “racial and ethnic makeup of owners and employees in the industry.” Their resulting research confirmed allegations that Hispanic, African American, and Asian American communities were underrepresented as owners or employees “proportional to the way that these groups are represented in Denver,” remarked Borchers.
  • This information guided development of the city social equity plan, she stated, and formation of a Marijuana Rulemaking Work Group (MRWG), which she co-chaired. This group had a broad constituency, informing on “a full overhaul of Denver’s marijuana licensing code” in addition to the equity program approved by the city council in 2021.
    • See documents about Borcher’s involvement in city outreach on cannabis-related state legislation from January 2021, in addition to two presentations from June 2021 by the MRWG. The group was established in 2021 by Ashley Kilroy, the former Department of Excise and Licenses Director, called “the woman who built Denver’s cannabis industry.”
  • Borchers commented that someone could qualify as an equity license applicant based upon a statewide definition to avoid redundant “eligibility processes.” Applicants needed to be Colorado residents who met at least one criteria:
    • Resided in a disproportionately impacted area (DIAs) or “opportunity zone" for “at least 15 years between 1980 and 2010”
    • They or an “immediate family member” had been “arrested, convicted, or suffered a civil asset forfeiture due to a marijuana offense”
    • Household income didn’t “exceed 50% of the state median income”
  • Borcher reported that applicants must retain 51% ownership of their business and Denver leaders “decided to exclusively issue most of our licenses to social equity applicants for the next six years.” She relayed that Woodson had been the first to warn of applicants being paid to apply and secure a license they would then sell to the party paying them, which led to a requirement that licenses have 51% minority ownership through June 2027. This applied to all licensing types, including the new hospitality model to allow for social consumption.
  • Borchers next said the “waived application fees and reduced licensing fees” for equity applicants would continue, and staff were “working on” reducing other barriers around start-up capital, regulatory complexity, and the limit on how many businesses the city could license. Denver leaders had committed one percent of cannabis revenue for small business investment up to $50 million, she pointed out. This was important as she commented that existing programs couldn’t be accessed by equity businesses due to the continuing federal illegality of the plant. Denver officials had also removed a cap “on the number of available licenses” as one way of managing their high resale value, Borchers added, along with setting up a technical assistance program. She termed it a “multi-pronged approach to what’s a very complex and difficult problem” which was seeing “slow but steady progress."
  • Woodson expounded upon the three R’s mentioned by Mosqueda: "reform, redistribution, and restoration." Color of Cannabis began as an effort that "spearheaded, essentially, all the social equity policy" for the city following a 2019 accelerator program set up to get help to “individuals who may have faced barriers to entry in Colorado's retail (adult-use) regulated marijuana industry.” The focus was on small business development beyond the cannabis sector, but took an equity emphasis by 2020 (audio - 11m, video). 
    • In 2020, equity applicants were designated using "race neutral" language in a state bill which avoided “any kind of discrimination lawsuits,” something Woodson said proved prescient as many local officials raised that concern.
    • In 2021, state lawmakers set aside “about $4 million in funding” disbursed through the Colorado Office of Economic Development and International Trade Cannabis Business Office, remarked Woodson. This “redistribution” was an important aspect of implementing equity and helping those “negatively impacted by the war on drugs,” she said.
    • Incremental change was common in government actions, observed Woodson, but equity applicants who had waited years for an opportunity “don’t want to hear about that.” Having experienced “a lot of performative allies" in the industry, she wanted there to be accountability proving the program was producing equitable results.
      • She predicted a “constant cycle” of reform and study of the problem around the country would be needed for the foreseeable future. When social equity programs didn’t swiftly produce equitable outcomes there was always an outcry and calls for more change.
      • Woodson indicated that the need to "tighten up criteria" was clear after an individual with 39 retail stores qualified as an equity applicant due to a previous arrest, stating “clearly, this program is not for you.”
      • She concluded that while race didn’t “need to be the only criteria” for equity applicants, a "minority designation" was needed because “there’s no way that we can acknowledge that Black and Brown people were discriminated against, and negatively impacted, based on the war on drugs” while making policy that excluded that criteria.
    • Woodson remarked that over the preceding decade it had become obvious that applicants couldn’t “find locations” due to retail saturation.  While caps on cannabis businesses had been removed in Denver, updating zoning restrictions was another improvement Woodson pushed for, as consideration of how new cannabis businesses could fit within a “saturated market” shouldn’t be an afterthought.
    • “That restoration piece” was all about accountability in Woodson’s perspective. Even though this effort was for “private sector” businesses, the equity programs were public and accountability in their implementation mattered.
  • During a short pause, Mosqueda reached out to Gerald Hankerson, former NAACP Seattle King County President whom Mosqueda described as a “labor relations” liaison for Mayor Bruce Harrell, regarding his impressions so far. He replied that he’d taken “a bunch of notes for afterwards” and would be following up on things they’d heard about.

• Tamika Drew, Biko Flower Founder and Cannabis Equity Retail Association (CERA) board member, talked about social equity policies and programs in Los Angeles (LA, audio - 11m, video). 
  • Drew told the committee that “‘biko’ means ‘please’ in the Igbo language,” a reference to Drew’s Nigerian heritage. A mother of four, she’d gotten involved in cannabis as a Crohn’s disease medical patient before becoming an equity licensee. She secured her licenses through the LA social equity program, having been engaged with the “Equity Trade Certification Leadership Coalition and Policy Committee” and the Social Equity Owners and Workers Association (SEOWA).
  • The LA Department of Cannabis Regulations regulated local businesses and staff were currently administering a licensing window exclusively for equity applicants, Drew stated. Previous windows had focused on adult-use and medical dispensary licensing and had expected “proof of compliant real estate.”
  • She described the first equity licensing window as having been “marred with several issues.” Some gained early access to the application portal while those submitting applications from poorer areas were subject to slower internet connections. This had impacts on the “first-come, first-rewarded” policy officials used, she asserted, mentioning that SEOWA members took the city to court over the process. The lawsuit led to changes in local laws which increased the amount of available licenses by one hundred, which was when she entered the market, Drew added. However, this delay cost applicants like Drew business partners and the locations for their cannabis operations, she attested, while also making it difficult for some to make any money.
  • A top resource she’d found was “people who already know how to run these businesses” and could mentor equity applicants “to really supercharge them.” Drew worked to start Our Academy, a social equity business accelerator, so that smaller operators had a chance to survive and “thrive within this industry.” She established Biko Flower with the hope of making a “social equity cannabis brand” that was sold statewide.
  • Grants and fee waivers for equity applicants mattered. Drew also called for “access to real estate,” business mentoring, and tax preferences along with legal/compliance support options. She warned that a loan program could have been detrimental in the face of “the difficulties licensees have had in getting their businesses off the ground.” Moreover, there hadn’t been any money in LA centered on community reinvestment, she mentioned. Another problem she’d found was “partners taking advantage of looming deadlines and creating situations” where applicants “are forced into partnerships” or face losing their license.
  • Staff for the Department of Cannabis Regulations had requested further changes to the program be made by the LA City Council, Drew told the committee, such as letting licensees like herself relocate anywhere in the city, though she doubted changes would take effect in time before “we have to get our state licenses in next month.” The department’s licensing workshops were effective, as were their worker training resources, she said, feeling that the city almost had an "easy and fair process where applicants are supported" at each stage.

• Davina Smith, City of Sacramento Office of Cannabis Management Program Manager, and Cannabis Opportunity Reinvestment and Equity (CORE) Administrative Analyst Larissa Wohl briefed on the California capitol’s work on cannabis equity (audio - 17m, presentation, video). 
  • Smith explained that she had been an attorney advising Humboldt and Solano Counties “on cannabis code enforcement and land use” before going to work for Sacremento’s program in January 2020. Wohl noted she’d worked with Smith as “the primary liaison to the CORE social equity program.”
    • Read Smith’s February 8th interview about CORE and the status of social equity in Sacramento.
  • In 2018, CORE was established and Smith indicated it had been paid for through a city tax of “four percent on all cannabis businesses’ gross receipts.” She stated the tax wasn’t consistently earmarked for spending, going into a municipal general fund, and that the activities of CORE lacked “a permanent funding source” since the coronavirus pandemic had shifted spending priorities for city officials. Social equity businesses were exempt from “business operating permit fees” which otherwise paid for her office, and some work of partnering agencies in the areas of “planning, building, police department, [and] code enforcement,” she commented.
    • Find out more from the CORE Grant Application Form and an overview of the program by Rooted Legal.
  • After a study of city cannabis arrest and census data by Smith’s team, the CORE program was approved by the city council.
    • Members of the public raised the idea that an “entire family” and the “entire community” were impacted when a person went “to jail or juvie” for cannabis, she said, stating that CORE was designed to “include family members of those who had been arrested” or lived in DIAs.
    • Smith relayed that CORE had included “financial and technical assistance” in addition to “mentoring and support services.” With strong compliance expectations for all applicants, Smith acknowledged that her office had looked at financial assistance as a way to keep equity applicants from succumbing "in the desert of permitting."
    • She also shared numbers on how many licensees in the city had benefited from the program, indicating that 300 licensees had been eligible “but we only have 24 operating cannabis equity businesses.” Based on their experience, Smith felt officials should have left the process open to anyone that could afford to complete it, and not reserve a set number of licenses for equity applicants. 
  • Wohl said CORE funding came from state social equity grants which had initially been disbursed to applicants through $25,000 “reimbursement grants.” Since coming on board in July 2021, she explained that the office hosted a series meetings and surveys “to hone in on what they’re looking for,” which turned out to be a “first-come, first-served grant process” awarding “up to $125,000” to a small number of applicants “only with leased or owned locations.” Wohl heard some complaints about their process despite their transparency, and remarked that her team would look to give “a combination of small and large grants” after the program’s most recent grant allotment.
    • Wohl predicted an amount of money would be set aside for a more competitive process to pay for larger projects such as “shared use facilities.” She added that the CORE Capital Loan Program had provided $3.7 million for a “zero-interest loan program,” with payments going back into a “revolving loan fund.” Wohl knew that other municipalities had varied experiences providing loans, but concluded that the grants had helped many businesses in Sacramento.
  • For educational opportunities and technical support, Wohl’s team had contracted with third parties like the Sacramento Asian Pacific Chamber of Commerce and Greater Sacramento Urban League to validate CORE applicants’ “baseline eligibility.” There were various training and support services available through CORE, which she highlighted were either free or “at a lower rate” for equity applicants. Wohl said she was working on a “CORE Media and Community Outreach Campaign” organized by a third party that would encourage consumers to seek out "local equity brands" and cover “stories widely of [CORE] businesses and owners.”
  • Wohl commented that the city would be updating a Technical and Education request for proposals to cover issues like:
    • Financial management/literacy
    • Support securing locations
    • Business Plan Development
    • Area specific training (cultivation, manufacturing, etc)
  • The office had hired Economic and Planning Services (EPS) to conduct a study at the behest of the city council, Wohl remarked, outlining the organization’s plan to look at cannabis “citywide” rather than just equity businesses. She shared a few areas of interest, including land use and regulation; taxation; and the fiscal impact of the industry.
    • Take a look at the EPS survey results released on March 8th.
  • The office was currently accepting bids for a separate study to “dive deeper” into cannabis equity, Wohl told the committee. This would review “the first couple of years” of CORE to improve the program, she relayed.
  • Wohl spoke briefly about how necessary workforce development in cannabis was in order to “take advantage of all the jobs that are being created” in their city.

• Committee members posed three questions to their guests, first on the best sequence to enact reforms, then on methods for funding a program, and finally on the best way to define “social equity” for cannabis.
  • City Councilmember Lisa Herbold, the Vice Chair of the committee, was grateful for the perspectives shared, offering an anonymous sentiment that the “normalization” of cannabis locally had been a positive step “but we really must have federal reform as well." She encouraged those interested in the issue to stay active on the federal level as it would lead to a safer working environment for employees and reduce “barriers” that were keeping people from participating in the industry (audio - 4m, video).  
    • Herbold had "a sequencing question," citing previous work with the Office of Intergovernmental Regulations to advocate for statewide social equity legislation passed by lawmakers—HB 2870 in 2020 and HB 1443 in 2021—which included a grant program and new licensing opportunities, but only two more retail licenses for Seattle. Groups like King County Equity Now and Black Excellence in Cannabis had called for dozens more licenses for the city but zoning restrictions remained a barrier even for the two allotments the city had. With all of that in mind, Herbold asked the panelists if their jurisdiction’s “zoning and land use restrictions make it difficult to use their social equity licenses? And if so…how do you recommend sequencing the necessary change?”
      • Find out more about the Washington State Legislative Task Force on Social Equity in Cannabis (WA SECTF) which most recently met on April 26th.
    • Recognizing the limited number of licenses, Minor explained that "brick and mortar retail" was the only type of cannabis license with a cap in Oakland. Otherwise, the city had an open and “fluid process” for continually considering cannabis business applications. This offered flexibility, he stated, before acknowledging that some felt the competition led to “a race to the bottom." Minor remarked that limiting cannabis retail required his office to have a firmer process and application window, and also increased the demand for the licenses. He speculated that financiers might be more interested in partnering with equity businesses because they were “more limited and more exclusive.” Minor stated that their equity application process included a lottery of qualified applicants for half the retail spots, complemented by a competitive process that “favors equity” without requiring it. Successful applicants were obligated to find a location and finalize their license, Minor indicated. He was very skeptical of requiring a location prior to licensure for applicants in a competitive process (audio - 3m, video).
    • Smith brought up how Sacramento had implemented "fear-based zoning" in 2019 under the assumption that cannabis businesses would be “impactful” in a negative way which pushed cannabis business zoning into industrial and manufacturing areas. “Those impacts did not necessarily occur,” she admitted, and many cannabis businesses emerged as generally “good neighbors” leading to some increases in area property values. Ensuring there was space for equity businesses was important in Smith’s view, as commercial real estate costs appeared to increase once an area was sited for cannabis. She’d known of landlords willing to leave a property empty “in hopes of getting that big fish, someone who could afford to pay...three to seven dollars more per square foot because it is a place where a cannabis business could go.” More areas zoned for cannabis businesses meant more options for equity applicants, Smith reasoned (audio - 2m, video). 
    • As far as sequencing, Woodson believed changes to zoning rules and a push for more licenses could happen concurrently “because the process does take a while.” She said some Denver businesses had been kept from areas because of "sensitive use" which helped stop “overconcentration” of businesses along with a one thousand foot buffer between stores. Still, “neighborhoods of undue concentration” impacted all “the predominant Black and Brown neighborhoods,” which Woodson lamented stopped “social equity people” from finding a place to open a business. She believed that "the old rules cannot apply" to cannabis zoning, and spoke favorably of Denver’s willingness to have an “exclusivity period” to see how businesses fared, followed by “sunsets, and then it’s done” (audio - 2m, video). 
  • Mosqueda inquired about funding, noting that varying taxes had been levied by panelists’ jurisdictions to pay for equity programming. For municipalities imposing such a tax, she asked for a quick reminder of how much they collected annually (audio - 1m, video). 
    • Borchers responded that in 2021, the council “decided to allocate one percent of existing marijuana tax revenue to [a] small business investment fund.” This could be funded “up to $50 million,” she told Mosqueda, but was expected to be “around $4 million for 2022” and wasn’t earmarked specifically for cannabis businesses. Borchers stipulated that $500,000 of existing revenue was going towards a technical assistance program (audio - 1m, video). 
    • Woodson stated that Colorado had “a $4 million fund” through the Cannabis Business Office that was a pilot program. “If it’s successful we’ll be able to go back to our joint budget…committee and ask for additional funds.” She mentioned some of the expectations of grant recipients and the scoring rubric, followed by her expectation of “about a hundred people applying” (audio - 1m, video). 
  • Hankerson remarked that when he’d first heard the term “social equity,” he had to look up the definition on Wikipedia. He was curious how the guests might define social equity so as to “target communities most impacted by the war on drugs” when a standard definition might include groups “who were not targeted by the war on drugs” (audio - 1m, video). 
    • Minor felt that definitions should “build towards” achieving the goals of city officials. Cities had adopted different approaches to the complicated question, he observed, but a clear goal was a “critical” way to judge success (audio - 1m, video). 
    • Woodson asserted that Colorado lawmakers had focused on “who’s been negatively impacted by the war on drugs,” which they chose to define as running primarily from 1980 to 2010. Within that time frame, officials looked at variables that might show a community had been negatively impacted like high rates of cannabis arrests, low rates of “high school completion,” or areas “where people are living in high poverty.” Woodson found poverty issues to be the most difficult as people could “make their income what they want it to be” when applying. “Long-lasting” consequences for cannabis convictions or felonies took precedence over misdemeanor possession cannabis arrests, as she indicated “tons of people have been arrested for marijuana” (audio - 2m, video). 
    • Smith called it a “localized determination,” noting that Humboldt County was “overwhelmingly White, but very much a cannabis producing area.” Their equity definition included victims of sex trafficking, domestic violence survivors, and “legacy farmers" that operated “under threat of arrest” for years. This criteria was unlike other cities, she acknowledged, but reflected how enforcement of cannabis prohibition impacted the county. Smith summarized that "you get to really make it most impactful for your jurisdiction" (audio - 2m, video).

Information Set