When I got my paperwork for being an equity recipient, it was kind of honestly one of the
best moments of my life.
Me being actually able to build something.
But I ended up realizing that it was just keys jangling in my face.
So I literally had to take 10 steps back to be able to create a change to move forward.
While I was trying to create my business, I had to literally stop that to create a
movement. I got involved with the social equity program,
most importantly, because I have friends and family that have been convicted due to the
war on drugs.
We are being impacted by this.
Edgar is a hopeful cannabis entrepreneur.
He's in the process of applying for legal access to the cannabis industry in
California. Although access seems to be opening up, the process is taking longer than
expected. For Edgar, this is year three.
Due to the high cost of cannabis licensing and the complex application process, only a
few can afford legal entry to the cannabis market.
But now, states like California are dealing with the ramifications of this limited
access. And while conversations around federal legalization gain traction, many are
questioning "Who really has access to sell cannabis legally?"
California has a long history as the cannabis capital of the United States.
In 1996, it was the first U.S.
state to legalize medical marijuana.
But prior to recreational legalization in 2016, the majority of cannabis cultivation
and sales happen in what was called the black market.
Many experts now call the black market the legacy market to honor the Black and brown
communities who built the robust cannabis industry that the U.S.
benefits from today.
When California legalized recreational cannabis, the state had to grapple with that
longstanding underground culture and a dark history of drug arrests from decades past.
Edgar is one of many cannabis enthusiasts in California who feel they're being left out of
the industry they were once criminalized for participating in.
So I was born and raised in San Pedro, California, in a community housing project.
My father is Hispanic.
My mom is Black.
I was convicted of a cannabis charge when I was a teenager.
Throughout the years, it did kind of put a stress on me in a sense, because, you know,
back in those times, the mindset of how cannabis was going about was totally
different than what it is now.
At the height of the war on drugs, there were over a 100,000 cannabis-related arrests in
California in a single year.
In 2016, prior to the passing of Proposition 64, California recorded nearly
8,000 felony cannabis arrests.
Blacks were disproportionately impacted.
While cannabis-related arrests in states like California dropped significantly after
recreational use was legalized, discriminatory trends continue to play out
across the U.S..
Despite medical legalization in 36 U.S.
states and recreational legalization in 18, the American Civil Liberties Union found that
Black cannabis users were 3.6 times more likely to be arrested than white users, even
though they had similar usage rates.
I really got involved in this whole issue because of my shock upon seeing data
about the numbers of people getting arrested for cannabis-related
products. Just a few years ago, we were seeing up to 50,000 young people of color
being arrested per year because they had a couple of marijuana cigarets in their back
pockets.
In March of 2021, New York state passed what is seen as the most progressive cannabis bill
in the U.S., which included cannabis record expungement and equity licensing clauses.
My bill includes a commitment of both technical assistance, capital money start up
and priority in licensing to make sure that the people who have an opportunity
are the people who've been locked out of so many economic opportunities.
I'm very heartened by how many other states and advocates
from other states have reached out to say, now we get it, you guys put it in law.
We need to start thinking in terms that you thought of in New York because we want the
same path.
While states like California fell short of folding progressive clauses into Proposition
64, in 2018, they found an alternative solution: cannabis equity programs.
The goal for the cannabis social equity program is to really uplift the people that
have been affected by the war on drugs and get them into the cannabis industry and make
them successful in this industry.
When I first heard about the equity program, it's something I looked into myself.
We all have to understand that our jurisdictions don't in a sense promote these
type of actions, but they do have them on their websites for people to look into.
California's social equity programs were implemented by the government in an effort to
create pathways for groups affected by the war on drugs.
Cannabis equity programs in California rely on grant funding from the state.
The parent cities then allocate these funds to provide resources and assistance for
approved cannabis equity applicants.
The city of Oakland was the first city in the country to have a social equity component as
part of the cannabis licensing program.
So that started in the spring of 2017, and then after that, city and county of San
Francisco, city of L.A., Sacramento, Long Beach, all of various counties started to put
more of an emphasis on including social equity language in their cannabis licensing
programs.
Long Beach launched their cannabis equity program in 2018.
Edgar was one of their early applicants.
So the application to get into the equity program, it was basically, you know, filling
out the requirements: $250,000 income or below, of course, you know, living in the
city of Long Beach within a certain amount of years, even having a cannabis conviction,
being on unemployment, things of that nature.
According to Edgar, Long Beach's cannabis equity program has 93 approved applicants
since launching, but only one applicant has a licensed cannabis business.
Of course, there's a lot of barriers within the application process alone that most
equity applicants can't get over.
So there's numerous challenges right now in the social equity program.
One of those being that the license types that we currently offer in Long Beach have
extremely high barriers to entry.
It often cost up to a $1,000,000 to create a cultivation facility, and you have to know
how to grow the plant, propagate, what types of chemicals to use all of those types of
things. It's not as simple as just growing a plant.
So the licensing structure is different for any marijuana program, right, depending on
the state that it's in. So for California, we have license types for
nurseries, for greenhouse cultivation, for __ cultivation, for indoor cultivation.
There's also a special transport-only distribution license and then, of course,
retail licenses.
Edgar has been developing his cannabis brand for years, but continues to experience delays
due to a lack of financial capital.
It's three dollars a square foot out here.
So, like minimum, you're going to have to spend a million dollars.
I've spoken to many people that have social equity licenses, and I would tell you the
common theme is frustration.
Kyle Kazan started Glasshouse Group, a vertically integrated cannabis brand, in
2015. Because of his background in private equity funding, he entered the cannabis space
with confidence and capital.
By the time we were all said and done to get the first 500,000 square feet in both farms,
we were over $20 million in purchase price and also retrofitting cost.
And that was money I raised in cash.
If I didn't have a long track record with a lot of investors of successfully deploying
capital and returning good returns, I'd have I would have had zero chance of doing it.
Kyle is also a former police officer who patrolled in Los Angeles at the height of the
war on drugs.
I'm proud of my participation in law enforcement, because I was able to help a lot
of people. I'm not proud of my zealous participation in the drug war.
We need to rebuild and offer opportunities to these areas that were so
decimated by the war on drugs.
When equity applicants like Edgar face barriers to capital, companies like
Glasshouse can play a huge role in helping them break into the industry.
What we can offer Edgar is, number one, the ability to assist him in setting
up his store. We can offer him the ability to go get a lease because we can stand
behind him and say Edgar is not alone.
I went into a space that I truly felt within the past years that was truly inaccessible to
me. So, you know, being able to see a farm, you know, two farms actually
that are acres upon acres of land of just beautiful flowers and product that, you know,
I would be able to use for my brand is is very overwhelming.
In March of 2021, California lawmakers announced that they would distribute $15
million in cannabis equity grants throughout the state.
About $1.3 million of that funding was allocated for Long Beach.
But their cannabis program is integrated into existing departments, meaning a limited
amount of funding goes toward applicants like Edgar.
So the grant funds only allow 10% of the total funding to go towards those direct
needs that the equity applicants have.
And so we are challenged by that.
And so we have to work with what we can.
We've seen a lot of success with Oakland's Social Equity Program.
There are many people who have gone through the licensing process, have their facilities
up and running. Then there are locations like Los Angeles, which many, many people are
still having a hard time there.
There are people who they secured a location and they've just been paying rent and running
out of capital because that program has not ruled out as intended.
So we see, like so many government social equity programs roll out and then just get
tied up in lawsuits.
And so I think it's important for all of the states that are going to be rolling this out
that that's been the trend.
After struggling to meet the requirements for his cannabis licensing application, Edgar
took matters into his own hands.
Edgar partnered with equity assistance programs like Sacramento's United Court
Alliance, who worked with Edgar to launch a similar committee in Long Beach called the
Long Beach Cannabis Commerce Council, or LBCCC.
With the great worK that me and my partner Brandon Bolton have been doing, you know, we
were awarded the solicitation to pilot one program, which is called the Entrepreneurship
Academy for Cannabis Equity, which provides workforce development, business development,
business plan development, technical assistance, everything basically that, you
know, social equity recipients have tough times getting over these hurdles.
We can provide, you know, a pathway.
Most recently, Edgar and his team at LBCCC advocated for cannabis delivery, which would
create easier pathways for equity applicants to deliver their products.
Delivery licenses are most accessible because there are no infrastructure costs
associated with them.
We do allow delivery, but on a very limited scale.
This delivery-only license type could potentially open to all businesses or equity
owned businesses, so that is something that we're exploring right now.
Edgar decided to put his brand, Ekstrepe, on the back burner while he runs LBCCC's
Entrepreneurship Academy.
This is a program that, you know, our organization just can't handle ourselves.
It's a community-based thing, so it takes all of us citizens to make this a successful
program. What we need is full support for our communities to make sure that we are
included in this.
Cannabis is a cultural-based industry, you know?
Without us, there would be no marijuana industry.
Period.