Column: California’s cannabis industry is broken. But here’s how we can fix one part of it
Broken promises. Constant funding delays. Nonsensical regulations.
Ask Kika Keith, owner of Gorilla Rx Wellness Co. in Leimert Park, about the many ways that California’s cannabis industry is broken and you’re sure to get an earful, as I did one recent morning, about the failures of city bureaucrats and state lawmakers alike.
“The lack of compassion for people’s lives and livelihoods. That their lack of attention to detail, that their deliberate inaction is actually causing more trauma,” she said. “That’s what’s been the most disheartening.”
I nodded. This was far from our first conversation about the sorry state of what California calls “social equity” — a collection of city-run programs that were supposed to help people of color who were criminalized during the war on drugs, so they could be among the first in line to profit from the newly legal market as entrepreneurs. Think small-business loans and grants, training and expedited access to licensing.
The promise of ‘social equity’ has been a key narrative tied to California’s legalized pot industry. So far, efforts have been mired by costly delays.
Well, it hasn’t worked out that way. And as the first Black woman to open a cannabis retail shop in Los Angeles — and having to sue the city to do it as a founder of the Social Equity Owners and Workers Assn. — Keith has lived the many reasons why.
But, on this particular morning, there was a new level of disgust and urgency to what she was telling me.
As of this month, the state Department of Cannabis Control has stopped accepting applications for so-called “provisional” business licenses and, as of June 30, will stop issuing them altogether. Instead, entrepreneurs will have to get more permanent “annual” licenses to open their businesses.
Sounds arcane, right? Like a minor bureaucratic issue.
Wrong.
This phasing out of provisional licenses could very well decimate social equity programs in California, undermining what many expected would be a coming surge of enrollment and new businesses in L.A., Oakland and Sacramento, as cities finally get their act together on cannabis.
The only way out of this — though belatedly — is through a bill from state Sen. Steven Bradford that faces a critical committee hearing on Monday. But more on that later.
At issue is the heavy reliance social equity applicants have on provisional licenses. Securing one means they can open the doors to their businesses and start making money, while simultaneously navigating a cannabis licensing process that even bureaucrats say is needlessly lengthy and expensive. This is how Keith did it with Gorilla Rx Wellness.
Annual licenses don’t allow that sort of flexibility, and the upfront costs are higher.
For entrepreneurs who get into the cannabis industry with tons of cash, and armies of lawyers and accountants, this is not as big of a deal. They can afford to wait. But social equity applicants cannot, as they tend to lack access to capital and therefore have less of a margin for error, after enduring decades of systemic racism.
Stories abound about Black people who have lost their savings paying rent on empty commercial properties for years, while trying to get licensed. The one that gets me is about a daughter, who along with her mother, sold her grandmother’s house to buy a storefront and then got foreclosed on before they could open their shop.
California’s legalization of recreational cannabis in 2016 ushered in a multibillion-dollar industry. But many of the promises of legalization have proved elusive.
“This was an opportunity to right the war on drugs. We believed all that hype because politicians were saying it, and who’s ever come into our community and said that? That there are laws and regulations to actually effectuate our economic power?” Keith asked. “We really believed it, and they strung us along.”
To let this situation stand, with social equity applicants denied access to provisional licenses, would mean abandoning one of the only potentially good things to come out of the legalization of cannabis in California. As my Times colleagues have written, it’s an industry that’s increasingly defined by a bevy of bad things, from corruption and violence to the exploitation of immigrant workers.
It also would mean depriving Black and brown communities of yet another source of generational wealth, in this case, by starting successful cannabis businesses.
The latter is something Keith has been working on for months, recently opening a workforce training facility and business incubator called Gorilla University. Lessons will include everything from how to comply with California’s strict seed-to-sale regulations, to how to handle cash as a budtender, to how to navigate the bureaucracy of social equity programs.
“This is my labor of love,” Keith told me. “This is my real, you know, love letter to my community.”
She doesn’t even want to think about how phasing out provisional licenses could undermine it all.
::
”Ashe!”
The two dozen people gathered in prayer on the sidewalk in Leimert Park shouted the word in unison, giving one final thanks to the ancestors. Then Keith and her daughter, Kika Howze, each took a chain and rolled up the security doors to unveil the rainbow-decorated windows of Gorilla University.
“I say it all the time,” Keith started, once everyone who had come to the grand opening was sitting down, “but what we’re doing next door and here really is the house that people built.”
Gorilla University is mostly blank white walls and plastic furniture for now. But in a few months, it will look more like Gorilla Rx Wellness, with its colorful shelves and flashy display cases. In short, it will be a fully operational mock store where people can learn to work with customers and manage the basics of a business in a back office.
Keith and her investors bought the commercial retail space after the previous tenant, L.A. Cannabis Co., left Leimert Park. They now own a decent chunk of an increasingly important block of rapidly gentrifying South L.A, with a stop on Metro’s new K Line and huge new apartment building right across Crenshaw Boulevard.
“Our goal is to retrench,” Keith told me, “gentrify with our people.”
Gorilla Rx Wellness already has about 40 employees, most of whom, like her, grew up in the surrounding community. She’ll probably hire more too, especially as she moves to open a second store in Long Beach.
All of this is why social equity programs are so important, and why the state must start issuing provisional cannabis business licenses to entrepreneurs again. Bradford said as much during the grand opening at Gorilla University.
His Senate Bill 51 would let state regulators resume issuing such licenses solely to social equity applicants who want to open retail stores. It also would allow the renewal of a provisional license for up to five years.
“I hope we can help with a pathway for some of those folks who might still be interested,” said Bradford (D-Gardena). But he acknowledged that “it’s too late for a lot of people. Some folks have given up, with all the hurdles and roadblocks that they’ve had to go through.”
The bill sailed through its first Senate committee hearing last month, with dozens of business owners and bureaucrats and representatives of cannabis trade groups testifying in support. Another key committee hearing is scheduled for Monday.
Keith will be watching. And praying. Ashe.
“That’s why we fight,” she told me. “I’m putting my foot on their necks about following the law that they created and the words that they said about righting the wrongs for the war on drugs.”
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