By Edward Henderson | California Black Media
Alphonso “Tucky” Blunt, owner of an Oakland marijuana store called Blunts and Moore, says his business is located in the same zip code where he was arrested for illegally selling weed in 2004 .
Now that he’s legit in the business – he opened his store just over three years ago – Blunt says it’s nearly impossible for Black and other minority cannabis startups like his. to make a profit in California.
“Where is the compromise? I’ve been in the business for a few years and I’m still in the red. California has one of the highest tax rates on cannabis businesses in the world. Oakland is in the top four across the country, ”Blunt said. “We also pay the most for armed guards. It costs between $ 25 and $ 30 an hour. The city requires us to have them, unlike Berkeley where they are not mandatory. But the police react faster there.
Blunt says the challenges California cannabis companies face are many, including the fact that they have to pay federal taxes but cannot deduct expenses because cannabis is not federally legal. Companies like his also have banking challenges due to federal restrictions. Additionally, criminals frequently target cannabis companies and when they do, insurance companies are generally unwilling to pay for damage or lost products, Blunt explains.
To address some of the challenges facing minority entrepreneurs in the industry, particularly those who fell victim to the War on Drugs, California lawmakers have taken a number of steps to lower barriers to entry into the industry. ‘industry.
“There is no doubt that the War on Drugs has caused disproportionate harm to people of color and their communities,” said Sen. Steve Bradford (D-Gardena), who is also chair of the California Legislative Black Caucus.
In 2019, Bradford authored SB 595, which established a cannabis fairness fee waiver program. The Legislative Assembly passed this bill and the Governor proclaimed it the same year. The program was conditional on funding Bradford successfully secured for its implementation in the 2021 Budget Act.
Currently, California is in the process of approving a $ 30 million fund that will eliminate trading fees for certain entrepreneurs entering the cannabis business in the state.
Last week, the Department of Cannabis Control (DCC) released the regulations it will follow to implement Senate Bill (SB) 166, the end-of-budget bill that Gov. Gavin Newsom enacted. in September establishing the fee waiver program.
The program creates pathways for those affected by the war on drugs to enter the cannabis industry. Potential business owners who live on 60% or less of the region’s median income; who have previously been convicted or arrested for a cannabis offense; or who live in a community negatively affected by past cannabis policies would be eligible for the program.
The waivers go to licensing fees for their potential businesses, which can range from $ 1,205 to $ 77,905. The DCC will start accepting fee waiver requests as of January 1, 2022.
The California Office of Administrative Law will post the proposed regulations as “under review” on its website: https://oal.ca.gov/. CDC will share instructions for submitting a public comment and participating in the regulatory process. The agency will also announce when the comment period, which will last five days, will be open to the public.
“SB 166 is part of my continued mission for the government to atone for the wrongs inflicted on people by supporting them with opportunities to enter and thrive in the cannabis market. I encourage anyone interested in the cannabis industry, particularly equity cannabis applicants and operators, to provide comments during the short comment window.
DCC Director Nicole Elliott said the state will continue to invest in opportunities to make licensing activities more equitable, especially for those affected by the war on drugs.
“We know that access to capital remains a persistent challenge for California equity seekers and licensees,” she said. “These waivers aim to address this challenge for those who need financial support the most. “
Bradford said that for the government to truly understand the challenges entrepreneurs face, it needs to make its voice heard and talk about the barriers to entry they face.
“These regulations are extremely important in determining who will and will not benefit from exemptions from application, license and renewal fees, as well as the amount of assistance they will receive,” Bradford said. “It is vital that the Administration has a clear understanding of people’s experiences in order to create a framework that respects them.
Blunt says he welcomes the state’s $ 30 million investment to help with licenses and other costs, but entrepreneurs like him need more.
“We need two years of tax relief. We have to pay sales taxes, but the extra cannabis taxes we pay, we need a break to recover. We can save some of that money and reinvest in our businesses and have money for security, ”says Blunt. “My business makes about $ 5 million a year, but the money I spend on security and taxes is easily in the range of $ 2-3 million – and I don’t count other expenses like payroll.” and other operational expenses. How will we ever make a profit? “