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Growing Pains Part 2: Back to the Underground

Instead of welcoming the cannabis industry into the light, Oakland's new rules are putting many out of business, while others are disappearing into the illicit market.



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Linda Grant
knows a lot about racially unequal marijuana laws. She sold cannabis in the early 1990s when, even in Oakland, it was a felony. She sold cannabis without a permit during the city's medical-only era. Born and raised in The Town, Grant, who is Black, has seen many of her friends and acquaintances, also mostly Black, arrested and prosecuted for cannabis.

"I lived in one of the police beats where they harass and arrest people for selling weed," she said.

Last year, Grant submitted paperwork to the city and state to obtain permits to legally operate her cannabis delivery business. She's one of the people trying to come out of the underground and join the legal economy. Because she qualifies as an equity applicant, Grant was quickly granted a permit. She said that city staffers like Nancy Marcus and Greg Minor, who handle Oakland's cannabis licensing program, have also helped her navigate local and state requirements.

Even so, it hasn't been easy. Initially, the city required documentation proving residency and income to qualify for the equity permit. But for many lifelong Oaklanders, proving they've lived here for decades and proving their income falls below 80 percent of the area average is no small task. Because lower-income people rent and move around more frequently, many don't have proof of residency going back a decade. Others don't have tax returns for some years, especially if they've been selling cannabis under the table for a living.

Grant and others raised these issues and helped realize that a broader range of documents proving income and residency would be adequate. This includes things like school attendance history, general assistance payments, Section 8 housing program vouchers, and food stamp records.

In Grant's case, the GummiCares company, a large manufacturer of chewable, THC-infused edibles, agreed to incubate her company, Herban Collective, inside its warehouse near the airport. It's much-welcomed assistance.

But Grant says the equity program is lacking in several fundamental ways that requires more than just small changes. "I've had my permit for four months and haven't started anything yet," Grant said. "I don't have money. There are no resources for someone like me yet."

Grant said she's been in talks to raise capital for her delivery service, but lots of investors want to take control of her company and just use her to gain access to Oakland's market. Although she has her own business plans, the people who have capital won't invest and trust her to grow her own business. "The hardest part is finding investors who want to invest in you, not their program," she said.

Because of ongoing barriers like these, she predicts a lot of cannabis entrepreneurs in Oakland's low-income communities will remain in or go back to the underground economy. Despite the city's efforts with the equity program, there still isn't really a viable path to becoming legal for a lot of cannabis dealers. A lot of this underground activity that will continue to thrive in Oakland involves African Americans and Latinos selling and delivering small quantities of cannabis on the streets.

Near the intersection of 90th Avenue and MacArthur Boulevard, Grant watched recently as a warehouse underwent extensive renovations and security upgrades. She's also seen unfamiliar white men going in and out of the building at odd hours. She suspects it's a grow operation.

Across MacArthur is an open-air cannabis market that's operated for years. Young men, mostly Black, stand near a liquor store and barber shop and sell grams, eighths, and ounces to customers, who are also mostly Black and from the same neighborhood.

Grant has recently watched Oakland police make drug busts there. She's also seen recent arrests near Arroyo Viejo Park. "The police label them as 'gangsters,' but I know some of these boys personally," said Grant. "I grew up with them since they were babies. They don't sell anything but weed, and they make good money. People come through there faithfully."

Oakland and state authorities have no plans or procedures to legalize this kind of entrepreneurial activity. According to data compiled by OPD, Black people account for 79 percent of citations and arrests for cannabis crimes. White people account for only 5 percent. In 2016, the most recent year's data available, police arrested 286 people for selling cannabis. Most of these arrests, 70 percent, were of Black people. On top of this, Oakland police cited 190 people for possession and personal use of less than an ounce of marijuana — again mostly Black people.

to Matt Hummel, current chair and longtime member of Oakland's Cannabis Regulatory Commission, legalization isn't on track to solve some of the really big problems created by almost a century of prohibition. The fatal flaw is that the state and city have created a regulatory regime that's unrealistically trying to contain the sprawling cannabis market. "The actual demand wants a way bigger market," he said.

Nobody knows for sure, but most industry insiders and consumers interviewed for this article estimate that the number of unlicensed Measure Z clubs, where people can purchase and use cannabis in Oakland at much cheaper prices, far outnumbers the handful of permitted dispensaries. Counting the quantity of cannabis that's sold at seshes and by individual dealers and growers in the underground, it's almost certain that Oakland's black market dwarfs the legal one.

This is why Jake Sassaman remains a staunch defender of Measure Z, which was approved by Oakland voters in 2004 and made "investigation, citation, and arrest for private adult cannabis offenses the city's lowest law enforcement priority." It also spawned numerous private clubs and collectives in the city, of which many still exist and now operate in a legal gray area.


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