LA Equity Program Aims to Undo Impacts of Drug War

(DutcherAerials/iStock)

LOS ANGELES—Esteban Araya was in the third grade and living in South Los Angeles when his mother was hit with a felony drug charge for transporting cannabis. For the 16 months she was incarcerated, Araya and his sister— just a few years old at the time—lived in foster care.

After she got out, Araya recalled, “my mom was never the same.” A year and a half behind bars had changed her. She would cry herself to sleep at night, and as a single mother with a felony conviction, she struggled to land a well-paying job.

“Those felonies have really affected her,” Araya said. “She hasn’t been able to get out of a certain bracket of income.”

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Nearly two decades after the arrest disrupted Araya’s family, Los Angeles is now opening its doors to commercial cannabis. And under a plan currently being developed, the city is working to ensure that a fair share of what’s expected to be a lucrative legal market belongs to those most affected by the drug war.

“Past cannabis policies have been extremely impactful, and there’s no reason to believe that future cannabis policies aren’t going to be impactful as well.”
Cat Packer, executive director, LA Department of Cannabis Regulation

For Araya, who’s now working to open a retail cannabis store with his mother, the program means a chance to reclaim cannabis as a means of economic empowerment rather than a tool of oppression.

Black residents make up just 9% of LA city’s total population, yet they accounted for 40% of cannabis-related arrests between 2000 and 2017, according to LAPD data. Whites, meanwhile, make up 28% of LA’s population but only 6% of cannabis arrests. That’s despite numerous studies showing the groups commit cannabis crimes at roughly the same rates.

But while people of color historically have borne the brunt of cannabis enforcement, most of legalization’s gains have gone to white people. Just 1% of storefront dispensaries nationwide, for example, have black owners, according to a 2016 BuzzFeed report. And in many legal states, laws create extra hurdles for would-be business operators who, like Araya’s mother, have cannabis convictions on their records.

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“[The data] gives you a clear picture of the disparity of the failed war on drugs that has disproportionately harmed people of color—and mainly African-Americans,” said Virgil Grant, co-founder of the Southern California Coalition and the California Minority Alliance, groups focused on building an inclusive cannabis industry.

In Los Angeles, residents are demanding the city do better. So officials are in the process of developing a so-called social equity program aimed at addressing the disproportionate drug-war harm inflicted on minority and low-income residents.

“Past cannabis policies have been extremely impactful, and there’s no reason to believe that future cannabis policies aren’t going to be impactful as well,” said Cat Parker, executive director of the Los Angeles Department of Cannabis Regulation, said at a special City Hall meeting Monday morning.

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The program is designed to give those communities a leg up when vying for legal cannabis licenses. While the details are still being hammered out, the goal is not only to award licenses but also to address some of the main hurdles facing new business owners, including finding funding, securing commercial property, and filing all the necessary forms.

“Just giving somebody a license is really just giving them a license to fail unless you provide a whole set of key resources.”
Robert Chlala, LA Cannabis Task Force Social Equity Working Group

The social equity program is also expected to establish a community reinvestment fund, which would take a portion of cannabis industry profits and put them directly back into neighborhoods that need it, funding for education, youth development, child care, mental health, and more.

“Just giving somebody a license is really just giving them a license to fail unless you provide a whole set of key resources,” said Robert Chlala, part of the LA Cannabis Task Force’s social equity working group and a UFCW Local 770 policy researcher.

Qualification for the program will be based on a range of factors related to socio-economic status and incarceration history, with prioritization based on how severely a given applicant was impacted. Top bidding will go to residents who have a prior cannabis conviction, are classified as low-income (defined as being at or below 80% of LA County’s 2017 average median income), and have lived in an LA neighborhood that’s been disproportionately impacted by cannabis prohibition—a determination based on the area’s number of cannabis arrests and percentage of low-income households.

Strictly speaking, race isn’t a factor in the application process. “When we first had this conversation, it was a race-based conservation,” said Grant, of the Southern California Coalition and the California Minority Alliance. Now, he said, “it’s a social injustice conversation.”

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The reasons for the change are many—and one is the very real threat of lawsuits. The cannabis industry can be a particularly litigious community, Grant said, and public programs based on race can be a very sticky subject. For example, Ohio approved a medical marijuana law last year that stipulated 15% of cannabis licenses go to black people or residents of Latino, Asian, or Native American descent—but legal experts have warned that the measure is still a form of racial discrimination and could be unconstitutional.

By expanding the definition of who was impacted drug war, Los Angeles can also address the more widespread ripple effects of incarceration. From employment discrimination and limited job opportunities to mental and physical health effects of being imprisoned, the social and economic fallout continues well past an individual’s release date, Chlala said.

Long-term damage isn’t limited to the arrestee. The drug war has affected entire communities and multiple generations, Chlala said, and has even forced children such as Araya into foster care. Overcoming those obstacles requires a comprehensive social equity plan that’s provides mentorship, access to land, and working capital, he said.

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Many of the affected areas are in Central and South Los Angeles. The city’s social equity program is designed to benefit those neighborhoods by requiring for all social equity businesses that half of all staff members are local hires.

The equity program isn’t “an affirmative action project,” Chlala said. Rather, it’s a form of reparations that attempt to recognize harm caused to communities over decades of enforcement.

The city’s plan was inspired largely by that of Oakland, which began accepting applicants to its equity program earlier this year. That city’s program similarly identifies eligible applicants through location, arrest history, and income. It also takes a holistic approach to assistance, offering everything from low-interest loans to step-by-step guidance with startup tasks.

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But LA has also learned from the portions of Oakland’s program that have proved problematic, like a “one-for-one” model that pushes equity applicants to partner with moneyed backers who provide capital or commercial space in exchange a license of their own. While the relationship was intended to be symbiotic, Chlala said, researchers found there were problems in the matchmaking process that resulted in complicated relationships and a lack of trust.

The LA program takes a more piecemeal approach to pairing equity businesses with others. It offers existing cannabis businesses things like tax rebate incentives for providing technical assistance, funding, or other resources to equity applicants.

Prospective entrepreneurs like Esteban Araya are optimistic. The 27 year old has already purchased a commercial property zoned for medical marijuana in city’s El Sereno neighborhood and his hoping to open a dispensary with his mother. Under the city’s proposed social equity guidelines, she’d receive priority processing for their application. Securing a permit, he told Leafly, could be transformative.

“It could be multi-generational wealth,” he said. “For all of us.”