BAD BUSINESS IN THE BAY

The city of Oakland may begin profiting off every cannabis business in the city. Three Oakland City Councilmembers proposed amendments to the city of Oakland’s Dispensary Equity Permit Program that would require the city to become a partner with each new Oakland cannabis business. The proposal was created by Oakland City Council President Pro Tem Larry Reid and Councilmembers Desley Brooks and Noel Gallo.

If passed, the city would be granted 25 percent ownership in each new cannabis business in addition to becoming a board member. Under the proposal, Oakland would not grant permits to businesses who refuse to give the city part ownership. While the legality behind the part-ownership by Oakland has caused quite an uproar, there are even more issues that are already facing the program.

A Modesto-based law firm, Channaveerappa & Phipps, LLP, sent the Oakland City Council a letter on September 19 to address concerns regarding Oakland’s Permit Program and its proposed amendments. Brandon Kilian is an attorney who works at the firm, and he was able to provide CULTURE with a copy of the letter. The firm started the note by stating that it represents both people who are in Oakland’s cannabis industry, as well as those who show interest in becoming part of the local cannabis economy. It continued to express the issues with these proposed amendments, “The program is unconstitutional as stands and a poorly-thought-out impediment to business development besides; the recommendations of the Cannabis Regulatory Commission would do nothing to fix those problems; and Councilmembers Reid, Brooks, and Gallo’s amendments would compound the constitutional issues while mutating an impediment to future business into a full-blown throttling of existing businesses.”

“The program violates our state and federal constitutional guarantees of equal protections of the laws. Its restriction hoarding half of all dispensary permits for Oakland residents of particular police beats is barely-disguised racial quota.”

The law firm applauded the city’s attempt to reverse the “War on Drugs” that has notoriously harmed “disadvantaged communities,” however, the letter explained that the program and its proposed amendments are not constitutional. “The program violates our state and federal constitutional guarantees of equal protections of the laws,” the letter read; “Its restriction hoarding half of all dispensary permits for Oakland residents of particular police beats is barely-disguised racial quota.” Restricting permits for residents based off of their residence determined by police beats, which refers the area patrolled by a police officer at a certain time, sets out to alleviate the suffering of one group by not allowing another access to permits. These restrictions are not a right or constitutional approach to establishing vital opportunities for those who have been discriminated against.

The proposed amendments to Oakland’s program created even more legal worries, and the amendments are even claimed to be unconstitutional. Good business practices tell us that taking equity off any new business could be very troubling, and by the city of Oakland enforcing their own 25 percent ownership of cannabis-related businesses, plus a seat as a board of director is equally troubling. Channaveerappa & Phipps, LLP wants to see Oakland’s cannabis industry move toward equality, however the program and its proposed amendments are not establishing that reality. The firm informed the council that they will take legal action if the city council continues with its actions that are believed by many to be unconstitutional.