Following the approval of emergency regulation by California’s Department of Cannabis Control, marijuana entrepreneurs affected by the “War On Drugs” can have the license or renewal fee waived. Senate Bill 166, signed into law on September 23, 2021, outlines broad criteria for the waivers and mandates that DCC have a fee waiver program in place by January 1, 2022. California has set aside $30 million to fund the fee waivers. The measure is a way for California to offer financial support for cannabis equity businesses.

Access to capital is frequently the biggest hurdle for maintaining success for equity operators. DCC anticipates rolling out additional guidance for licensees and applicants in the coming weeks and, on January 1, 2022, will begin processing fee waiver requests. 

“While this is a critical first step, we recognize that there is more work to be done to refine these rules,” said Nicole Elliott, DCC Director. “That is why DCC will immediately begin engaging directly with equity operators and stakeholders to begin the development of regulations for the permanent rulemaking package.”

To qualify for the waiver, an equity owner must meet at least one of the following criteria:

• The owner was convicted of or arrested for a cannabis offense before November 8, 2016.
• The owner’s household income is less than or equal to 60% of the Area Median Income for the local jurisdiction where they live.
• The owner lived for at least five years between 1980 and 2016 in an area disproportionately impacted by past criminal justice policies implementing cannabis prohibition. 

Additionally, individuals who meet any of the above criteria must own 50% or more of the business and have had gross revenue of $1.5 million or less per year. The company should be expected to gross income of $1.5 million or less for the first year for new applicants.

California has struggled to uphold its equity values. Mendocino County’s combination of the income limits and other criteria have eliminated otherwise viable candidates. Oakland’s Cannabis Commission admitted that the city sent some equity operators who had fallen out of compliance with their loan agreements to collections. Only 28 out of 200 identified social equity applicants in Los Angeles have received temporary approval.

The eligibility, structure, and funding implementation varies from county to county, which makes tracking social equity-related dollars in cannabis across all jurisdictions difficult.

Waiving the collection of fees could be an efficient method for providing immediate and meaningful assistance to equity applicants navigating the expense process of launching a business. The fee waiver program will enable cannabis businesses to get operational and remain operational to provide cannabis supplies to their customers.

“Equity fee waivers will allow me to create additional business opportunities in my community. High fees are a barrier to equitable participation, and I’m excited about the opportunity the state is providing,” said Ali Jamalian, an equity business owner of Sunset Connect