Cannabis Equity grants go to top dogs in the industry
How Sonoma County's Cannabis Equity Program missed the mark
Ever since Sonoma County began to accept applications for cannabis permits in July 2017, the whole thing has been a mess.
Despite the many dispensaries that have opened, the vision to make Sonoma County the cannabis version of Wine Country has been ultimately unsuccessful, and the windfall the county expected from related taxes has not come.
As a result, many cannabis operators in the county, successful or not, feel like victims of a system that doesn’t let them act like other businesses.
Operations can’t use national banks, they are limited in how much they can grow and where, and they have trouble competing with an unregulated market that doesn’t have to expend any energy building ADA-compliant bathrooms, etc.
As a way to offer reparations to those who have been wronged by the county’s shifting cannabis policies or the state’s pre-2016 War on Drugs, Sonoma County recently applied to take part in the state’s Cannabis Equity program.
Since 2020, the state has awarded over $107 million to 35 cities and counties throughout the state to be used for their local cannabis equity programs.
In April of this year, the Board of Supervisors authorized the allocation of $635,000 in Cannabis Equity grants to 20 local cannabis operators through the program. Everybody who applied for a grant received one.
According to the state, the intention of the program “is to advance economic justice for populations and communities impacted by cannabis prohibition and the War on Drugs.”
David Rabbitt, the chair of Sonoma County’s Board of Supervisors, added in a press release that the county’s grants were specifically given to “socioeconomically disadvantaged individuals navigating the cannabis permit process.”
According to an investigation by Sebastopol Times, many of those who received Cannabis Equity grants from the county do not quite fit this description.
Rather, a majority of the grant recipients are among the most successful and influential people in the county’s legal cannabis industry. Some of them are even promoters of local equity initiatives themselves.
For example, the county’s Cannabis Equity program gave four grants to individuals associated with SPARC, which took over Sebastopol’s first dispensary, Peace in Medicine. SPARC has three dispensaries in the county and four others around the Bay Area.
Eight other grants were given to individuals who are established players in the county’s cannabis industry.
The chief reason why these operators got grants is because the eligibility criteria is not means-tested and is so broad that almost anyone in the industry can qualify.
To get a grant, applicants themselves or a relative of theirs had to have been arrested and/or convicted of a non-violent cannabis-related offense between 1971 and 2016, when marijuana was illegal for recreational use.
From there, another set of 11 criteria, including veteran status and children’s school district enrollment, were used to determine the amount of grant money everyone received. For each additional criteria they met, recipients received $5,291.67.
This month, the County released the list of Cannabis Equity grant recipients. The grants ranged from $18,520.83 to $50,270.83 and are to be spent on taxes, licensing fees and other expenses.
Timothy Crites, the COO of SPARC, got an equity grant of $39,687. According to the lawyer who submitted Crites’ application for the Cannabis Equity Program, Crites participated as a teenager in a drug diversion program in Indiana, after which the drug-related arrest was expunged.
This made him eligible for a grant meant for those most heavily impacted by the War on Drugs, even though he went on to attend the University of Michigan and law school at American University before becoming the production manager at the first cannabis company to get an adult-use retail license in any state east of the Mississippi.
Erich Pearson, the CEO of SPARC who has served on government advisory committees and the board of national industry trade groups, also got a grant.
So did SPARC associated individuals Barry Wood and Alex Pearson, who filed their application through the same lawyer as both Erich Pearson and Crites. They all used the same business address and used almost identical statements about what their grant money would be used for and how much they needed.
SPARC’s individuals were not the only grant recipients who acted in tandem with their business partners and submitted almost identical applications.
Sebastopol residents and husband and wife, Yarrow and Heather Kubrin, submitted scanned photographs of their identical, handwritten applications. Dominic and Alexis Hilaman of Humanity Wellness in Santa Rosa (the most reviewed dispensary in the whole county on Weedmaps), Matthew and Ron Ferraro of Bango Distribution and Dustin Gibbens and Benito Loya of 965 Solutions all also received individual grants.
Yarrow Kubrin and Dustin Gibbens are both on the board of directors of the Sonoma County Cannabis Alliance, an organization which is explicit in their goal “to establish a successful Cannabis Equity Program specific to Sonoma County to help local operators.”
While it seems clear these cannabis operators are not the intended target for the Cannabis Equity grants, both McCall Miller, the county’s cannabis program coordinator, and SPARC’s Erich Pearson are sticking by the results of the program.
“The grant recipient met the eligibility criteria as specified,” Miller wrote in an email.
“As a business owner with a fiduciary responsibility to my investors, it is imperative to explore all available resources,” Pearson wrote in an email. “Ultimately, I applied for the grant, and the State/County determined that I qualified.”
Pearson’s notion that he was entitled to the grant is ironic, as SPARC promotes the idea of equity on its website and markets “social equity” brands in their store.
“Thousands of lives—predominantly within communities of color—have been negatively impacted by cannabis prohibition,” a page on their website reads. “While other industries have focused purely on profits, growth, and other capitalistic tendencies—the cannabis industry includes an agenda to right the wrongs of outdated laws and policies in order to create more equitable opportunities.”
In California’s small towns, getting a license for a dispensary or a grow can in fact be very competitive. SPARC has one of two allowed retail licenses in Sebastopol, has been adamant that they should remain the sole dispensary allowed in the town of Sonoma, and was among several applicants to seek one of two granted permits to open up a dispensary in Healdsburg.
In other words, SPARC competes, as all businesses do.
The other places where cannabis equity programs have been tried, from Arizona to New York City, have faced a similar problem as Sonoma County—namely, that they often help the people at the top and rarely do much to help anyone break into the industry.
If everybody can be an equity applicant, then the word “equity” doesn’t mean anything. Operators with means and savvy can out-compete the people who actually need the cash, business guidance and connections.
Moreover, these equity programs pit people against each other in what Christine de la Rosa, the CEO of “The People’s Ecosystem,” a cannabis consultancy for “BIPOC” operators, calls the “Oppression Olympics.”
“It’s like the Hunger Games of cannabis,” said de la Rosa, who was sure to mention that “there’s not a single cannabis company on the planet that only needs $50,000 to start up.”
Perhaps the strangest of the grant recipients is John Loe, who applied for and ultimately received a $39,687 equity grant.
Loe, who owns a house in Sebastopol and the recently opened Loe Dispensary in the Sonoma Valley, once caused a Board of Supervisor’s meeting to adjourn for the day.
Loe uses his application as another opportunity to berate the county, claiming that he “will not stand by while this county discriminates against Whites and against non-criminals.”
Loe stood his ground in an email to the Sebastopol Times.
“I applied for the equity grant to make sure it wasn’t able to discriminate against Whites,” he wrote.
While the county didn’t use race as a criteria for the equity grants, they suggested that “white stakeholders” dominate the local industry when the equity program was introduced.
Thus, Loe elucidates the crux of the issue, which is how easy it is for equity programs such as these to fall short in achieving their express purpose.
“I think that the initial idea came from a very good place,” de la Rosa said. “We’ve never done anything like this before. But I think the second we knew these weren’t going to work, which was in 2018, we should have pivoted, and we didn’t as a community. And, as a state, we did not pivot when we realized this wasn’t going to work.”
The county has said they “will be reviewing and updating the eligibility criteria in the coming months” as they continue to apply for Cannabis Equity funding from the state.
Excellent article
Thank you Ezra.