Well, it’s official. As of the first of this month, recreational marijuana became legal in the state of California. But if you’re looking to get into the cannabis industry, you’re going to want to pay attention to local laws. Some cities, like Riverside, Fresno, Bakersfield, Pasadena and Anaheim, have banned local marijuana sales. And even among cities like Los Angeles, San Francisco, San Diego, Oakland and San Jose that are issuing permits for recreational retailers, the cost of starting the process varies greatly.
Oakland, though, is taking a unique approach, offering an equity permit program that grants certain breaks for specific categories of people who want to enter the cannabis industry. We asked Richard Ng who helped create the Canna Equity, a tool that the City of Oakland uses for their cannabis licensing program, to walk us through the Town’s recreational permitting process.
YR: So what’s the first step to getting a cannabis license to be a legal business in Oakland?
RN: For the cannabis licensing program in the City of Oakland, there’s two tracks: you can either be a general applicant where you just submit your application and don’t have to be a resident of Oakland or if you qualify, you can participate in the equity application program, which creates the opportunity for residents who are below a certain income, have had prior offenses related to cannabis, or live in certain zones where there have been a lot of arrests made around cannabis, to participate in the economy.
YR: How much does it cost to get started in the cannabis industry in California?
RN: If you’re a young cannabis entrepreneur looking to get started into the business in Oakland, just the application fee alone will cost you around $2,500. That cost varies by city and county. But that is just the application. If you’re thinking about starting up a business at any regular startup, there’s gonna be a huge amount of startup costs. Specifically for the cannabis business, there are a lot of prerequisites that are going to be included in your application. It also depends on what type of license you’re applying for. If you applied to be a cultivator, you’re going to need to have your retail space which is going to help you grow; you’re going to have to set up all your security systems to be in compliance with the city’s safety ordinance; that in addition to needing a good amount of capital startup funding. If you look at other states such as Washington, Oregon, and Colorado the start up costs would probably be — and this is just a ballpark estimate — 10 million dollars.
YR: Wow.
RN: So that’s why the city of Oakland created this equity program because they wanted to let the residents who are already participating in the cannabis industry have a chance to transition over. If you qualify as an equity applicant your fee is waived. The city of Oakland is the only city that has offered this program.
YR: And Federally all of this is illegal, right? So could people still get busted even if they’re following the new California cannabis laws?
RN: Yes technically they can. It’s not just in California. That’s every every state that has passed legislation on both medical and recreational. The federal government could come in and close down your business, that is a possibility. I think every business owner should have that in the back of their mind.