“Those were our entrepreneurs we locked up.”
Can Oakland, a new capital of legal weed, undo the injustices of the war on drugs?
Nina Parks was working as a music video producer in 2014 when her brother was arrested and sentenced to a year at New York City’s Rikers Island for marijuana possession. He was on the verge of launching a cannabis delivery service in the Bay Area at the time. “All the paperwork was put in,” Parks said. “He had branded it and gotten all the packaging, the promo stuff, the clothing.” Parks, a Filipino American with botanical tattoos twisting down her left arm, had spent much of her career working with formerly incarcerated youth. When she spoke to her brother in jail, he sounded dispirited, worried that he’d be shut out of his own company or pushed into the black market. “It was imperative that I find avenues to advocate for him,” Parks said. She decided to take over the company and today is the CEO of Mirage Medicinal, a delivery service based in her native San Francisco.
She’s also a founder of Supernova Women, a group created to ensure that there’s room for women of color in legal marijuana, which is arguably the country’s fastest growing industry. Supernova began last year after Parks met a dispensary executive named Amber Senter at an industry conference in San Francisco. “I was looking around the room, and it was all just imported white men in suits,” Parks, 32, said. “Amber was the only other person of color in the room. She was over there rolling up some weed, and I’m like, ‘Yo, me too!’” Senter had recently moved to Oakland to access medical marijuana for her lupus; she’d spent years growing her own in Georgia, and after moving to the Bay Area, she took a position as chief operating officer of Magnolia, an Oakland dispensary. The two quickly bonded, and a few months later they sat down at a kitchen table with a lawyer friend to found Supernova, which now offers cannabis business workshops and advocates for policies supporting minorities, women, and ex-offenders.
Last year, U.S. legal marijuana was a $5.4 billion business, and that figure is expected to quadruple by 2020. According to one 2016 estimate, the industry and supporting businesses already employ between 100,000 and 150,000 people in the U.S., more than General Motors. California’s recent vote to legalize recreational marijuana — medical marijuana has been legal in the state since 1996 — created the world’s largest legal market and sent the clearest signal yet that widespread legalization is inevitable. (Seven other states legalized medical or recreational marijuana as well.)
The most glaring irony of legalization is that for decades black and Latino communities have disproportionately suffered under harsh drug laws, and now, with those laws in retreat, the entrepreneurs cashing in on the booming business are overwhelmingly white. California, like the four states that had previously legalized recreational pot, imposes restrictions on convicted felons joining the industry; some states also require business-license applicants to demonstrate cash reserves of hundreds of thousands of dollars or more. Both criteria weigh heavily against minority entrepreneurs seeking to enter the industry.
In June, I met Parks and several other Supernova members at the East Bay loft office of the marijuana delivery service StashTwist. Andrea Unsworth, a former bond analyst for Moody’s who owns StashTwist, was preparing the downstairs space to host cannabis yoga sessions. A few low-slung seats and an ashtray suggested the office could double as a lounge. After we settled into chairs, Parks was quick to point out the absurdity of keeping the people with the most knowledge of the industry from participating in it. “If you have been arrested for cultivating, transporting, or selling cannabis, you are going to be locked out of the business of cultivating, transporting, and selling cannabis?” she said. “It doesn’t make any sense whatsoever! If anything, how are you even supposed to learn that skill set? Who has that résumé?”
Supernova had recently been focusing its efforts on Oakland. A diverse city with a history of tolerant pot laws, Oakland was hoping to lead the way in creating an industry that compensates for the racial inequalities of the past, but it was struggling with how to translate decades of injustice into still-hypothetical profits. Weeks earlier, Oakland’s city council had passed a remarkable, first-of-its-kind “equity amendment,” guaranteeing 50 percent of cannabis business licenses to former marijuana felons and to residents of several neighborhoods considered especially damaged by the war on drugs. In public statements, Oakland City Council member Desley Brooks, who introduced the amendment, made clear that her intention was to foster minority-owned businesses. “When you look at the cannabis industry here with respect to the ownership, it is predominantly white,” she said from the podium in the drab chamber of Oakland’s city council. People of color “are tired of simply being employees. When do they get an ownership piece of the pie? That is what this is about.”
But the amendment raised concerns about who would benefit and how; critics worried that it would force companies to leave the city. Unsworth, a San Diego native whose cousin was put in jail after starting his own cannabis business, told me that she appreciated the intent of the amendment. “Those were our entrepreneurs we locked up!” she said with a wry laugh. “There is a definite need for and a call for — people don’t like to use the term retribution, but you are in fact trying to undo a severe injustice.” But Unsworth, a black woman in her 30s who voluntarily pays business tax in Oakland, wouldn’t qualify for an equity permit since she doesn’t live in one of the selected neighborhoods. “I’m in the general pool with everyone else, who are probably more well-capitalized,” she said. “So we’ll see.”
Supernova had drafted proposals to modify the amendment. Though the group’s leaders didn’t agree with the wording of the law, they agreed that the conversation happening around it was crucial. “Just as a human being looking at: What does equity mean? What does justice mean?” Parks said. “I can’t responsibly participate in this industry without addressing that.”
To insiders, Oakland is both a spiritual home to the cannabis movement and an obvious hub for commercial pot in California, halfway between the northern growing regions and the immense Los Angeles market. The push for legalization, which has a strong history here, is a cause as well as a business, and within the cannabis world, the most outspoken voices are both activists and entrepreneurs. Perhaps no one embodies both roles more fully than Steve DeAngelo, who’s often credited as the father of the modern marijuana industry. DeAngelo is the co-founder and head of Harborside Health Center, considered by some to be the nation’s largest dispensary, and he’s an articulate spokesman for how cannabis can be “a new kind of industry,” one that embraces diversity, environmentalism, and living wages. Inevitably, as one of the representatives of big business in the city, he also attracts criticism from smaller players.
The industry’s upper ranks are more clean-cut than you might think, but DeAngelo, who’s jowly and almost 60, with a rumbling chuckle, has a plug in his left ear and wears his hair in two long gray braids beneath a fedora. Every day, he ingests hundreds of milligrams of THC, enough to debilitate many seasoned cannabis users, but DeAngelo manages to be an astute, and sometimes sharp-elbowed, operator. We spoke in a packed café during a cannabis conference as his assistant fetched him coffee.
Most jurisdictions consider cannabis businesses something between a nuisance and a threat, but the city government in perennially broke Oakland was quick to recognize the economic opportunity in legal pot. It was an early jurisdiction to decriminalize adult use of marijuana, in 2004, and it became the first in the country to license medical marijuana dispensaries, also in 2004. Harborside, which celebrated its tenth anniversary in October, was one of the first dispensaries to open in the city, and it helped pioneer the widely imitated idea that dispensaries should be clean, welcoming spaces, more like Apple stores than smelly, cramped head shops. It now brings in a reported $30 million in annual sales and is an important Oakland taxpayer. After the Justice Department initiated a case against the dispensary in 2012, Oakland took the unprecedented step of suing the federal government on behalf of a cannabis business. (The Justice Department dropped its case earlier this year.) “Oakland, almost from the beginning, had a really positive attitude about medical cannabis,” DeAngelo said. When the feds raided Oaksterdam University, the first marijuana trade school, opened in 2007, “you had elected officials from city government who were there on the streets helping to protest that raid.”
But Oakland has also been a violent theater in the drug war. In The New Jim Crow, the scholar Michelle Alexander writes of a 1989 Oakland police unit that one officer said operated like a “wolfpack,” bringing in “anything and everything we saw on the street corner.” In the early 2000s, black drivers in Oakland were twice as likely to be pulled over and three times as likely to be searched as whites. Oakland’s police department has been under federal oversight since 2003, following a legal settlement in which 119 plaintiffs were awarded $11 million after suing the city for police misconduct. Oakland’s population is about a quarter African American, but in 2011, African Americans accounted for three-quarters of the marijuana arrests in the city.
DeAngelo told me that a “commitment to social justice is something that’s become a deeply ingrained part of our government.” He believes this must extend to how the city regulates marijuana. Virtually everyone I spoke to in Oakland’s cannabis industry agreed on the need to proactively support minority business owners. The difficult question is: how? Direct affirmative action isn’t permissible under California law, so when Council member Brooks proposed the equity amendment, she chose six of the city’s 57 police beats based on the number of marijuana arrests in one year, 2013. All six beats are in Brooks’s district and that of a close ally on the council. Residents of troubled neighborhoods not in Brooks’s district, like West Oakland and Fruitvale, receive no benefit. (The amendment set off a flurry of outreach as those who failed to qualify looked for partners who did.)
It also alarmed existing gray-market companies, including sizable growers and manufacturers who have been operating in the city for years, employing people and in some cases paying taxes, since it would complicate their path to licenses. Supernova’s Unsworth argued that the amendment had to change if Oakland was “to be the model city of business ownership by people of color.” Others went further, saying that the amendment seemed hostile to their individual businesses and to the collective goal of making Oakland the center of the industry. Like almost every entrepreneur I spoke to, DeAngelo pointed out serious concerns, saying that businesses controlled “by people who are either residents of an extremely challenged neighborhood or formerly incarcerated people” will find it “difficult to impossible” to get investors. (As an already licensed dispensary, Harborside is not directly affected by the equity amendment.)
By phone, Brooks told me that she is fighting for the Oaklanders she represents, even if some of her ideas are contrary to mainstream economic thinking. “If it ruffles some people’s feathers, I’m OK,” she said. She believes the equity businesses will generate jobs and taxes to replace whatever companies leave. “The notion that there are no people of color who have money and are interested in investing in this is foolish,” she said.
As Oakland struggles to develop its policy, the industry is racing ahead in Colorado, where recreational dispensaries have been open for almost three years. In this short time, Colorado’s biggest companies have started to look like chain pharmacies. In May, The Denver Post reported that five white men control 134 business licenses in Denver, about 13 percent of the total, and as companies expand to new states, further consolidation is likely. The differences between the Denver and Oakland models are clear from how their businesses do community outreach. The dispensary closest to my home in Denver sponsors highway cleanups and a charity golf tournament. Oakland’s Magnolia, where Supernova’s Amber Senter works, is a community center offering blood pressure tests, cannabis cooking classes, and support groups for veterans. It sends care packages to more than a dozen marijuana offenders serving life sentences.
Though Oakland hopes to set the tone for the national cannabis industry, more immediately, the city’s government and residents need the money the industry could generate. The working-class port city with a large black population has been deluged by yuppie refugees and techies priced out of San Francisco. The gentrification and climbing rent have provoked resentment: Oakland has one of the highest costs of living in the U.S. alongside neighborhoods where unemployment is two to three times the national rate. A cannabis industry in Oakland, many think, could be a counterweight to the forces remaking the city.
Ben Larson met his co-founder Carter Laren in 2014 while they were both at Founder Institute, an entrepreneurship training program in Palo Alto that seeks to “globalize Silicon Valley.” Legalization caught both partners’ attention, but when they began their research, the companies they encountered were, Larson said, “far from the quality that you might see in the typical Silicon Valley pitch session.” They lacked professional polish and what he called an “understanding of what makes a viable business.” Gateway, the cannabis incubator the pair started in response, takes a 6 percent stake in early stage startups and, in exchange, gives them a months-long boot camp and a chance to pitch investors. Basing Gateway in Oakland was an easy call. “We see it as the capital of the cannabis industry,” Larson said.
Gateway received more than 100 applications for its first class, which began with seven companies this past spring. Gateway is housed in a bayside industrial building called Leviathan, whose façade evokes a ship and a sea monster in battle. Some of the walls are covered in copper-colored scales, like snakeskin.
When I visited in June, presentations to investors were still months away, but the founders were already honing their language and slide decks. Over a pizza lunch, they practiced their pitches for one another, a few guests, and a video camera. Laren paced the barren room like a stern grade school teacher, encouraging “candid, Simon Cowell–style feedback.”
Most of the Gateway companies had developed software aimed at professionalizing the outlaw industry. One startup, called Charge, wanted to simplify payment processing; since many banks won’t give cannabis companies accounts, they still often operate in cash. Another, Trellis, had developed compliance and inventory software for growers. Of the five founders who presented, two, Khari Stallworth and McKinley Owens, were black — roughly as many black entrepreneurs as I’d met in the previous year and a half covering cannabis from Denver.
Twenty-four-year-old Owens, dressed in a jean jacket, untucked shirt, and pointed leather boots, went first. He’s the CEO of Flora, a company he started with two friends from the University of Michigan. Flora plans to digitize and study the cannabis genetics data that underground growers have accumulated over the years. For now, growers use “20 years of intuition and maybe pen and paper if they’re super advanced,” Owens told the room. He quoted one grower: “‘If those notes got wet or caught fire, we’d be fucked.’”
Flora had attracted interest on Reddit, but like any tech startup, it faced thorny questions. One was how to convince growers — a generally self-protective group — to share their data, especially with, as Owens put it, “carpetbagging hipsters.”
When Stallworth’s turn came, he stood up and said, “My wife and I don’t know shit about cannabis. We know food.” He wore a sport coat over a Sriracha T-shirt, and a few days of stubble. After high school, Stallworth lived near Chicago with a roommate who was studying to be a chef. When they got high, they feasted on his roommate’s homework assignments — foie gras and crème brûlée — instead of chips and pizza.
Years later, after studying cooking and cinematography, he was living in Los Angeles working as a unit technician on Hollywood blockbusters when he met Sascha Simonsen, an expert baker from Denmark who catered movie shoots. On the set of Inception, Stallworth boasted, “Leonardo DiCaprio himself” requested her cookies. The pair married and now have two young children.
The edibles market is crowded, but the couple thought they could differentiate themselves with treats that masked the plant’s unappealing taste. “We knew we were on the edge of a problem we could solve,” Stallworth said. Early this decade, their company, Buddha Bakes, placed products in 75 dispensaries and had more orders than they could fill. But as they started having kids, they became worried about the risk of criminal prosecution and eventually scaled down and then shuttered the business. After Gateway invited them to join its first class, however, they decided to try again. They moved to Oakland and renamed their company Kamala.
Unlike Gateway’s software companies, Kamala, if it stays in Oakland, will have to get licensed by the city. Over the summer, Stallworth told me, he got into a tense exchange with Council member Brooks at a mixer for those interested in equity licenses. When Stallworth said that entrepreneurs with criminal backgrounds would struggle to raise venture capital and that the city should figure out ways to support them, Brooks accused him of, as he recalls, “trying to cut people out.” (Brooks has no memory of this exchange.) “I definitely recognize the injustices,” Stallworth said. “I am a black man.” But as a new arrival, Oakland is telling him to take his business’s jobs and tax dollars elsewhere. The city should “put something together that just makes sense for a business owner,” he said.
As legalization has spread, other jurisdictions have recognized the moral urgency of creating diversity in the industry. So far, none has succeeded. This past summer, Maryland issued its first 30 medical marijuana business licenses, but the process was thrown into disarray once it became clear that none had gone to a woman or an African American. It’s a “very complex problem,” the head of Maryland’s cannabis commission told The Baltimore Sun. Time sensitive, too, since the established companies are getting bigger and richer. Ohio’s medical marijuana law reserves 15 percent of business licenses for minority owners, but this aspect of the law immediately came under legal scrutiny and the program has yet to become operational.
Oakland’s civic leaders place a great deal of emphasis on what Brooks called the city’s “secret sauce,” the notion that impossible things can happen in this unusually progressive city. But for an equitable policy to compete with proven corporate practices, it has to be able to take root everywhere, not just in one city. It has to scale.
Months after the equity amendment passed, the city hasn’t even begun accepting applications, and no one knows how many equity-eligible entrepreneurs will apply; the two I spoke to didn’t even support the proposal. Gary Roberson, 34, a music producer eligible both because of where he lives and because he’s been in prison for a marijuana offense, said he didn’t want to see existing businesses pushed out of the city, commenting that “some really help the community.”
A proposal from Supernova this past spring called for Oakland to create an additional class of “cottage licenses” for small-scale and home growers, licenses that would let anyone with a basement or spare room go into the business. Conservatively, a 250-square-foot grow can produce 50 or more pounds of weed in a year, meaning that even a small operation could net roughly $70,000 annually. “If you want to talk equity, this is the single most leveling activity that could exist in the industry,” one Bay Area grower and activist told me. “We built our country on this kind of agriculture.”
California’s new recreational marijuana law, like those in other states, has been criticized for handing over a once-in-a-generation economic opportunity to the already rich. Cottage licenses could allow mom-and-pop marijuana businesses to generate wealth as well. Writ large, this is a response to one of the country’s most intractable economic problems: the lack of a pathway into the middle class for the tens of millions of Americans without college degrees. Crucially, cottage licenses could enable greater diversity of business ownership while avoiding the rancor and legal battles that make laws that address race specifically so difficult to create and maintain.
In late September, commercial home growing received a huge endorsement when California Governor Jerry Brown signed a law creating cottage licenses for 500 square feet of indoor space (and somewhat larger outdoor grows). California cities now have to decide if they’ll participate. In Colorado, by contrast, there’s no allowance for cottage licenses, and new commercial grows are generally measured in tens of thousands of square feet.
Supernova’s Nina Parks said cottage licenses would encourage people who might not thrive in a traditional work environment, like some veterans and the disabled. “I don’t want to work for a big corporation, making money on their time and having to apply for when they’re going to tell me I can take my vacation or take my lunch break,” she said. “That doesn’t sound appealing to me at all.” Mirage Medicinal gives her the flexibility of running her own business. Or partially her own: Her brother was released from Rikers late last spring and is back in the Bay Area. “Actually, he’s the one answering the phones right now,” she told me, laughing.