Oakland’s new medical cannabis laws, intended to right the perceived wrongs of the U.S. war on drugs, are the focus of a fierce political fight at City Hall.

Although the City Council voted unanimously to approve the laws in May — creating a permit system that will bring Oakland in line with new requirements for regulating the state’s multibillion-dollar cannabis industry — several council members say the system they created is not a done deal.

The main sticking point is a provision that reserves half the city’s medical cannabis permits for residents who were jailed on marijuana convictions in Oakland within the past decade, or who have lived for at least two years within six police beats in East Oakland where pot arrests were concentrated in 2013. To obtain one of these “equity permits,” an applicant must own at least a 50 percent stake in the proposed business.

The intent of supporters, led by Councilwoman Desley Brooks, is to help people whose lives were disrupted by drug-related prosecutions and incarceration. Critics, while praising the goal, say Oakland’s approach could hurt those people instead.

It could “fail to promote, and in many cases actively compromise, the city’s social-justice and equity goals,” the group Supernova, which advocates for women of color in the cannabis industry, warned in a letter to the council.

The problem, the group said, is that the permit system is so restrictive it could choke off Oakland’s flourishing pot trade, the jobs it could bring and tax dollars it could raise, even as Californians prepare to vote in November on whether to legalize recreational use of marijuana.

“We want the laws to be successful,” said Matt Hummel, chair of Oakland’s Cannabis Regulatory Commission, who thinks the equity-permit program is too limited. “But the big concern is, are we actually doing what we’re trying to do?”

Backers say the equity program is needed to bring more low-income blacks and Latinos into what they call a predominantly white industry. They note that of Oakland’s eight licensed medical pot dispensaries, just one is run by African Americans, and none by Latinos.

Preferential treatment

The program’s staunchest proponents are Brooks and Councilman Larry Reid, whose districts cover the territory where people who want to enter the marijuana business would receive the preferential treatment.

“You’re talking about an industry of predominantly folks that don’t look like me who are trying to drive this process,” Reid, who is African American, said at the council’s July 7 Rules Committee meeting, where Councilmen Dan Kalb and Abel Guillen asked for a public hearing to propose changes to the laws. “And their interest is not in my best interest.”

Officials are counting on the new permit systems to bring hundreds of underground pot businesses into the open, creating what could be an employment bonanza and tax windfall for Oakland. Cannabis businesses are required to pay 5 percent of their gross receipts to the city, and under the new laws, every new business must hire half its workforce from Oakland and one-fourth from the city’s economically depressed areas.

Tax revenue, jobs

“We’ve known for a long time that Oakland has quite a number of unregulated cannabis businesses,” said Joe DeVries, an assistant to the city administrator who helps oversee the Cannabis Regulatory Commission. “These laws give certainty to those businesses that they won’t be shut down. And now they’ll be allowed to grow, providing tax revenue and jobs for the city.”

A too-narrow permitting process could undermine this potential, say commission members and others who want to expand it.

One pot advocacy group, the Oakland Diversity and Equity Cannabis Coalition, is pushing to broaden the equity-permit program. In June, the coalition asked the City Council to issue equity permits to residents in 13 police beats besides the original six, including several in West Oakland, some in Fruitvale and some in other parts of East Oakland. There are 57 police beats throughout the city.

Past pot convictions

The group also asked that equity permits be given to people convicted of pot crimes more than 10 years ago, and to people jailed in cities beyond Oakland — and that permits be given not only to those who were convicted, but to their family members as well.

The proposed changes are scheduled to go before the council’s Public Safety Committee on Sept. 27.

Brooks, who chairs the committee, has resisted attempts to change the equity-permit provision, calling them a veiled campaign to shut African Americans and Latinos out of the industry.

“The council has one opportunity to get this right, and not continue the systemic racism in this burgeoning industry that has allowed some to be advantaged while others are left out,” Brooks wrote to the council on July 7, the day of the Rules Committee meeting. Brooks was absent for the session but had an aide read her letter.

Two of the six designated police beats where people are now in line for equity permits are in Brooks’ district. Two are in Reid’s district, and two straddle both.

Neither Reid nor Brooks returned calls for comment.

More than 300 people showed up at City Hall last week for a meeting at which city officials explained the new rules. Some were wary of the equity-permit program.

“I’ve talked to a couple hundred people (in Oakland) who want cannabis permits,” said James Anthony, a lawyer who helps fledgling marijuana entrepreneurs start their businesses. “I’ve found five people who qualify for equity permits by residency, either because they live within one of those police beats or have a family member who lives there with whom they’d happily share their business. I’ve found one person who qualifies via the incarceration route. Everyone else was a low-income resident, an immigrant or a person of color, but they don’t fit the criteria.”

Anthony described his cannabis work as atonement for his former career as a prosecutor. From 2003 to 2005 he worked for the Oakland city attorney’s Neighborhood Law Corps program, suing Oakland residents and trying to seize their homes for “nuisance” crimes, including drug possession.

Broader geography

He said victims of the drug war are scattered throughout Oakland — particularly in the low-income pockets of East and West Oakland and the Fruitvale neighborhood — and that the council should not limit its focus to a cluster of six police beats.

Frank Tucker, a prominent African American businessman and head of the mentorship group 100 Black Men of the Bay Area, was at the permit meeting and told The Chronicle that he is “exploring business opportunities” in the cannabis industry.

Tucker, a longtime friend of Brooks’, said he opposes changes that would “dilute” the equity-permit program.

“I view the cannabis industry as equivalent to the growth of tech, where underrepresentation of minority people is apparent,” he said. “I think the equity program is focused on areas that could benefit the most.”

Rachel Swan is a San Francisco Chronicle staff writer. Email: rswan@sfchronicle.com

Twitter: @Rachel Swan