Oakland approves laws to regulate pot industry

Council member Dan Kalb of District 1 listens to a member of the public give comments during an Oakland City Council held at City Hall in Oakland, CA Wednesday, July 7, 2015. Council member Dan Kalb of District 1 listens to a member of the public give comments during an Oakland City Council held at City Hall in Oakland, CA Wednesday, July 7, 2015. Photo: Michael Short, Special To The Chronicle Buy photo Photo: Michael Short, Special To The Chronicle Image 1 of / 1 Caption Close Oakland approves laws to regulate pot industry 1 / 1 Back to Gallery

The Oakland City Council on Tuesday unanimously approved laws to regulate the city’s medical cannabis industry, but promised to revisit provisions that have drawn sharp objections from industry leaders.

At the center of the debate is an equity program that some council members see as reparations for the U.S. drug war, but that industry leaders say will cause the city’s pot trade to sputter.

The program would reserve half the city’s cannabis permits for applicants who fit a narrow set of criteria: Residents who have lived for at least two years in a designated police beat in East Oakland that saw a high number of arrests in 2013, or individuals who were incarcerated for marijuana-related crimes in Oakland over the last decade. Equity permit holders must keep at least a 50 percent ownership stake in their businesses. The city’s eight currently licensed dispensaries would be grandfathered in.

While the idea was to promote diversity and redress the racial injustices of the drug war, critics say the program may create obstacles for the people it seeks to help. It could also undercut a pot economy that is expected to boom — and generate a tax windfall for Oakland — as the state inches toward legalizing recreational marijuana.

“This is not equity, this is a travesty,” said Jake Sassaman, a member of the city’s Cannabis Regulatory Commission. Sassaman, who is white, said he knows several African African pot entrepreneurs who would be barred from getting equity permits because they do not meet the requirements.

Oakland’s pot ordinances were designed to bring the city in line with state laws that will regulate all aspects of the multibillion-dollar cannabis industry by 2018. Those laws stipulate that all cannabis businesses get a license from the city in which they operate.

Councilwoman Desley Brooks pushed for the equity program at the May 3 council meeting, tacking on a slew of last-minute amendments to ordinances that had taken the cannabis commission 18 months to write. Councilwoman Annie Campbell Washington added the provision extending equity permits to people with criminal records.

While many speakers at Tuesday’s meeting applauded the council for making race and equity a point of discussion, they warned that the proposed amendments could create a permitting bottleneck: Oakland would be required to award at least one equity permit for each general permit.

Daniel Grace, president of Dark Heart Nursery — which grows medicinal cannabis plants — said that if the council implements the program, he may have to move out of town.

“It is unclear when or if our company, and most of the dozens of other cannabis companies in Oakland, will be able to receive a permit from the city,” Grace wrote in a May 9 letter to Councilwoman Rebecca Kaplan.

Councilman Dan Kalb raised questions about the new pot laws having unintended consequences, and said he would work with other officials to clean up the language in about a month and a half.

“We have to as policy makers go beyond the ‘feel good’ to the ‘actually good,’” he said.

But Brooks staunchly defended the equity program.

“If you’re serious about equity, show us you’re willing to share this big pie,” she said to the pot business owners who challenged her amendments.

Other supporters of the program said it would turn the tables on a drug policy that for decades has persecuted African Americans and Latinos.

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