Under fire, Oakland officials scrap pot residency requirement

Cannabis leaves at an Oakland business on Sept. 19, 2016 in Oakland. Cannabis leaves at an Oakland business on Sept. 19, 2016 in Oakland. Photo: Santiago Mejia, Special To The Chronicle Photo: Santiago Mejia, Special To The Chronicle Image 1 of / 1 Caption Close Under fire, Oakland officials scrap pot residency requirement 1 / 1 Back to Gallery

Oakland lawmakers Tuesday withdrew a legally questionable component of their newly minted cannabis ordinances that would have largely barred non-city residents from opening a pot business there. The latest revisions — an effort by City Council members to contain the fallout from their attempt to put Oakland residents ahead of outsiders — mean the implementation of the laws will be delayed by several weeks.

The residency condition would have blocked anyone from the city’s expected cannabis bonanza who hasn’t lived in Oakland for at least three years. It was an eleventh-hour addition two weeks ago to a batch of laws meant to leverage the marijuana permitting process as a way to help the people whose drug use has been heavily policed in recent decades — believed to be a first-in-the-nation form of reparations.

But details within the legislation — the first iteration of which was drafted in May — have prompted heated debates within the council over how to best create racial equity in the industry. Council President Larry Reid called it “one of the ugliest processes I’ve gone through.”

The laws give a head start to so-called equity applicants — people who were either convicted of a cannabis-related offense in Oakland in the last two decades, or people who live in neighborhoods that have historically seen high numbers of pot arrests. For the latter group, applicants can qualify only if they make less than 80 percent of the city’s median income.

At least half of the initial cannabis permits the city plans to issue will go to equity applicants under the ordinances.

At their last meeting, as City Council members sought to overhaul the legislation, one clause added by Councilman Noel Gallo quickly aroused questions of legality. The proviso would have required that non-equity applicants be city residents.

A mass of public speakers at the Tuesday council meeting aimed to make the case that allowing general applicants to be from outside the city would hurt the equity program. Their efforts were ultimately futile, when all but council members Reid and Desley Brooks voted to overturn the residency rule.

“The residency requirement is patently, blatantly unconstitutional,” said Rob Selna, an Oakland attorney advising equity and general cannabis applicants. “As a lawyer, you hear that they’re going to exclude businesses owned by non-residents — it just hits you in the gut as illegal.”

State Assemblyman Rob Bonta, D-Oakland, agreed.

“The mission and goals are right,” Bonta said. “Maximum equity — that’s spot on. Those who were the victims of the war on drugs and drug policy should be able to benefit now. But as you chart a course to get there, you need to be compliant with the Constitution and all state and local laws.”

It’s not the first time the legality of an element in the city’s equity cannabis laws has been challenged.

Last year, council members Gallo, Brooks and Reid sought to compel cannabis business to hand over one-quarter of their ownership and at least one seat on their board of directors to the city in exchange for an operating permit. Bonta was among those who cried foul, and the idea was eventually scrapped.

The amended ordinances will have to be approved at the next City Council meeting before going into effect.

Kimberly Veklerov is a San Francisco Chronicle staff writer. Email: kveklerov@sfchronicle.com Twitter: @kveklerov