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For some time now, the Department of Cannabis Control (DCC) has sought to redress some of the legacy of the War on Drugs by waving fees to communities historically harmed by prohibition.

Now, the department wants to hear from the cannabis community about proposed changes to the state’s cannabis Equity Fee Waiver Program and proposed deferral regulations. Members of the DCC invited cannabis industry stakeholders to a virtual meeting on Wednesday to get feedback on the proposed changes and to brainstorm additional strategies.

“The meeting was really about dialing in those regulations and building out the [existing Equity Fee Waiver] Program,” Ross Gordon, policy director at the Humboldt County Growers Alliance (HCGA) and policy chair at the Origins Council, said during a follow-up interview with the Outpost. “…We have a lot of equity businesses in our membership – and obviously thousands all around the state – that have been impacted by the War on Drugs, and the state has set aside some funding and created a program to provide equity fee waivers and deferrals for those equity businesses.”

Eugene Hillsman, deputy director of Equity and Inclusion at the DCC, identified two primary changes to the existing fee waiver program. The first is “narrowing the residency criteria” of counties with higher-than-average rates of drug-related charges by focusing on individuals who “live in a census tract with a high rate of poverty” or “who have a family member who was convicted of a cannabis-related crime.” 

The second change relates to gross receipt restrictions and moving the gross revenue cap up to $5 million. “Previously, the [DCC] established a benchmark of $1.5 million for waiver applicants,” he said. “Based on feedback from licensees that currently participate in our local jurisdictions’ equity programs, the [DCC] determined that an expected gross revenue less than or equal to $5 million more accurately corresponded to licenses held by equity commercial cannabis business operators.”

Hillsman outlined four proposed concepts being considered for the final regulations:

1. Additional businesses – Equity businesses are currently eligible for one fee waiver per year, additional businesses would be eligible for fee referrals.

2. Equity commitments – Deferrals may turn into a waiver by meeting additional requirements, including hiring equity employees, supporting community organizations and supporting equity businesses.

3. Payment plan – Equity businesses would be able to pay fees over time. Initial deferral, with delayed payments to be provided later.

4. Tiers – Below a specified amount, equity businesses would be eligible for a fee waiver. Above that amount, they would be eligible for a fee deferral.

Several cannabis industry representatives asked about the timeline for the deferral program, emphasizing the need for immediate relief.

The fastest way to enact the fee waiver changes would be to readopt the emergency regulations that were adopted last year, Hillsman said. The DCC will accept feedback from stakeholders through May and the proposed deferral program must be implemented by January 2023.

Speaking to the Outpost after the meeting, Gordon said the HCGA would encourage the DCC to provide a fee waiver for cannabis farmers with multiple cultivation licenses.

“One thing that maybe isn’t always understood is that there are a lot of farmers who have two very small cultivation licenses because they want to cultivate using different methods,” he said. “Having multiple licenses doesn’t mean you’re big, it just means that you want to cultivate some of your crop under a hoop house, which requires one license, and some crop outdoors which requires a separate license.”

More than anything, having an equitable regulatory framework is key, Gordon said. “Having an equitable framework really is a question about the entire state regulatory framework and tax framework as a whole,” he said. “It’s not that we have something called equity programs…and then on the other hand we talk about taxes and that’s a different conversation. They’re really the same conversation. …It’s great to have these equity programs and these resources available, but ultimately, if we have a tax framework, which is not going to work for small businesses…it’s not going to be functional.”

The DCC will accept feedback in writing from stakeholders through May 2, 2022. Comments can be sent to outreach@cannabis.ca.gov with “DCC Equity Fee Waiver and Deferral” in the subject line.

A portion of Wednesday’s presentation can be viewed in the video below.

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