City approves addition of 10 new dispensary permits to increase equity in local cannabis industry

Looking to increase equity in Sacramento’s burgeoning cannabis industry, the City Council this week unanimously approved the addition of 10 new storefront dispensary permits.

The new permits will benefit participants in the City’s Cannabis Opportunity Reinvestment and Equity (CORE) program, which works to remove barriers of entry into the cannabis industry for individuals and communities disproportionately impacted by the War on Drugs.

“By adding these permits, the City is taking several steps toward achieving its goal of 50% CORE-eligible ownership of all cannabis business permits,” said Davina Smith, who leads the City’s Office of Cannabis Management.

Though there are many ways to participate in the local cannabis industry — including cultivation, manufacturing, testing and delivery — the storefront dispensary is the most sought-after business model, Smith said.

The City previously had set a cap of 30 storefront dispensary permits, which were awarded to holders years ago. Because of this, participants in the CORE program, which launched in 2018, have had little opportunity to open a storefront dispensary, even after completing the program’s business and mentorship training.

Mayor Darrell Steinberg late last year proposed adding storefront permits for CORE participants. A Council workshop followed, as did several stakeholder meetings and a digital survey to help decide possible criteria for awarding permits.

Following Council discussion and direction, new permits will be awarded as part of a competitive “Request for Qualifications” process that evaluates CORE applicants’ business readiness and likely success operating a dispensary.

The Office of Cannabis Management currently is working to finalize the RFQ criteria, which it expects to release early next year.

When approving the new storefront dispensary permits, Council also set timelines for when the new dispensaries must be operational and provisions for keeping the permits under CORE-participant ownership.

Approximately 160 people have graduated from the CORE program, which is operated by the Greater Sacramento Urban League and the Sacramento Asian Chamber of Commerce.

All cannabis businesses in Sacramento are required to pay a 4% gross receipts tax, so the new 10 storefront permits likely will generate new Business Operating Tax (BOT) revenues for the City. The current annual BOT paid by storefront dispensaries range from $81,000 to $650,000.

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