California launches $20 Million grant program to support Cannabis retailers
Regulators in California announced last week the launch of a new program designed to increase consumer access to legal marijuana in cities and counties that have not yet licensed cannabis retailers in their jurisdictions.
Under the program from California’s Department of Cannabis Control (DCC), up to $20 million in grants will be available to provide local jurisdictions with resources to expand access to regulated cannabis products in underserved areas.
The retail access grant will prioritize areas with little to no access to legal cannabis retail where national surveys find high rates of cannabis consumption. The grant program seeks to incentivize local best practices by prioritizing programs that support equity operators and utilize existing licensing and permitting practices.
“Expanding access to California’s retail cannabis market is an important step towards protecting consumer safety and supporting a balanced market,” DCC Director Nicole Elliott said in a statement from the agency. “The retail access grant program ultimately seeks to encourage legal retail operations in areas where existing consumers do not have convenient access to regulated cannabis.”
Cannabis Deserts Have No Pot Retailers
The DCC noted that nearly two-thirds of local governments in California have declined to authorize retail sales of legal cannabis within their jurisdictions, creating vast “cannabis deserts” where residents have difficulty shopping for regulated marijuana products. Surveys reveal that of the 33 counties in California that currently do not offer cannabis licenses, nine counties show substantial rates of cannabis consumption despite only having one or zero licensed cannabis retailers. In four of the nine counties—Butte, Glenn, Madera and Sutter— there are no licensed cannabis retailers.
“Lack of access to California’s legal cannabis marketplace threatens consumer safety and perpetuates the illegal market,” the DCC wrote. “By financially supporting the creation of pathways to retail licensure and creating incentives to ensure consumers have access to legal retail, these grant funds are intended to help reduce illicit market activity and provide consumers with access to legal retail stores and regulated products.”
Counties that currently do not have a local retailer licensing program but plan to create one are eligible to participate in the DCC’s Local Jurisdiction Retail Access Grant program. The funding can be used to support equity applicants and licensees, permitting expenses, environmental reviews and personnel costs. The $20 million grant program will initially award up to $10 million in grants by June 20, 2023. After June 30, 2023, an additional $10 million will be available to previous awardees as they issue licenses to local retailers.
The DCC said that the new program is the first time a state government has offered grants to encourage retail cannabis licensing at the local level. The agency said that the program can provide much-needed assistance to cities and counties as they partner with the state to ensure consumers have sufficient access to regulated cannabis, noting that 60% of California’s local governments are not offering licenses for retail cannabis businesses.
California legalized recreational marijuana with the passage of Proposition 64 in 2016, creating the world’s largest regulated cannabis market. But many licensed businesses have struggled to thrive, with operators citing competition from the unregulated market and high taxes and fees as challenges to their success. Will Senn, chief corporate development officer at licensed cannabis firm StateHouse Holdings and the founder of the company’s Urbn Leaf chain of retailers, says that the retail access grant program can have a positive impact on the California cannabis market. But he adds that other steps must also be taken to support the struggling industry.
“Overall, the grant program is a step in the right direction, but the state must immediately focus on the systemic issues that we are currently facing in California: over taxation and lack of enforcement of the illicit market,” Senn writes in an email. “Without a material tax holiday on cannabis excise taxes, there may not be many operators left in California by the time the grant program begins to show its benefits.”
