In 2015, African Americans were arrested at seven times the rate of whites, despite only being less than 10% of the population. African Americans across California were two times more likely to be arrested for a marijuana misdemeanor, and five times more likely to be arrested for a marijuana felony. A simple marijuana arrest often meant lost opportunities for housing, education, and employment that were denied because of a criminal record. In the last decade alone, nearly 500,000 residents have been arrested for marijuana. For many living in California, the terms War on Drugs and Mass Incarceration are just words, but for many members of our communities, these words have had very harsh consequences on their lives, families, and neighborhoods. The Social Equity Program is an opportunity for those disadvantaged communities and families to create generational wealth and offer community-based businesses’ the chance to thrive.

When the Social Equity Program was introduced to Los Angeles in 2017, our communities were excited and felt our government would be prioritizing individuals who so deeply have been affected by the War On Drugs. Now, over a year later, after numerous date changes, regulation changes from both a state and city level and red tape, our applicants have another challenging barricade, predatory lending.

Through predatory behavior, investors are believed to be offering back end deals, lowered equity, and selling of licenses. We as a community stand behind our own, and demand that the Department of Cannabis Regulations reads through every management agreement and contract to ensure that no social equity applicant is getting taken advantage of. We have contracts in hand that can prove this. 

The Social Equity program has sold our constituents a dream of being a business owner and affording them the ability to help rebuild the communities in which they represent. We, as a city, must ensure that the investors who are assisting in funding these projects are doing so with the idea of community reinvestment, and job options for the community, in their model. We must ensure that no social equity applicant is getting an unfair deal that would bankrupt them, or make them lose their homes or assets through liens or collateral. 

When a new business comes into a community, the economics of that neighborhood changes, and we must be vigilant in our efforts in not just listening to the voices of the marginalized, but amplifying them. Los Angeles has a unique opportunity to work with social equity applicants in a way that empowers the community, and we must make sure that it happens. The dream that has been sold to applicants must be delivered upon, and the best way to do that is to have the Department of Cannabis Regulations enact a period AFTER pre-verification is over on July 29th, 2019, to work with The California Department of Business Oversight. This is necessary to make sure that those applying don’t fall victim to deceitful or fraudulent loans that steer borrowers towards interest rates that far exceed the lender's risks, charging excessively high fees, misrepresenting the loan’s terms and conditions, as well as community reinvestment percentages that unfairly target vulnerable populations.

If the DCR deems a company predatory, the respective company or investor should be barred from applying for any cannabis business in Los Angeles, as well as California, for predatory lending behavior.

Thank you.