Making it big selling legal weed is harder than it looks

An initiative in California is giving people harmed by the "war on drugs" a chance to make it big in the burgeoning legal cannabis industry. But participants say making it big is a lot harder than it looks.

Every night, Julian Nelson sleeps on a sofa inside the office of his cannabis business in Oakland, California, in case armed robbers break in again.

Shelves of pre-rolled spliffs, pet comfort CBD oil, hash caramel chocolate bars and sour green apple cannabis sweets fill the place.

The shop, Green Gold Delivery, is perfectly legal, licensed by the city.

But it is frequently targeted by thieves.

"When I first got started, someone broke in and wiped me out, completely stole everything," Mr Nelson said. He bought more security equipment, but he was robbed again earlier this year while he was out and lost $15,000 (£12,137) worth of product.

Having a licensed weed business means a lot to Mr Nelson. He had been arrested multiple times for cannabis possession in the past. When it happened the third time, it was after police raided his home. He has served time in jail.

But an initiative called Social Equity gave Mr Nelson the opportunity to open a legitimate business.

The city programme aims to minimise barriers to the legal cannabis industry for those targeted in the so-called US "war on drugs" - a decades-long policy that was found to have unfairly targeted black and Hispanic Americans, putting small-time users or sellers in jail for drug possession.

Begun in 2017, the programme was the first of its kind in the US and has received over 280 applications, according to media reports.

A Social Equity licence is supposed to give these communities a slice of California's billion-dollar legal cannabis industry and bring diversity. The state decriminalised marijuana in 2016.

It has been replicated in other US states and even London Mayor Sadiq Khan has visited a Social Equity business in Los Angeles to learn about them.

But while who have opened shops have expressed pride in being able to operate legally, they have also been beset with problems.

Access to capital, banking difficulties, bureaucracy, the high tax on legally sold cannabis and crime are just some of the hurdles they've had to deal with.

Mr Nelson said that though business is good, it has not always been easy for him or others in the programme, and it remains an open question as to whether Social Equity has really opened up the legal cannabis industry as it intended to.

The programme was born more than 50 years after US President Richard Nixon declared a "war on drugs" in 1971, called drug abuse "public enemy number one" and addiction a "national emergency".

Since then, the size and presence of federal drug control agencies increased, as did arrests and incarcerations, which affected people of colour at much greater proportions.

According to a 2020 study by the American Civil Liberties Union, black Americans are almost four times more likely than white Americans to be arrested for marijuana possession, despite using it at similar rates.

An important study by Oakland City council in 2017 found that African Americans in Oakland made up to 80-90% of police cannabis arrests each year while white residents represented just 4% of arrests.

Under Social Equity, half of cannabis licences go to applicants who live in areas that have a high number of arrests and incarcerations for weed possession. They also get licence fees waived and can apply for financial support in the form of grants and loans.

Mr Nelson says many cannabis businesses in Oakland have been broken into. He believes it is because they operate with cash and legal cannabis has a high street value, it has been subject to tests and regulation, so it's considered a premium and safer product.

Not long ago, he met Chris Eggers, 40, a former undercover cop turned cannabis business consultant in Oakland.

Mr Eggers left the police force over a year ago to set up Cannabis Compliant Security Solutions, which provides security advice to cannabis firms all over the US. He is helping a few social equity businesses like Mr Nelson's for free.

He found that his experience of infiltrating criminal gangs gave him insight into the kinds of weaknesses armed robbers look for.

But theft is only the beginning of the problem for many weed businesses.

Mr Nelson is still waiting on his insurance pay out for the last break-in - a common occurrence, according to Mr Eggers.

Insurance for cannabis is often so complex and difficult to understand that Social Equity business owners often get negative answers from insurers about their claims, he said.

"Robberies certainly hurt, but it's the aftermath that kills these businesses," Mr Eggers said.

Another problem for Social Equity recipients is the struggle to transition from illegal to legal cannabis.

Linda Grant, 53, lives in a residential working-class neighbourhood in east Oakland with her family. She has been around weed for most of her life. She first started smoking it when she was 11 years old and began selling joints at school when she was 13.

She made hundreds of dollars a week from selling weed illegally and was arrested several times, but stopped selling after having children.

Years later, she heard about the Social Equity programme and decided this was her way back into the cannabis industry. She said she wants it to be a family business and to get her grown-up children involved, and that she views the programme as a form of reparations.

But operating in the illegal cannabis market did not prepare her for the bureaucracy in the legal one. "That's the hardest part - having to conform from an outlaw to a legal person," she said.

Ms Grant has been trying to start a cannabis delivery business called Just Blaze, but she has gone through a range of problems - unscrupulous partners and broken promises, issues with funding and trouble finding premises.

In the latest setback, her plans for the business to move have fallen through because the landlord sold the building.

"I'm devastated, I've been crying all day," she said.

She also tried to convince others in her community to apply to the programme, but many she approached said "hell no", she said.

"A lot of people were not with it because they felt like it would further criminalise them, you know, it might be a trap."

They told her they preferred to continue operating in the illegal market, which continues to thrive in California despite legalisation.

When Tucky Blunt, 42, got a phone call from a friend telling him about Social Equity, he jumped on the opportunity.

Mr Blunt, who had been arrested in 2005 for selling weed illegally, became one of the first to open a cannabis retail store, Blunts and Moore, in the city.

On the surface, he is doing well. A stream of customers - nurses, teachers, construction workers and pensioners - can be seen on a typical day coming and going from the bright orange building with a green glowing pharmacy cross in the window.

Many said they buy from the shop because they like the variety and the weed is safer than what they could get on the street.

Mr Blunt pointed out that his store is just under a mile away from where he was first arrested. It "feels great" to have it there, he said.

"I've definitely seen change in the community because there are black owners, there are [Social] Equity owners," he said.

The programme has achieved its goal of giving people "who caught weed cases" the chance to become legitimate, he said.

But despite $3.5m (£2.8m) in sales this year, he needs to make another $1.5m just to break even. He has made no profit for four years, he said, explaining that this was because of California's high tax on weed sales.

Sometimes described as California's cash cow, cannabis has brought in $4bn in tax revenue since 2018.

"We are being overtaxed and overregulated, tax takes up most of my money," Mr Blunt complained.

He also points out that while cannabis remains illegal in the eyes of the federal government, he does not get the tax benefit that other businesses can.

The state has listened to the industry and has implemented some tax reforms, said Nicole Elliot, Director of the Department for Cannabis Control in California's state government.

Tax on the cultivation of cannabis has been abolished and rebates are to be given to Social Equity businesses.

But there is only so much they can do while cannabis remains illegal at federal level, Ms Elliot said.

High taxes may force people out of business, however.

"Two more years and I'm going," said Mr Blunt. "I'm not going to be in business just to stay in debt. I want to make generational wealth for my kid's kids, I can't do that if I'm going in debt every year."