S01 E08 – Social Equity: The Truth (Pt 2)

Announcer: Information provided on this podcast does not, and is not intended to constitute legal advice. All information, content and materials available on this podcast are for entertainment purposes only. The views and opinions expressed are those of the speakers and do not necessarily reflect the official policy or position of Cultiva Law. Now, without further ado, here are your exquisite esquires, Mio Asami and Fabiola Jimenez.

Mio and Fabiola (together): What up, squad.

Fabiola Jimenez: You’re back with Mio and Fabi.

Mio Asami: Your girls. The usual.

Fabiola Jimenez: And this part two of part one of our social equity programming, and with this we have some special guests. We have Chris Girard aka the head guru who is part of the Cultiva team helping with operations, legal support, and really anything else that we very kindly ask of Chris to do. And also joining us is Ken Ford who is another attorney here at the firm. He’s going to go ahead and give his thoughts on this social equity topic.

Mio Asami: Drop some knowledge on you all.

Fabiola Jimenez: The shouts. The shouts. We be giving out the shouts. And if you don’t know that, you’re too young for me, bro.

Mio Asami: I’m not sure if I can switch one.

Fabiola Jimenez: People, don’t forget.

Mio Asami: Don’t forget.

Fabiola Jimenez: All right, so we went over… First half of this two-part series was talking about the history, what does actually social equity mean. Now we’re going to be diving into some of the nitty gritty and some of the real stuff where we’re just going to be talking about-

Mio Asami: The dirt, man.

Fabiola Jimenez: The dirt. Like is the implementation of social equity like a real thing? Is it a good thing?

Mio Asami: What’s it doing?

Fabiola Jimenez: Yeah, what’s it not doing.

Mio Asami: What’s it not doing. People.

Fabiola Jimenez: For sure. For sure.

Mio Asami: Well, we got into that a little bit last time.

Fabiola Jimenez: We did.

Mio Asami: Granted, we’re going to get on a bit more. Might get a little bit more heated, guys.

Fabiola Jimenez: It’s going to get real heated because I have some very strong opinions about this.

Mio Asami: Again. So again, you grab some snacks and chill.

Fabiola Jimenez: Grab some snacks.

Mio Asami: HO2.

Fabiola Jimenez: For sure. For sure. So let’s go into it. Like what the fuck is social equity? What are these programs? The key word that social equity programs around everywhere talk about these opportunities. Like they’re creating these opportunities with-

Mio Asami: Equity.

Fabiola Jimenez: … this equity opportunity. They’re creating something out of nothing or in some circumstances, it’s reparations for some past-

Mio Asami: The war on drugs.

Fabiola Jimenez: So I personally think using the word opportunities is just that. I think it’s not a good word to describe what a social equity program should be. It’s not creating opportunities per se as like it should be coming up with something new. I think it’s-

Mio Asami: For me, at least to use the word opportunities is kind of deceptive.

Fabiola Jimenez: Yeah, it is deceptive.

Mio Asami: Because it’s not-

Fabiola Jimenez: We’re doing you a favor, bro. And it’s not ideal.

Mio Asami: Yeah, but also it’s like now I’m under the impression that if I qualify, then I’m at the same starting point as anybody else that isn’t part of the program. Do you know what I mean? So if I was a social equity applicant and I’m like, “You know what? I have all these opportunities now.” Suddenly I’m thinking I’m going to be at the same starting point as somebody is just applying for a license regularly without the program, but that’s just not the case. It’s not at all.

Fabiola Jimenez: There is no leg up, right?

Mio Asami: Right.

Fabiola Jimenez: Opportunities is like up here this is advantageous. This is you’re getting a leg up on everybody else. But when you look at the way some of these social equity programs are designed, that’s just not the case.

Mio Asami: Right, because there’s other barriers, right? It’s not just, “Oh, I don’t have the opportunity to get a license if I’m not part of the program,” which is really what I have experienced social equity to be is that you are restricting certain people from, certain other privileged people, from applying. But at the same time, there’s other barriers to entry, kind of what I talked about in part one. Like there is financing is a huge barrier to entry. The social equity programs… It doesn’t get rid of the fact that you still need-

Fabiola Jimenez: Money.

Mio Asami: … hundreds of thousands of dollars to start up your business, and it just-

Fabiola Jimenez: And I also think, again, it’s opportunities in the way that they describe it. These social equity programs are like, “Okay, well, who is the most deserving of this opportunity?” Right?

Mio Asami: Right.

Fabiola Jimenez: And again, those are all deceptive things because as we mentioned earlier, some of these social equity programs will pin people against each other, and then it’s like this is an opportunity. This is a fucking fight to the death and we’re just going to roll with it. And so, I think, yes, the word “opportunities” is a deceptive way to describe what the social equity programs are bringing about.

Kenneth Ford: I think that, like you said, the idea of opportunity is an interesting phrase, especially when you’re just looking at Washington and their plan, course of action. Well, they had like over 569 licenses out there, and then essentially for their social equity program they’re only giving away the 34 cannabis license that have been revoked.

Mio Asami: Canceled [crosstalk 00:05:47].

Kenneth Ford: Exactly. And so they’re looking to like, “Hey… ” They first initially looked at the numbers and said, “Dang, this doesn’t have as many minorities as we would like in the cannabis industry. Let’s try to bump it up a little bit.” But what do you think 34 minority cannabis owners would do to the over 500 and something? If you just do simple math, that is less than the proportional population of these races in Washington.

Chris Girard Oh yeah. Absolutely. And then like Mio had said, the way that they obtain these didn’t start with the idea of social equity. It was from seizing licenses, from shutting them down, from getting to people that just made honest mistakes having their licenses ripped from them before we had this big change in laws. And now they’re trying to figure out how to re-stimulate their budget with new licenses, and this one makes them look best. At least that’s how it comes across. I don’t read anybody’s mind or know any policies. But it’s just like, “Oh hey, we screwed up. Here’s a token to fix it.”

Kenneth Ford: Yeah, and here go our leftovers.

Mio Asami: Right. Yeah, no, exactly though.

Kenneth Ford: Here go our scraps. Yeah.

Chris Girard Right.

Mio Asami: In Los Angeles, it doesn’t change the fact that… Because Washington is still in the preliminary stages, right, they haven’t implemented or even finalized their program yet, but in Los Angeles they have. It’s still changing but it’s finalized to a degree. Being part of the social equity program doesn’t change the fact that it’s still helpful… Having a secured location and paying rent on an empty store that you don’t even know if you’re going to get a license in yet, but paying rent there is going to make your application look better than someone who hasn’t secured a location yet because to the people who are processing the applications, it just looks better. Like, “Oh, you’re serious about trying to open a store here. You clearly have the funds to operate because you’re already paying rent somewhere,” and there’s just a bigger level of commitment or higher level of commitment that you show by paying rent on an empty fucking location.

Mio Asami: But again, people who are qualifying for social equity program usually don’t have the means to pay the rent for somewhere like that, right? So you’re waiting. You submit your application. You’re like, “You know what? I’m in this active lease and I’m just waiting. I’m now paying 3,000 bucks a month for this store, for this space that I don’t even know if I’m going to license in, but that’s what I’m doing right now.” It’s ridiculous. Again, barriers to entry.

Mio Asami: Finances. The social equity program doesn’t absolve you of those types of advantages that you would have if you have the money to wait for your application.

Kenneth Ford: And I would say that it creates a heavier burden, those additional requirements that normal cannabis license holders do not have to take. Like here in Washington, they’re making these applicants, they have to submit a business plan where they talk about their partnerships and assistance to residents in connection with high rates of marijuana prohibition. They have to show that they-

Fabiola Jimenez: They have to justify being in the program.

Mio Asami: But they have to show how they’re going to give back.

Kenneth Ford: Yeah, in some type of way. Right. They got to have some type of partnership, some type of way they’re giving back. Either they’re-

Chris Girard Imagine.

Kenneth Ford: … giving away some of their own revenue and profits to the community.

Mio Asami: 100%.

Kenneth Ford: Or they have to do additional hours of work with their community, whereas in other cannabis licenses, they don’t have to do that, which means they have more profitable money in their pockets they get to keep, more hours to work and grind.

Mio Asami: There are some cities in California that have that type of requirement on the application itself but it’s uniform. Everybody has to go through that. It’s not just the social equity program.

Fabiola Jimenez: Which I’m okay with. If you’re going to ask-

Mio Asami: Enforcing your quota. Yeah.

Fabiola Jimenez: When, again, you start thinking about how fucked up that is, it’s like… I don’t know what a business plan was until I was in college. When I went to law school, I further understood-

Chris Girard How those work.

Fabiola Jimenez: … how those work. I have clients right now that are incredibly fucking successful and they’re like, “A business plan for what? I just go. I just do this.” Like “I come to you now because I need contracts but as I’m grinding, I don’t have the time or the luxury to sit down and be like, ‘This is what I’m going to do on fucking Tuesday and this is what blah blah.'”

Mio Asami: Like “This is my 34-page plan. The investors take this and this is how I’m going to roll.”

Fabiola Jimenez: But again, you’re in this weird… in this real world where people, the social equity programs are supposed to be helping this, the people that don’t have the same luxuries, right, and they’re requesting those things to come from them to justify them being in these programs where it’s like, no, no, no. Don’t you think if homey knew how to fucking do a business plan, he wouldn’t even be in this situation right now? I don’t know. Fucking ironic, right? And so that’s… So yeah. It’s a trip to have so many additional requirements for being in these social equity programs that are supposed to be geared towards helping people, and yet…

Mio Asami: It sounds good in theory.

Fabiola Jimenez: It sounds good in theory and maybe I am just a capitalist. Money is money. Sometimes you just go and you want to do business together, well… And I had this like weird epiphany eons ago where I was debating on… I really wanted to go into business law, and someone was like, “You know you’re fluent in Spanish. Why don’t you go into immigration law?” And so then I was like, “Well, I guess that’s the greater good, right? I’m giving back to my community. Why not help my [inaudible 00:11:37]? Sure.” Then I had another friend who’s incredibly fucking rich, and he was like, “All right, girl. So what’s up? What are you doing in law school?” And I was like, “Well, I really wanted to do business law and pursue that but to give back to my community maybe I should pursue doing immigration law.” He’s like, “Why don’t you give back to community by giving some money?”

Mio Asami: Money.

Fabiola Jimenez: Like, “Are you passionate about immigration law?” I was like, “I mean, I’m passionate about immigration reform,” I was like “but not necessarily the practice of it.” That doesn’t make me a bad person. That I love money also doesn’t make me a bad person, but the fact that I had someone be real with me and say, “You know what? The best way for you to give back to your community is to be able to support these programs. Or give up your time. If you’re going to be so miserable doing immigration law because you don’t like it, that’s not where your passion is, and you’re probably not going to be very good at it in the beginning but why don’t you flex on what you got?” So anyways, that’s just a tangent. There’s different ways of giving back to the community.

Mio Asami: Right, so requiring them to take money out of their business or write this plan to like, “Oh, I’m going… ” Because I can’t even think of the city right now in California, but I was looking up their application materials or their evaluation criteria and you had to show, talk about your partnerships within the community, kind of like what Washington’s trying to do, but also you have to talk about the grants that you’re going to give to high school students in the community.

Chris Girard For change.

Mio Asami: Right? No, yeah, for college or whatever it is, and it’s like-

Chris Girard Look at last year versus this year. One needed a laptop last year, then you get a backpack [crosstalk 00:13:16].

Mio Asami: Right. And so it’s like… Again, I get where it’s going but going back to the financing issue, Los Angeles specifically, if you want to be a Tier 1 applicant, you have to maintain 51% of your company, ownership of the company. That includes voting rights. That includes profit sharing. That includes literally everything that it would mean to be a 51% owner of the company.

Fabiola Jimenez: But you’re also-

Chris Girard Which breaks every investor’s heart by the way.

Mio Asami: Exactly. Exactly though.

Chris Girard It hurts them inside.

Mio Asami: Because you’re asking an investor to invest $1 million in-

Chris Girard Something they have no control in.

Mio Asami: … in business that doesn’t have any type of history yet, first of all. And second of all-

Chris Girard In an untested market.

Mio Asami: … they don’t get any type of control. So it’s like immediately investors are like, “Maybe not,” because case in point, I literally represent a client that was an social equity applicant, and then he came to us and said, “Hey, I need to negotiate with this investor and I want you to write the contracts for the stock purchase contracts and things like that.” I was like, “Okay, cool. Definitely can do that for you. No problem.” We get on the phone with the investor and he finds out my client has to maintain 51% ownership including voting rights, including this and that, including profit, everything.” Immediately the investor’s like, “We’re going to think about it,” and backed out. Immediately.

Kenneth Ford: Well, it’s the good and bad in that.

Mio Asami: Yeah, 100% though. I get why it’s there. It’s to deter predatory investment, investors who are just trying to take over the company and just try and tokenize and just try to capitalize on the business. But at the same time, is that the best way to do it? I don’t know. Is it? I don’t have the answer on this.

Chris Girard Well, as the token white man-

Mio Asami: No, don’t look at me. Don’t look at me. I don’t have the answer. I’m just saying it’s a problem.

Chris Girard I can absolutely say that 100% of the time, somebody that’s willing to invest their money is going to have a very hard time giving up control in that project. And unfortunately, what that does is open up the doors to more predatory tactics, more devious ways of doing business.

Mio Asami: Or just backdoor shit.

Chris Girard Right. With handshake deals, they’re going to go sideways because nine-and-a-half out of ten go sideways. And it’s just the way it is. And then so you’ve got this group of people, because they qualify for this, obviously experienced some hard times, at least regarding to cannabis. And then you’re going to give them this hope. They’re going to do anything possible. They’re going to agree to anything possible if they want it. They’re going to go for it. They’re going to go. And finance is not a simple thing to understand at all. It took me four years to understand barely enough to be dangerous. And so, there’s so many ways around things. There’s the workarounds that we’ve seen in cannabis were born out of things like the finance industry, and all these others, they know how to subvert better than any other. Investors know how to keep their money, keep their tax burdens. The biggest quote you hear is “Tax avoidance is not illegal. Tax evasion is illegal.” Every finance guy will you because that’s what his accountant told him. And so with that-

Kenneth Ford: Tax planning.

Chris Girard Exactly. Exactly. And so they’re going to do a backend deal. They’re going to construct something that could potentially get torn down because complaint driven industries with enforcement priorities and all these things, as competition ramps up, as soon as somebody hears about their scheme or whatever they got going on, they’re going to tell them. We’ve seen this in Washington, Colorado. Every other legal state has become complaint driven where people just tell on each other now.

Mio Asami: And they do it to spite each other.

Chris Girard Right. And so that’s going to come up with finance. And now you’ve got this person that’s been disenfranchised, been given what’s considered an opportunity, given the hope of financing, just to be torn down again. I don’t know about you. That pissed me off. And so predatory financing is probably the scariest thing that I see in this. The government’s going to do whatever they do, and they’re going to screw it up, and nothing’s going to be perfect, but the predatory lending, the payday loan, dead inside people, those are the ones that I am terrified just running amok preying on social equity applicants, because we’ve seen it.

Chris Girard I’ve talked to these guys, and not everybody of course, but I talk to guys that are like, “Hey, I’m looking at social equity. It’s the only way to get licenses anymore. What’s the deal?” It’s like, “Well, you can’t own it.” He’s like, “Well, could I own a company that has like a minority board,” and all these different schemes, and they’ll just go through one after another after another. And you know what, half of them will probably work. And it’s terrifying to realize how screwed these people are going to get. Like talk to your lawyer before you take a dime. Please.

Mio Asami: It’s really not funny. It’s not funny. It’s not funny but at the same time, I thought it was kind of ironic that Los Angeles specifically has these little fact sheets. It’s like, “Say no to predatory lenders.” Like “This is how you avoid predatory lenders.” It’s like what? It’s a literal fact sheet that looks like a fucking DARE ad and some shit where it’s like, “Yo, this is… ”

Chris Girard This is the trafficking ad you see at an airport.

Mio Asami: This ain’t going to work. It’s not. I don’t know. Maybe it’s helped somebody. I’m sure it has. I can’t shit on it, but I also think it’s kind of funny, right, that that exists because it’s just happening. It’s happening.

Kenneth Ford: It’s interesting. That’s why I said making sure that these minorities keep control over their company and protecting them is really paramount because we’ve seen it in cannabis. You read these operating agreements. You read these contracts. You said, “Oh, nobody’s called a lawyer before they… They drafted this themselves. They just did this.” And you can see, and that’s how you can see this industry is just a newborn baby to legal business world because it’s not an industry that would do… They would never do that. Nobody moves without speaking to the lawyer. Nobody moves without speaking to the tax lawyer. And they’re going to make sure that they properly plan and they properly know the tax implications of these deals, of this agreement. We see it time and time after… often musicians. They’ve been taken advantage of because they’re not fully reading their contracts.

Mio Asami: Sure. [crosstalk 00:19:56].

Chris Girard Sports players.

Kenneth Ford: Sports players. They’re not properly reading that. And so, it’s going to be really tough to emphasize just the importance of, hey, seeking legal counsel before you agree to these deals or you meet with that investor. Because like I said, they are professionals in how to structure something. I’m a tax attorney. I’m still trying to understand some of the finances because that-

Chris Girard We had to get creative over the years.

Kenneth Ford: And so, they will make those loans to them where the interest rate is so high, this person is constantly paying back, and there’s no revenue.

Chris Girard You’re going to make millions so don’t worry. You can afford that high balloon payment.

Kenneth Ford: Right. Exactly. Like 12% interest rate. It’s crazy you would think.

Chris Girard 14 I saw for a long time.

Fabiola Jimenez: And one thing that I guess people don’t realize, I know it sucks and it can be intimidating. I grew up not knowing one attorney. I didn’t know-

Mio Asami: Oh yeah. Me too.

Fabiola Jimenez: I didn’t have friends that were attorneys in my family. Unless you were a criminal attorney. We didn’t have friends that were attorneys or anybody that we can turn to and say, “Hey, so and so.” But one thing that I’ve been really pushing a lot is understanding that there are lawyers depending on the size of the firm, the specialty that they practice under, you can afford an attorney. And maybe it does take $2,000 up front to save you $10,000 on the backend is a good way to put it. But yeah, it’s really important to be able to feel comfortable reaching out to somebody for help because the risk of not is so great and it can be so damaging. But really hiring an attorney is not really that daunting. You just have to start getting on the phone.

Mio Asami: And it shouldn’t be. Yeah.

Fabiola Jimenez: And it shouldn’t be. But for the longest time, only the rich, only the wealthy, only the privileged were able and knew how to get into contact with lawyers. And so this way you see a bunch of these fucking Karens now, and it’s, “I’m going to get my lawyer.” Meanwhile us lawyers on TikTok are like, “What the fuck is this bitch saying? [inaudible 00:22:08]? Grow up.”

Mio Asami: Have you read the constitution, lady?

Fabiola Jimenez: For what? What is it?

Chris Girard Just spend money talking to your lawyer?

Fabiola Jimenez: Exactly. It’s like this makes no sense.

Kenneth Ford: No, they will.

Fabiola Jimenez: But it’s a privilege thing. And so I think we have to get over the stigma and we have to push through to everybody that hiring an attorney doesn’t have to cost you $10,000. It will cost you some.

Chris Girard Pay for an hour.

Fabiola Jimenez: Yeah, pay for an hour and just say, “I just need to talk through this.” Believe me when I tell you, lawyers will be more than willing to say, “Here’s your pre-retainer. You have an hour with me, and that’s it and then I’m done.” They will do that for you, I promise.

Chris Girard I actually knew a gentleman who would go through his consulting business, or whatever you want to call it, but he was a pretty good mover. And what he would do is, people that really were serious about doing a deal with him, he was like, “All right, what you’re going to do is you’re going to pay me a $500 down payment to engage with you in this, and we’ll take that off whatever money I get for the way you want to pay me for whatever.” And then he’d go around and pay for a lawyer for just an hour of their time, or sometimes he’d charge more on a bigger deal, and go immediately retain an attorney and say, “Hey, look. This is what I got going on. This is how it’s going. I just want to make sure that I’m good.” And then that was one of many ways, but it’s just an example of how easy it is to protect your assets, which is you at this point.

Fabiola Jimenez: Yeah, but the stigma is you can’t or you shouldn’t. You’re not allowed to.

Chris Girard Oh, no. Don’t worry. No. We have our own lawyers.

Fabiola Jimenez: We have our lawyers. No, no, no. Look, yo, no.

Chris Girard Never trust that by the way.

Fabiola Jimenez: Don’t ever trust someone telling you, “I got my lawyer looking at it.” Always look at any sort of agreements as a lawyer drafting it to be in their best interests for their client. And so you have to really picture who is their client. If it’s not you, then assume that things are not going to go your way. So it’s tough but this is real talk. We’re really trying to help de-stigmatize having conversations with lawyers around this, and I think that’s probably one of the easiest and best ways to help people in this industry get a leg up and to not really get fucked over like we see time and time and time and time and time again. Your contract for anything shouldn’t be a page. It shouldn’t be two pages. I will maybe go five if it’s single spaced. That’s it. I will go five. But yeah, some of the… I’ve seen like $100,000-

Mio Asami: Singled spaced, no paragraphs.

Fabiola Jimenez: No paragraphs.

Mio Asami: Maybe five.

Fabiola Jimenez: Maybe five. Real talk.

Mio Asami: Just one big chunk.

Fabiola Jimenez: Yeah, just one paragraph. No indenting.

Mio Asami: Absolutely. I would say, “Fuck this.”

Fabiola Jimenez: But I’m seeing-

Kenneth Ford: That is considerate.

Fabiola Jimenez: You’ve seen contracts for hundreds and thousands of dollars, and it’s like, “Is this it?” I literally have said, “Is this it? Did a page get cut off?”

Chris Girard Where’s the rest?

Fabiola Jimenez: Where’s all this other stuff? So that’s I think the easiest way for our peeps to be able to get on par with some of these “non-social-equity people.”

Mio Asami: And not to toot Cultiva’s horn but we do our best to… I’m going to toot it out there. I think we do our best at this firm to try and keep a culture of openness and try and be really relatable to our clients. Because cannabis industry, right? Not everybody is going to be the white-collar type of people, and that’s totally fine. We dig that.

Kenneth Ford: No personality in the white collar.

Chris Girard Right? White collar is [inaudible 00:25:48].

Kenneth Ford: We have the blue collar, green collar, and every other collar, but now white collar’s announcement. “Uh-oh. Now they’re really going to take advantage of us.”

Mio Asami: But I’m saying we do our best for your labels. We just piss up.

Chris Girard And nobody’s here to do [crosstalk 00:26:07]-

Mio Asami: Shameless one. Piss up.

Chris Girard Money is not evil. People that have money are not evil by nature. It’s not a synonymous thing. But at the same time, we look to areas that haven’t installed certain financial safeguards. And you look at the difference between Washington’s licensee success rate and Nevada’s licensee success rate. Barring the fact that they were all friends of representatives, whatever that [crosstalk 00:26:34] licensure down there, but requiring wherewithal in a bank account, requiring these certain things that, yes, are barriers to a lot of different groups of people, that is technically the smartest way to do it. How many times have licenses changed hands here in Washington? Yeah, there’s only 500 something licenses, but I guarantee you there’s been 2,000 license transactions.

Fabiola Jimenez: 100%.

Chris Girard And so because of anybody that had a thousand dollars and could fill out an application got a license, and that’s terrifying because low barrier to entry and that, letting people participate, but you got to show some wherewithal business sense something, otherwise it could be a nightmare. I guess dreams are all the same whether they’re nightmares or not; they’re all still dreams.

Fabiola Jimenez: It’s a dream.

Chris Girard But what kind of dream do you want to live? So it’s weird because one part of me is like yes, we should have these wherewithal barriers in place. But the other side of me is like, what about the people who can’t access past those barriers? They just get screwed. There’s got to be some medium. And I think that that is the spirit of social equity, but you can say utopian societies are a great idea. Marxism, great idea. But once you put it in a practice, complete shit show, right? So I would say social equity’s pretty much on par with that.

Fabiola Jimenez: I agree.

Chris Girard Because it’s-

Fabiola Jimenez: Now that we totally ripped the shit out of social equity, let’s discuss the bright spots. Where are some proposed legislations around social equity? What are some places where there is some good, there could be some good coming down the pipeline with some of these programs? How do you guys feel about social equity and the marriage of federal decriminalization of marijuana?

Mio Asami: But like-

Chris Girard It’s going to happen.

Mio Asami: I’m the type where it’s like I really want to see it, so you know. Again, talk to me when it happens. Anyway… But as far as the brighter sides of social equity, I think that… And I shit on Los Angeles’ social equity program a lot. I spent 40-plus minutes talking about how shitty it is. But at the same time, I think that retail licenses are the most sought out license in California. Everybody wants to have a dispensary. They want to be delivery only or brick-and-mortar dispensary store. Everybody wants to do that. But Los Angeles has reserved any new licenses that have to do with retail, they’re only reserved for social equity applicants. And I think that… And they have that reservation until 2025 as of right now. They might shorten it because they’ve done things like that before, but as of right now, it’s open until 2025.

Mio Asami: And I think that that is something that’s good in that it gives those applicants room and time to really develop what it is that they need to do in order to properly execute their [inaudible 00:29:42] in their business and operate this dispensary. Because anybody can tell you that dealing and selling on the unregulated market is not the same as operating a regulated dispensary. It’s just not. You have so many more regulations. You have taxes. You have other considerations.

Chris Girard Taxes alone.

Mio Asami: Yeah, taxes alone. It’s a very, very big difference. And so giving those applicants that time to really develop and process the idea of look, this business, I am passionate about it, obviously. I don’t want to get into it but it’s not the same as, “Yo, I’m going to go to my dealer’s house and chill for a while and then bounce out [crosstalk 00:30:28].” That’s not what I’m doing.

Chris Girard Bounce out. [crosstalk 00:30:28].

Mio Asami: I think it’s good that the discussion has even started and that it’s even existing. Is it perfect? Hell no. Can it do good? I think it can. I think the potential is there. Is it doing good? I don’t know. I have yet to see because, again, Los Angeles has not really issued any licenses from the social equity program yet.

Fabiola Jimenez: But neither has Washington, right? Washington rules were supposed to be solidified back in like December, and here we are-

Chris Girard October.

Fabiola Jimenez: Me.

Mio Asami: Me.

Fabiola Jimenez: Here we are in January and it’s still nothing. We’re still having these random conversations. I’m like, “Okay, where were these conversations eight months ago when it was first [inaudible 00:31:17].

Mio Asami: LA’s getting sued, granted. Because they decided to do their first round via first come, first served, and then people had backdoor lease. So LA’s getting sued. Anyway, that’s a different thing.

Kenneth Ford: I think though we’re all I’ll guess, like you said, the best thing is that they’re discussing it. They’re talking about it. They’re having a conversation. They didn’t necessarily have to. I think that when it comes to federally and the War Act, that they have proposed this bill. There is talk about the allocation of tax revenue from it being allocated to communities that were affected by the prohibition of cannabis. And to me, I’m saying, “Okay, who is the congressperson who is going to put the pressure to turn that into reparations?” Because I think that’s more of a better social equity move is to say, “We’ll allocate those tax dollars to those communities” versus trying to make capitalism play fair.

Kenneth Ford: All of our social services come through tax dollars, and they don’t necessarily come through a free market. And so that’s just how I appreciate the conversations, but like all conversations, they will eventually end. They will die. People will stop talking about it. But now as it is a hot topic, trying to channel that, these communications into real actionable things.

Fabiola Jimenez: As much as I talk shit about the social equity program in Washington, I do appreciate the fact that they are still having these conversations. I think as volatile some of the meetings have been, they’re trying. They’re trying and-

Mio Asami: And the community leaders are actual members of-

Fabiola Jimenez: Of the community. Yeah. And so we have a number of people that listen and join these conversations, and they’ve taken wild-assed turns in mid-conversation, but nonetheless, like I was saying, the conversation’s being had, Washington is trying to cope with it, trying to figure out a way to address all these concerns. I think they’re kind of pulling and pushing in a couple of directions and seeing what sticks and what feels good or what sounds good and kind of coming to terms that going this way is just not the right way to do it.

Fabiola Jimenez: The intentions are good but you know what? In actual practice with people from the community, it’s awful. It just, it doesn’t make sense. And so I think we just have to keep trying, keep trying and eventually some of those kinks are going to work themselves out. But it’s so important to voice your opinion, to let it be known that there’s… If a social equity program is trying to go one way and is just, in real life it just doesn’t work, it doesn’t make sense, say something. It’s so important to say something because they don’t know what they don’t know.

Chris Girard When we look at the fines that are paid on top of license fees, on top of excise taxes, on top of all that, everybody wants to talk about the excise tax and how much money marijuana has made in tax money and all that. What about the fine money it’s brought in? Firsthand, we’ve seen how many dollars in fines come through? A lot.

Fabiola Jimenez: Yo, a lot.

Chris Girard And so while I’m glad they’re having these conversations and I think it’s super important, and everybody’s right. Yes, we need to be talking about disproportionately affected people, especially something that we’ve decided to prohibit for so long, demonize, demonize various groups because of it, and now all of a sudden legalize it and make sure that all of the senators’ friends get the licenses and make some fat, we need to do something to rectify that because that’s too far.

Chris Girard But we’re having the conversations and every conversation can do one of two things. It can either turn into action. Useful action. Or it can die. And it’s up to everybody in a community to at least be mindful of it, that like, “Hey, there’s a lot of people that got screwed for us to get here.” It’s just straight out. That’s just the way it is. And to be grateful that it may not have been you or be grateful for what it birthed and these positive thoughts of rectifying these issues. It’s a nice path, but I would rather see something personally like taking that millions of dollars of fine money and setting up grants for social equity licenses.

Fabiola Jimenez: 100%.

Chris Girard Because that’s what they really need to avoid predatory lenders. To avoid all these things, is just set up a grant program or something that just assists them in that where it’s like, “Hey, these resources are available. We donate to this nonprofit as the state,” so the state doesn’t have any stake in it. Something like that, even that’s probably imperfect but I want to see more actions that are “Let’s talk about what we want to do to make ourselves feel better.” But whenever you look at…

Chris Girard The cool thing of these boards being formed like in Washington and other states, we have boards of members of the community that have actually been affected. They get to contribute to the conversation now. Before, they were barred out. They got nothing to speak on.

Fabiola Jimenez: Yeah, who’s giving these opinions? Who is talking about this? Because I didn’t know anybody talking about it. I didn’t know. All of a sudden it was like, oh this idea has now come forth from the grave.

Chris Girard It’s worth [crosstalk 00:36:56].

Fabiola Jimenez: Yeah, from my [crosstalk 00:36:57]. Some random, a random person. And so, yeah. That is so important.

Chris Girard It is.

Fabiola Jimenez: It’s so important for people that are in the community that have suffered these atrocities. Yeah. So there is a little bit of light to be had given the way the programs have been structured.

Chris Girard [crosstalk 00:37:16].

Mio Asami: I think it’s a tool, at least… I can’t remember if it was something that we talked about in the last part or if it was something that I saw on Twitter because what it is, [inaudible 00:37:26].

Fabiola Jimenez: She loves [inaudible 00:37:27].

Mio Asami: But somebody somewhere said, “Capitalism doesn’t play nice until government tells you to play nice.”

Chris Girard [crosstalk 00:37:36].

Mio Asami: And that’s supposed to have been [inaudible 00:37:37] social equity program could be used for, right? Tobacco companies did not want to fucking talk about how fucking terrible cigarettes are until the government was like, “Yo. Yo, yo, yo.” So you got to talk about this.

Chris Girard Put $500 million in this fund.

Mio Asami: Like “Let me tell you how to do this.” AT&T Bell did not want to let go of their monopoly until the government was like, “Yo, yo. We got to not have a monopoly, okay?” So again, it’s one of those things I think where the social equity program could be used as like 802. Like capitalism.

Chris Girard We got to tweak some things.

Mio Asami: Yeah, we got to uplift some other people.

Kenneth Ford: I’m all about just putting money where your mouth is. And one thing I loved in 2020 is Portland allocating their cannabis tax revenue away from the police force and divulging it elsewhere. And so when you look at… I love to [inaudible 00:38:37]-

Mio Asami: Demand.

Kenneth Ford: … look at a lot of states and where the tax dollars go and where the revenue goes. And a lot of it goes to supporting the police force in those local communities in those states.

Kenneth Ford: So all of that allocating to them does not need it. And so we really need to follow everything. Just follow the money where it goes because giving somebody an opportunity does not necessarily mean that it’s going to be a success, that it’s going to be equal footing, and any of these things. But giving somebody a check, giving somebody a dollar that’s allocated, that’s far better because you just… You don’t know what opportunity means in that person’s hands.

Chris Girard Well, and to that point just real quick, is there is the very real situation to where some marijuana tax money is going directly to marijuana task forces. You want to see irony; your tax money for buying weed is going to bust people for growing a few plants on their own. Like that almost makes me want to stop buying weed from direct market. I’m just saying, like that in itself-

Mio Asami: I’ve actually heard that cited as reasons why people don’t want to buy from direct market. You don’t want to because you’re like, “No, no, no. It’s funding [crosstalk 00:39:57]-

Chris Girard It’s a plant. It’s not busting heads.

Fabiola Jimenez: I 100% agree. It has blown my fucking mind to see these new enforcement task force that have been created. I’m like, why?

Mio Asami: And the funding that they get.

Chris Girard Wrong direction, bro.

Fabiola Jimenez: Why? Why are we… And instead of further educating because that’s also an issue, right? Having enforcement and a lack of education and training, or uniform education and training is a real issue. And so you’re creating these task force for people that they shouldn’t be doing this shit anymore. They shouldn’t even be involved. There’s a number of enforcement officers that are just not for this industry.

Mio Asami: Well yeah, because they use former state patrol fucking state troopers.

Fabiola Jimenez: They hate it.

Chris Girard They joined because they wanted to bust more weed [crosstalk 00:40:48].

Mio Asami: Exactly.

Fabiola Jimenez: Yes. Which is blowing my mind because now they are the only help line.

Chris Girard Fish in a barrel.

Fabiola Jimenez: Yeah, there’s nothing else. And all of a sudden, they are creating more and more task force keeping some of these people on when they really should not be on. They go off and do what they want to do with their lives, but not have encouragement or any sort of enticement to continue.

Mio Asami: I am sorry but what other fucking industry uses former law enforcement as their enforcement officers. Why don’t they fucking tell me. Tell me-

Chris Girard We got a few consultants here in Washington now though.

Fabiola Jimenez: That’s what I’m talking about.

Mio Asami: Tell me the last time anybody’s worked at any restaurant and they were scared that a former cop was going to come into their restaurant and bust them for a server not washing their hands. You know what I mean? That’s just fucked.

Chris Girard I think [crosstalk 00:41:36]-

Fabiola Jimenez: People are dirty as fuck. I don’t know about that one.

Kenneth Ford: I can see the little excellent group of them.

Mio Asami: Well, they come to do that, right? Because they can raid the restaurant.

Kenneth Ford: [inaudible 00:41:45].

Mio Asami: That’s what I’m saying. Any other… We equate cannabis industry to alcohol, right?

Fabiola Jimenez: But the thing is that this is… The cannabis industry is growing and if you’re hurting people in the industry-

Mio Asami: You can’t tell them [crosstalk 00:42:00].

Fabiola Jimenez: … they’re purposely not wanting to be a part of that growth and are stunting it; you’re just creating more and more barriers for the maturity of the industry. I think why don’t you… Okay, I’m okay if you want to be an ex-cop and do this. I’m okay with that. But-

Chris Girard [crosstalk 00:42:18]-

Fabiola Jimenez: … at least have more of an understanding of what the goal is, right? We’re trying to help licensees grow a weed the proper way. You fuckers don’t know what you’re doing. The agency doesn’t know what the fuck they’re doing. So and so doesn’t know what the fuck they’re doing. And so when licensees are trying to create their businesses, inevitably there’s going to be errors. But I don’t think that those errors… I’m speaking very, very… Disclaimer. There is some shit people that don’t want a [inaudible 00:42:41].

Chris Girard You did what?

Mio Asami: [crosstalk 00:42:41] That’s a felony?

Fabiola Jimenez: Yeah, that is a felony business. I’m giving you the finger right now. But when we go out and [inaudible 00:42:51] licensing book because he didn’t have the right paperwork in an industry is not known for paperwork, it’s just like you’re [crosstalk 00:42:58] right? Or [inaudible 00:42:59]. It’s just not.

Mio Asami: They said… It’s again-

Fabiola Jimenez: It’s a transition of like-

Mio Asami: It went from unregulated and I was doing this for all my life and it wasn’t regulated to now I’m in a regulated work and I have to do all these things. What?

Fabiola Jimenez: For sure.

Mio Asami: Inevitably like Ron said. Inevitably there’s going to be mistakes. There’s going to be some hurdles that we have to get through, and that’s just-

Fabiola Jimenez: And so I hope that as we continue on this discussion of social equity as within the cannabis industry, that particular section continues to grow and mature, that we one day can look back and say, “The struggle was real and there was a lot of it but we are now closer and closer and closer to a solution that addresses the actual crises within the minority communities and within the disenfranchised communities trying to make their way within the cannabis industry.” And so that’s all we can do right now is be helpful, provide education, really be that ally, and that speaks to not just us here as lawyers but anybody in the industry to just be an ally for the community. And we come from a point of abundance and there’s plenty enough for everybody. It’s fucking weed. It’s weed. If it was meth, I’d be like, “Well, I don’t know.” This is a very different topic. But-

Chris Girard I’m not a part of that topic.

Fabiola Jimenez: … it’s weed. I can’t make meth but I can grow weed near to my heart.

Fabiola Jimenez: So yeah, so we have to stay tuned and essentially we have to keep on fighting and see where we can help-

Mio Asami: And participate.

Fabiola Jimenez: And participate. It’s incredibly important. So with that, you all, concludes a two-parter on social equity.

Mio Asami: And we spent the past 40 minutes talking shit on the social equity program and going into maybe if you’re good, that’s great. But if any of you guys listening have had any good experiences with social equity program-

Fabiola Jimenez: Happy to see that.

Chris Girard Please tell us.

Mio Asami: Happy to listen. I want to know how it’s been helping people so that maybe I won’t be so jaded.

Chris Girard We need a little help.

Fabiola Jimenez: Yeah, I think we are very jaded.

Mio Asami: And I think especially because I’ve seen so many failed deals because of the regulations on social equity programs that could have potentially been really good, but they weren’t going to work out or they didn’t work out because of the program. So yeah, if you listening have any good experiences with the program or any thoughts, comments-

Fabiola Jimenez: Please share them.

Mio Asami: … we’re on IG Cultivating Conversations. I’m on IG [email protected]

Fabiola Jimenez: I’m on IG fabiolacultivalaw.com. Wait, no. [inaudible 00:45:39]. Shit. What time is it?

Chris Girard Who are you?

Fabiola Jimenez: What time is it? No, [inaudible 00:45:46] all about go about your day. Thanks so much for listening you all and we’ll catch you guys on the next episode. Thank you to our guests Chris and Ken for being a part of this.

Chris Girard Welcome.

Fabiola Jimenez: We will definitely hear from them again on a plethora of topics that we have coming up.

Chris Girard Ciao.

Fabiola Jimenez: So all right, awesome. Nice. Thanks you all. Bye.

Mio Asami: Thanks. Bye.

Chris Girard [inaudible 00:46:06].

Cultiva Law

Disclaimer: The contents of this blog is considered an advertisement under CA law. The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice from Cultiva Law, PLLC or the individual author, nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s state, country or other appropriate licensing jurisdiction.



Contact Us For A Consultation

Call (888) 896-3313 or fill out the form below: