Chapter 23The California Cannabis Equity Act

Section § 26240

Explanation

This law outlines definitions related to local equity programs for the cannabis industry. An 'eligible local jurisdiction' is one that plans to or currently has a program supporting those impacted by past cannabis criminalization. An 'equity assessment' helps shape these programs by analyzing past arrest data and community impact. 'Local equity applicants' and 'licensees' are those who apply for or receive permits under these equity-focused initiatives. A 'local equity program' offers various supports, like business assistance and reduced fees, to help those from communities disproportionately affected by previous cannabis laws. Lastly, a 'transitional worker' is someone facing employment barriers like homelessness or a criminal record, but benefits from local equity programs designed to ensure inclusivity and support in the cannabis sector.

For purposes of this chapter, the following definitions apply:
(a)CA Business and Professions Code § 26240(a) “Eligible local jurisdiction” means a local jurisdiction that demonstrates an intent to develop a local program or that has adopted or operates a local equity program.
(b)CA Business and Professions Code § 26240(b) “Equity assessment” means an assessment conducted by the local jurisdiction that was used to inform the creation of a local equity program, and that assessment may include the following:
(1)CA Business and Professions Code § 26240(b)(1) Reference to local historical rates of arrests or convictions for cannabis law violations.
(2)CA Business and Professions Code § 26240(b)(2) Identification of the impacts that cannabis-related policies have had historically on communities and populations within that local jurisdiction.
(3)CA Business and Professions Code § 26240(b)(3) Other information that demonstrates how individuals and communities within the local jurisdiction have been disproportionately or negatively impacted by the War on Drugs.
(c)CA Business and Professions Code § 26240(c) “Local equity applicant” means an applicant who has submitted, or will submit, an application to a local jurisdiction to engage in commercial cannabis activity within the jurisdictional boundaries of that jurisdiction and who meets the requirements of that jurisdiction’s local equity program.
(d)CA Business and Professions Code § 26240(d) “Local equity licensee” means a person who has obtained a license from a local jurisdiction to engage in commercial cannabis activity within the jurisdictional boundaries of that jurisdiction and who meets the requirements of that jurisdiction’s local equity program.
(e)CA Business and Professions Code § 26240(e) “Local equity program” means a program adopted or operated by a local jurisdiction that focuses on inclusion and support of individuals and communities in California’s cannabis industry who are linked to populations or neighborhoods that were negatively or disproportionately impacted by cannabis criminalization as evidenced by the local jurisdiction’s equity assessment. Local equity programs may include, but are not limited to, the following types of services:
(1)CA Business and Professions Code § 26240(e)(1) Small business support services offering technical assistance or professional and mentorship services to those persons from economically disadvantaged communities that experience high rates of poverty or communities most harmed by cannabis prohibition, determined by historically high rates of arrests or convictions for cannabis law violations.
(2)CA Business and Professions Code § 26240(e)(2) Tiered fees or fee waivers for cannabis-related permits and licenses.
(3)CA Business and Professions Code § 26240(e)(3) Assistance in paying state regulatory and licensing fees.
(4)CA Business and Professions Code § 26240(e)(4) Assistance securing business locations prior to or during the application process.
(5)CA Business and Professions Code § 26240(e)(5) Assistance securing capital investments or direct access to capital.
(6)CA Business and Professions Code § 26240(e)(6) Assistance with regulatory compliance.
(7)CA Business and Professions Code § 26240(e)(7) Assistance in recruitment, training, and retention of a qualified and diverse workforce, including transitional workers.
(8)CA Business and Professions Code § 26240(e)(8) Other services deemed by the Governor’s Office of Business and Economic Development to be consistent with the intent of this chapter.
(f)CA Business and Professions Code § 26240(f) “Transitional worker” means a person who, at the time of starting employment at the business premises, resides in a ZIP Code or census track area with higher than average unemployment, crime, or child death rates, and faces at least one of the following barriers to employment: (1) is homeless; (2) is a custodial single parent; (3) is receiving public assistance; (4) lacks a GED or high school diploma; (5) has a criminal record or other involvement with the criminal justice system; (6) suffers from chronic unemployment; (7) is emancipated from the foster care system; (8) is a veteran; or (9) is over 65 years of age and is financially compromised.
local equity program cannabis industry commercial cannabis activity eligible local jurisdiction equity assessment historical arrest rates War on Drugs impact disproportionately impacted communities small business support fee waivers capital investment assistance regulatory compliance transitional worker definition employment barriers mentorship services
(Amended by Stats. 2021, Ch. 70, Sec. 91. (AB 141) Effective July 12, 2021.)

Section § 26242

Explanation

This law allows a department to offer technical help to local programs that support small cannabis businesses run by people from disadvantaged backgrounds, known as local equity applicants or licensees. The decision to provide this help depends on how sensible the request is and whether resources are available. This assistance could include providing training sessions about how state cannabis licenses and regulations work and is organized together with local programs.

(a)CA Business and Professions Code § 26242(a) The department may provide technical assistance to a local equity program that helps local equity applicants or local equity licensees. When determining whether to provide technical assistance, the department shall make individual determinations based on the reasonableness of the request and available resources.
(b)CA Business and Professions Code § 26242(b) “Technical assistance” includes providing training and educational sessions regarding state cannabis licensing and regulatory processes and requirements to equity applicants or equity licensees that are coordinated with the local equity program.
technical assistance local equity program cannabis licensing regulatory processes equity applicants equity licensees training sessions educational support disadvantaged backgrounds resource availability
(Amended by Stats. 2021, Ch. 70, Sec. 92. (AB 141) Effective July 12, 2021.)

Section § 26244

Explanation

This law allows certain areas eligible for state assistance to apply for grants to support their local cannabis equity programs. The grants aim to help individuals or businesses entering the legal cannabis market who have been negatively impacted by past cannabis law enforcement. Applications must show how the area has been affected by cannabis arrests and include details about their equity programs. Grant money can be used to develop these programs, provide loans or grants to affected individuals or businesses, and offer technical assistance. Areas receiving these funds must report on how they use them annually. Administrative expenses from the grant should not exceed 10% of the total grant amount. The office in charge has the authority to set guidelines for how these processes work.

(a)Copy CA Business and Professions Code § 26244(a)
(1)Copy CA Business and Professions Code § 26244(a)(1) An eligible local jurisdiction may, in the form and manner prescribed by the Governor’s Office of Business and Economic Development, submit an application to the Governor’s Office of Business and Economic Development for a grant to assist with the development of an equity program or to assist local equity applicants and local equity licensees through that local jurisdiction’s equity program.
(2)CA Business and Professions Code § 26244(a)(2) An eligible local jurisdiction that has a local equity program shall include in its application submitted pursuant to paragraph (1) the equity assessment that was used to inform the creation of the local equity program.
(3)CA Business and Professions Code § 26244(a)(3) The Governor’s Office of Business and Economic Development shall consider the following factors when reviewing an application:
(A)CA Business and Professions Code § 26244(a)(3)(A) Whether the local jurisdiction is an eligible local jurisdiction.
(B)CA Business and Professions Code § 26244(a)(3)(B) Whether the local jurisdiction has identified communities and populations within that local jurisdiction that have been disproportionately or negatively impacted by arrests and convictions for cannabis law violations and has demonstrated a nexus between the individuals served through the local equity program and the communities and populations identified by the local jurisdiction.
(C)CA Business and Professions Code § 26244(a)(3)(C) Whether the local jurisdiction has adopted or operates a local equity program, and, if so, the Governor’s Office of Business and Economic Development shall consider the following:
(i)CA Business and Professions Code § 26244(a)(3)(C)(i) How long the local jurisdiction has operated the program.
(ii)CA Business and Professions Code § 26244(a)(3)(C)(ii) The outcomes of the program.
(D)CA Business and Professions Code § 26244(a)(3)(D) Whether the local jurisdiction has demonstrated the ability to provide, or created a plan to provide, the services identified in subdivision (b).
(E)CA Business and Professions Code § 26244(a)(3)(E) Whether the local jurisdiction has demonstrated a financial commitment to the implementation and administration of the program.
(F)CA Business and Professions Code § 26244(a)(3)(F) Whether the local jurisdiction has demonstrated a commitment to remove, or has taken steps to remove, local barriers to entering the legal cannabis market for local equity applicants and local equity licensees, including, but not limited to, developing a local regulatory framework that facilitates an equitable and economically just industry.
(G)CA Business and Professions Code § 26244(a)(3)(G) The number of existing and potential local equity applicants and local equity licensees in the local jurisdiction.
(H)CA Business and Professions Code § 26244(a)(3)(H) Any additional relevant and reasonable criteria the Governor’s Office of Business and Economic Development deems necessary.
(4)CA Business and Professions Code § 26244(a)(4) The Governor’s Office of Business and Economic Development shall grant funding to an eligible local jurisdiction based on the eligible local jurisdiction’s compliance with paragraph (2), if applicable, and its review of the factors in paragraph (3).
(b)Copy CA Business and Professions Code § 26244(b)
(1)Copy CA Business and Professions Code § 26244(b)(1) An eligible local jurisdiction that receives a grant pursuant to subdivision (a) shall use grant funds to do either of the following:
(A)CA Business and Professions Code § 26244(b)(1)(A) Assist the local jurisdiction in the development of a local equity program.
(B)CA Business and Professions Code § 26244(b)(1)(B) Assist local equity applicants or local equity licensees in that local jurisdiction to gain entry to, and to successfully operate in, the state’s regulated cannabis marketplace.
(2)CA Business and Professions Code § 26244(b)(2) For purposes of this subdivision, “assist” includes, but is not limited to, any of the following methods:
(A)CA Business and Professions Code § 26244(b)(2)(A) To provide a low-interest or no-interest loan or a grant to a local equity applicant or local equity licensee to assist the applicant or licensee with startup and ongoing costs. For purposes of this paragraph, “startup and ongoing costs” include, but are not limited to, the following:
(i)CA Business and Professions Code § 26244(b)(2)(A)(i) Rent.
(ii)CA Business and Professions Code § 26244(b)(2)(A)(ii) Leases.
(iii)CA Business and Professions Code § 26244(b)(2)(A)(iii) Local and state application, licensing, and regulatory fees.
(iv)CA Business and Professions Code § 26244(b)(2)(A)(iv) Legal assistance.
(v)CA Business and Professions Code § 26244(b)(2)(A)(v) Regulatory compliance.
(vi)CA Business and Professions Code § 26244(b)(2)(A)(vi) Testing of cannabis.
(vii)CA Business and Professions Code § 26244(b)(2)(A)(vii) Furniture.
(viii)CA Business and Professions Code § 26244(b)(2)(A)(viii) Fixtures and equipment.
(ix)CA Business and Professions Code § 26244(b)(2)(A)(ix) Capital improvements.
(x)CA Business and Professions Code § 26244(b)(2)(A)(x) Training and retention of a qualified and diverse workforce.
(B)CA Business and Professions Code § 26244(b)(2)(B) To support local equity program efforts to provide sources of capital to local equity applicants and local equity licensees.
(C)CA Business and Professions Code § 26244(b)(2)(C) To provide or fund direct technical assistance to local equity applicants and local equity licensees.
(D)CA Business and Professions Code § 26244(b)(2)(D) To assist in the development or administration of local equity programs.
(E)CA Business and Professions Code § 26244(b)(2)(E) To fund the creation of an equity assessment to inform the development of a local equity program.
(c)CA Business and Professions Code § 26244(c) An eligible local jurisdiction that receives a grant pursuant to subdivision (a) shall, on or before January 1 of the year following receipt of the grant and annually thereafter for each year that grant funds are expended, submit an annual report to the Governor’s Office of Business and Economic Development that includes all of the following information:
(1)CA Business and Professions Code § 26244(c)(1) How the local jurisdiction disbursed grant funds.
(2)CA Business and Professions Code § 26244(c)(2) How the local jurisdiction identified local equity applicants or local equity licensees, including how the local jurisdiction determines who qualifies as a local equity applicant or local equity licensee.
(3)CA Business and Professions Code § 26244(c)(3) The number of local equity applicants and local equity licensees that were served by the grant funds.
(4)CA Business and Professions Code § 26244(c)(4) Aggregate demographic data on equity applicants, equity licensees, and all other applicants and licensees in the jurisdiction, including, but not limited to, race, ethnicity, gender, sexual orientation, income level, education level, prior convictions, and veteran status. This information will be consolidated and reported without the individual’s identifying information.
(5)CA Business and Professions Code § 26244(c)(5) If the local jurisdiction requires equity applicants to become eligible through specific ownership percentages, a breakdown of equity applicants’ and equity licensees’ business ownership types and percentages of ownership.
(6)CA Business and Professions Code § 26244(c)(6) Other information that the Governor’s Office of Business and Economic Development deems necessary to evaluate the outcomes of the program consistent with the intent of this chapter and that was specified in the grant agreement between the Governor’s Office of Business and Economic Development and the local jurisdiction.
(d)CA Business and Professions Code § 26244(d) An eligible local jurisdiction that receives a grant pursuant to this section shall use no more than 10 percent of the state grant for administration, including employing staff or hiring consultants to administer grants and the program.
(e)CA Business and Professions Code § 26244(e)  The Governor’s Office of Business and Economic Development may review, adopt, amend, and repeal guidelines to implement uniform standards, criteria, requirements, or forms that supplement or clarify the terms, references, or standards set forth in this section and Section 26240. The adoption, amendment, or repeal of a guideline, term, or standard authorized by this subdivision is hereby exempted from the rulemaking provisions of the Administrative Procedure Act (Chapter 3.5 (commencing with Section 11340) of Part 1 of Division 3 of Title 2 of the Government Code).
local equity program cannabis marketplace grant application Governor’s Office of Business and Economic Development eligible local jurisdiction grant funds equity assessment disproportionate impact technical assistance financial commitment barriers to cannabis market administrative costs cannabis regulatory framework entry into cannabis market equity applicants and licensees
(Amended by Stats. 2021, Ch. 70, Sec. 93. (AB 141) Effective July 12, 2021.)

Section § 26246

Explanation

This section aims to ensure fair opportunities in the cannabis industry by supporting local equity programs. The department acts as a liaison for these programs. By January 1, 2022, the Governor's Office must share local equity ordinances online and provide model ordinances crafted by advocacy groups and experts. These experts may include minority business owners, organizations helping those with past legal issues, and unions for cannabis workers. The department and Governor's Office should work with local governments to make this happen whenever possible.

(a)CA Business and Professions Code § 26246(a) To facilitate greater equity in business ownership and employment in the cannabis market, the department shall serve as a point of contact for local equity programs.
(b)CA Business and Professions Code § 26246(b) On or before January 1, 2022, the Governor’s Office of Business and Economic Development shall publish on its internet website local equity ordinances that have been enacted by the legislative body of the respective local jurisdiction, and model local equity ordinances created by advocacy groups and experts. Advocacy groups and experts may include, but are not limited to, minority business owners and entrepreneurs, organizations with expertise in addressing barriers to employment and licensure for low-income communities or persons with prior arrests or convictions, and unions representing cannabis workers.
(c)CA Business and Professions Code § 26246(c) To the extent feasible, the department and the Governor’s Office of Business and Economic Development shall coordinate with the relevant local jurisdictions to carry out the responsibilities described in this section.
cannabis equity business ownership equity Governor's Office of Business and Economic Development local equity programs cannabis market minority business owners employment barriers licensure barriers local jurisdictions advocacy groups cannabis workers model ordinances internet publication of ordinances union representation in cannabis fair opportunities in cannabis
(Amended by Stats. 2021, Ch. 70, Sec. 94. (AB 141) Effective July 12, 2021.)

Section § 26248

Explanation

This law requires the Governor’s Office of Business and Economic Development to annually report to the Legislature about the progress of local equity programs receiving funds. The report must include details like which local areas have equity programs, their assessments, descriptions, the number of applicants and licenses, and other specific data points. This information must also be published online and follow certain government reporting rules.

(a)CA Business and Professions Code § 26248(a) On or before July 1, 2021, and annually thereafter, the Governor’s Office of Business and Economic Development shall submit a report to the Legislature regarding the progress of local equity programs that have received funding pursuant to Section 26244.
(b)CA Business and Professions Code § 26248(b) The report shall include, but is not limited to, the following information:
(1)CA Business and Professions Code § 26248(b)(1) The local jurisdictions that have enacted local equity programs.
(2)CA Business and Professions Code § 26248(b)(2) A copy of the equity assessment and equity program description of each local jurisdiction that applied for grant funding pursuant to Section 26244.
(3)CA Business and Professions Code § 26248(b)(3) The number of local equity applicants and general applicants applying for and receiving licenses in the jurisdictions that received grants pursuant to Section 26244.
(4)CA Business and Professions Code § 26248(b)(4) Information collected pursuant to subdivision (c) of Section 26244.
(c)CA Business and Professions Code § 26248(c) The Governor’s Office of Business and Economic Development shall post the report required by this section on its internet website.
(d)CA Business and Professions Code § 26248(d) The report required by this section shall be submitted in compliance with Section 9795 of the Government Code, and shall apply notwithstanding Section 10231.5 of the Government Code.
local equity programs funding Governor's Office of Business and Economic Development report submission Legislature equity assessment equity program description grant funding local jurisdictions applicants and licenses annual report website publication Section 26244
(Amended by Stats. 2021, Ch. 70, Sec. 95. (AB 141) Effective July 12, 2021.)

Section § 26249

Explanation

This law requires the department to create programs for waiving and deferring fees for cannabis business applications, licenses, and renewals. By early 2022, they must offer fee waivers, and by early 2023, they must offer fee deferrals. At least 60% of the financial benefits must help equity applicants, who are those previously impacted by cannabis-related legal issues or who live in low-income or disproportionately affected areas. These equity applicants must own at least half of the business they are licensing. The law also allows the department to set specific rules and make quick regulatory changes to implement these programs, and its effectiveness relies on funding being allocated in the state budget.

(a)CA Business and Professions Code § 26249(a) Notwithstanding Sections 26012 and 26180:
(1)CA Business and Professions Code § 26249(a)(1) On or before January 1, 2022, the department shall develop and implement a program to provide waivers for application fees, licensing fees, and renewal fees required by this division.
(2)CA Business and Professions Code § 26249(a)(2) On or before January 1, 2023, the department shall develop and implement a program to provide deferrals for application fees, licensing fees, and renewal fees required by this division.
(b)Copy CA Business and Professions Code § 26249(b)
(1)Copy CA Business and Professions Code § 26249(b)(1) At least 60 percent of the total dollar amount of deferrals of fees pursuant to the program developed and implemented by the department pursuant to subdivision (a) shall be allocated to the deferral of fees for equity applicants and licensees.
(2)CA Business and Professions Code § 26249(b)(2) At least 60 percent of the total dollar amount of waivers of fees pursuant to the program developed and implemented by the department pursuant to subdivision (a) shall be allocated to the waiver of fees for equity applicants and licensees.
(c)CA Business and Professions Code § 26249(c) For purposes of this section, “equity applicants and licensees” means applicants and licensees that demonstrate all of the following:
(1)Copy CA Business and Professions Code § 26249(c)(1)
(A)Copy CA Business and Professions Code § 26249(c)(1)(A) For applicants and licensees in local jurisdictions with local equity programs, that they are locally verified equity applicants and licensees; or
(B)CA Business and Professions Code § 26249(c)(1)(A)(B) For applicants and licensees in local jurisdictions without local equity programs, that they are local applicants and licensees.
(2)CA Business and Professions Code § 26249(c)(2) That they, either individually or in combination with other persons who qualify as equity applicants or licensees pursuant to this section, own no less than 50 percent of the business that is in the process of being licensed or is licensed.
(3)CA Business and Professions Code § 26249(c)(3) That they satisfy one of the following:
(A)CA Business and Professions Code § 26249(c)(3)(A) They have previously been convicted of an offense related to the sale, possession, use, manufacture, or cultivation of cannabis, under past criminal justice policies implementing cannabis prohibition.
(B)CA Business and Professions Code § 26249(c)(3)(B) They have previously been arrested for an offense related to the sale, possession, use, manufacture, or cultivation of cannabis, under past criminal justice policies implementing cannabis prohibition.
(C)CA Business and Professions Code § 26249(c)(3)(C) Residence in a household with a household income less than or equal to 60 percent of the area median income for the applicable local jurisdiction.
(D)CA Business and Professions Code § 26249(c)(3)(D) Residence in an area with a population disproportionately impacted by past criminal justice policies implementing cannabis prohibition.
(4)CA Business and Professions Code § 26249(c)(4) The eligibility for those that qualify pursuant to the criteria listed under subparagraphs (A) to (D), inclusive, of paragraph (3) may be further refined by the department through regulations, including, but not limited to, regulations regarding the following:
(A)CA Business and Professions Code § 26249(c)(4)(A) Criteria regarding the license or licenses an applicant or licensee may seek or hold.
(B)CA Business and Professions Code § 26249(c)(4)(B) Criteria regarding the time period or length of time in which an applicant or licensee resided in a low-income household for purposes of subparagraph (C) of paragraph (3), or in an area with a population disproportionately impacted by past criminal justice policies implementing cannabis prohibition for purposes of subparagraph (D) of paragraph (3).
(d)CA Business and Professions Code § 26249(d)  The department may adopt regulations, including emergency regulations to implement this section. The adoption, amendment, repeal, or readoption of a regulation authorized by this section is deemed to address an emergency, for purposes of Sections 11346.1 and 11349.6 of the Government Code, and the department is hereby exempted from the requirements of subdivision (b) of Section 11346.1 of the Government Code.
(e)CA Business and Professions Code § 26249(e) The operation of this section is contingent upon an appropriation in the annual Budget Act or another statute for purposes of this section.
cannabis business fee waivers fee deferral program equity applicants cannabis equity programs licensed business ownership local equity programs cannabis-related conviction low-income household disproportionately impacted areas past cannabis prohibition emergency regulations budget appropriation
(Amended by Stats. 2021, Ch. 260, Sec. 2. (SB 166) Effective September 23, 2021.)

Section § 26250

Explanation
If any part of this chapter is found to be invalid or unenforceable, the rest of the chapter remains effective and can still be applied where possible.
The provisions of this chapter are severable. If any provision of this chapter or its application is held invalid, that invalidity shall not affect other provisions or applications that can be given effect without the invalid provision or application.
severability clause provisions application invalidity enforceable chapter independent provisions legal effect separate validity partial invalidity
(Added by Stats. 2018, Ch. 794, Sec. 3. (SB 1294) Effective January 1, 2019.)