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Oakland Rolls Out Dispensary Application Process

On your marks. Get set. Go!

The City of Oakland rolled out its much anticipated dispensary application process last week, and hopeful applicants now have until November 20 to get their applications in. The dispensary applications are broken down into two categories, general applicants and equity applicants. The application for both general and equity permits are nearly identical, but the application processes could hardly be more different.

General Application

General applicants must pay a $2,500 application fee, as well as $32 per person for LiveScan processing. The application must identify every person "directly or indirectly interested in the permit sought, including all officers, directors, general partners, managing members, stockholders, and partners.”

Applicants are then scored on a 148-point scale (with theoretically infinite opportunity for extra credit for you over-achievers out there. More to come on that). The scoring breaks down as follows:

Business Plan 24 16.22% Security Plan 10 6.76% State Law Compliance 10 6.76% Tax Rates 10 6.76% Odor Mitigation 10 6.76% Neighborhood Beautification 10 6.76% Labor 20 13.51% Ownership 30 20.27% Product from Equity 24 16.22% SUBTOTAL 148 100%

It is important to note at this point that the application is required to be completed in the space provided. Blank space is provided on the application for applicants to detail their business plan, security plan, compliance measures, odor control strategy, and more. The City Administrator’s Office has been clear that applicants will not be allowed to supplement the application with additional pages. So, it will be important to be pithy.

Points for general applicant’s business plans are divided between an applicant’s a) understanding of the cannabis dispensary market, b) background in dispensing cannabis “or similar industries,” c) ability to cover startup costs and working capital requirements, d) breakdown of start-up expenses, e) three-year staffing plan, and f) three-year profit and loss forecast. While the application does not spell it out, statements at public hearings on the applications seem to indicate that each of these subcategories could earn applicants 4 of the total 24 points allotted to their business plans.

The security plan seeks a narrative description of the tactics that applicants will utilize to i) avoid diversion of cannabis to unregulated markets, ii) prevent burglary or armed robbery, and iii) minimize loss of product resulting from such burglary or armed robbery. Similarly, the state law compliance section asks for a narrative account of the applicant’s product supply chain and tracking of cannabis products. Odor control and neighborhood beautification also call for narrative answers about how the applicant plans to make its neighborhood prettier without tainting Oakland’s commercial district air with the stench of cannabis. The Tax Rates section, on the other hand, is essentially a fill-in-the-blank quiz that tests applicants to ensure that they understand how much Aunt Libby and Uncle Jerry will be taking off the top.

Labor points for general applicants are tied to what percentage of the dispensary’s proposed work force will be Oakland residents and what percentage will be formerly incarcerated Oakland residents. Oakland Municipal Code 5.80 requires a minimum of 50% of the dispensary’s workforce reside in Oakland. In order to get top marks in this category, though, at least 90% of employees must live in Oakland and at least 50% must have been previously incarcerated.

Fifteen of the 30(!) Ownership points are awarded to any applicant 100% owned by Oakland residents, and the other 15 are awarded for applicants at least 50% owned by those meeting the definition of “Equity Applicant.”

Finally, points for “Product” are awarded based upon the percentage of cannabis products an applicant will commit to purchasing from Oakland equity businesses. One important note here: Oakland has warned that dispensary permit-holders will be held to their commitments. Thus, applicants must be realistic about how much product they can actually obtain from equity businesses. Committing to 50% or more may get you 24 points, but it could also result in the loss of your license down the road.

“WAIT! You said there was extra credit!” Yes, I did. There is still hope for those applicants from outside Oakland, with a ton of cannabis retail experience, an establish a network of suppliers, and the number of key employees from outside Oakland who are rightfully be concerned about the fact that they will score quite low on equity/residency categories making up more than a third of the application score. With enough money and real estate, these applicants can more than make up this deficit. That is because the application includes an allotment of 24 points for each equity business that a general dispensary applicant agrees to incubate. That means that for every business qualifying for Oakland non-dispensary equity program to which a general dispensary applicant is willing and able to grant 1,000 square feet of free space for three years, the applicant can rack up bonus points two dozen at a time.

Once Oakland has tallied up the scores for each general applicant, those with the top four scores will move on for final approvals. Equity Application Equity applicants must pay the same application fees and fees for LiveScan processing. Equity applicants will also have to answer almost every question asked of general applicants. The city will not, however, score their responses. Every equity applicant that files a complete application will qualify for a random drawing in which the cities for equity dispensary permits will be awarded. The first four names pulled out of the hat get the first cracks at the four permits allotted.

Just as with the city’s non-dispensary program, equity applicants will have to establish that they are at least 50% owned by Oakland residents with annual income at or under 80% of Oakland’s adjusted Average Medium Income, and who has either lived in certain Oakland police beats for 10 of the last 20 years or has an Oakland-based cannabis conviction from after November 5, 1996.

Final Approval Process

After the city has selected four general applicants and four equity applicants, each will then receive 90 days to identify an appropriate site. Each will then appear at a public hearing where the community can weigh in on the proposed site. If all goes well, the hearing officer can conditionally approve the applicant pending review and approval of the building, fire, revenue and police departments. If, however, the hearing officer denies the site proposal, the applicant will have 45 days to find and obtain approval for an alternative site. If the applicant is unsuccessful, the baton passes to the next general or equity applicant in line (based on score and drawing, respectively). So, in sum, there is a great deal of information for applicants to digest, a great deal of information to provide the city, and not much time to get it all done. Those who hope to be among the eight lucky winners should consult with professionals right away to get the permitting process started.