A recent meeting of the state’s Social Equity Council has prompted some confusion of whether the group that is overseeing the granting of many cannabis business licenses to so-called social equity applicants has as much money as it expected in the coming year.
The confusion comes at a time when the council was anticipating using millions of dollars for workforce development and other programs geared toward those applicants.
The issue came up at the council’s Sept. 7 meeting when several members questioned the lapse of funds.
“How much money are we giving back to the general fund? Do we have a record of that?” council member Michael Jefferson asked. “How much money are we not spending? How much money are we missing? … I’m sort of alarmed by it quite frankly.”
Christine Shaw, who is chair of the council’s finance committee, said the council spent $239,000 of the $3.9 million in general fund dollars allotted to it in fiscal year 2022, which ended June 30. Shaw added that it was anticipated the remainder of the unspent funds would not be rolled over, but rather sent back to the state’s general fund, effectively canceling some of those plans for workforce development, technical assistance and an accelerator program.
Council member Avery Gaddis said he flagged the issue in May, which he discovered through his work with Senate Republicans. He said he sent an email to someone who he did not name about a proposal in the state budget to “strip” unspent money away from the Social Equity Council and “sweep it” into the state’s general fund.
“As a general rule, as a budgetary procedure, most accounts set up like our accounts are swept. It’s a very fiscal responsible thing to do. If you don’t use the money, we’re going to take the money,” he said. “That’s just the way it is.”
The council, however, should not be worried according to a spokesman from the state’s Office of Policy and Management. While the council spent only a fraction of its approved funding, enough funds are expected to remain in place to allow the programs to move forward. Further, the council is approved to spend $10.7 million in the current fiscal year, with those funds coming directly from revenue expected to be generated from cannabis-related businesses.
One of the major duties of the 15-member council is to ensure that funds raised through the state’s adult-use cannabis program go to the communities hit hardest by the war on drugs.
The council received the initial appropriation from the state’s general fund to cover start-up costs, but it will ultimately be self-sufficient once the state’s adult use-market is fully up and running through revenues from cannabis licensing and sales. Shaw said at the Sept 7 meeting that she couldn’t confirm the exact amount but that the state had started to receive cannabis revenue through licensing and other fees paid by applicants.
The state Department of Consumer Protection had issued provisional licenses to five equity applicants for cultivator licenses, as of Monday afternoon, with each applicant paying a $3 million licensing fee. That’s in addition to other application and licensing non-refundable fees that equity and non-equity applicants must pay to the state.
The state’s adult-use cannabis program gives priority in licensing to equity applicants who live in areas targeted by past criminalization of cannabis and who meet income and business ownership requirements.
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