Robberies and taxes threaten Oakland’s status as the US cannabis capital
Once considered America’s cannabis capital, Oakland is in danger of losing that title in 2022. Patience is running out for legal cannabis companies hit by the relentless waves of crime and permissive City Hall crackdown. Some have already left the city. Others are considering leaving. Some who once considered settling in Oakland have decided against it.
In the past few months, dozens of cannabis companies across California have reported break-ins or attempted break-ins. Growers and traders in the Bayview district of San Francisco suffered at least six break-ins or attempted break-ins in October. Licensees in the Sacramento area reported more than 15 break-ins or attempted break-ins through November.
But Oakland’s operators seem to be shouldering the brunt – with at least 25 break-ins in a two-week period in November and losses from a Thanksgiving crime wave that reportedly hit about $ 5 million.
On the steps of Oakland City Hall on November 29, Oakland licensees called for better policing and tax breaks to restore and upgrade their safety equipment.
“We’re here today because cannabis companies are under attack in Oakland.”
Amber Senter, Founder, EquityWorks Incubator, Burglar Victim
“We’re here today because cannabis companies are under attack in Oakland,” said Amber Senter, whose business incubator EquityWorks was broken into this weekend.
“Oakland is a hub for the US cannabis industry,” added Senter. “If this continues, the city could lose this title.”
Tax breaks in SF, less so in Oakland
In early December, San Francisco supported its legal cannabis industry by suspending a city-wide cannabis tax that was due to come into effect in 2022.
“Cannabis companies create good jobs for San Franciscans and offer their customers safe, regulated products,” tweeted City Supervisor Rafael Mandelman. “Now is not the time to impose a new tax on small businesses that are just getting started and are trying to compete with illegal operators.”
Oakland’s sky-high royalties remain in place.
Low priority break-ins with a lean police force
The armed burglaries continued in December. Oakland Police report that they have lost 60 sworn officers and are unable to respond quickly. The police chief has reported 129 murders, 600 shootings, nearly 2,500 robberies and nearly 500 car thefts in Oakland so far in 2021.
On December 8, robbers ambushed Presto Canna twice in Oakland’s Fruitvale neighborhood and spent nearly two hours loading and unloading $ 50,000 worth of goods, reports said.
“The Oakland cannabis company robberies are still going on,” Senter reported on December 8th. “Several armed robberies last night.”
Earlier this month, Oakland Mayor Libby Schaaf doubled the number of police officers in the city. But if newly hired police officers can be recruited, the deployment will take months.
Meanwhile, licensed operators are preparing for more crime during the holidays. Fear, frustration, and paranoia can be felt across the city.
Rob your own golden goose
Oakland helped invent the concept of medical marijuana, legal cannabis, and their licensing and taxation. This is what makes this latest chapter so tragic for the industry.
Oakland was the first city in the United States to launch a medical marijuana program, the first to tax cooperatives in 2009, the first to license stores and farms in 2010, and the first to issue distribution licenses after it was consumed Adults was legalized in 2016.
“This is how Oakland became a mecca for cannabis,” said Amber Senter, noting that such actions have drawn so many cannabis companies to the city.
Now they and others in the industry say the business and security climate repels companies. She warned that several cannabis companies are considering leaving town and startups are reluctant to move because “incentives to work in Oakland are few”.
Long simmering crime problems are boiling over
The 2021 Thanksgiving crime wave showed how the longstanding practice of robbing California cannabis licensees has evolved.
Underground producers and traders have long been victims of robbery. When the state’s medical and adult industries went online, licensees saw the same robbery attempts with a twist.
Locked out of the banking system due to the federal ban, cannabis companies offered thieves three attractive properties: cash, cannabis, and a well-known public address.
In the era of the pandemic, legal cannabis ripping crews became much more organized.
In June 2020, burglar caravans raided dozen of companies amid protests against the murder of George Floyd. Coordinated theft rings took advantage of social unrest to rob an estimated 40 cannabis companies on the west coast.
In 2021, criminals refined the flash robbery playbook.
The Thanksgiving Wave
On the weekend of November 20th – following Kyle Rittenhouse’s November 19th acquittal – burglars raided at least 25 cannabis companies in Oakland. This included distributors, manufacturers, and retailers. Security footage showed groups of masked men ransacking warehouses and destroying shops.
That list of allegedly robbed companies included: Blunts & Moore, Community Gardens, Eco Cannabis, Magnolia Oakland, Organicann, Phytologie Oakland, Purple Heart Patient Center.
The industry reports read like from the Wild West:
- An industry member reported, “3 truckloads of guys armed with weapons tried to get through the gate. Luckily for us, we welded it and they thought it was still broken. They later broke the welds. They came back around 2:30 a.m. Then came back around 4:40. Flown before the police came. Then came back at 6:30 am and entered the building through the roller door. “
- In another, armed security guards and intruders exchanged fires and injured you.
- In another suspect, a police car riddled with bullets when police arrived to investigate a break-in into a pharmacy, only to find a group of people escaping the store clutching goods.
- In another case, “five or six people rammed their way through the wall with sledgehammers,” an Oakland delivery company told Leafly.
Victims also included participants in Oakland’s social equity program, which aims to trip up people harmed by the war on drugs, particularly people of color and those in jail for grass. These companies often operate on a small scale and may not even exist without the help of other companies to give them space and other support.
Mayor supports sky high taxes
Cannabis operators say it is especially frustrating to see such slow police response times given the heavy and uneven tax burden they carry. Oakland cannabis companies have paid the city $ 22.36 million in taxes over the past two years, reports the San Francisco Chronicle. And Oakland cannabis licensees pay a tax rate 100 times higher than any other type of business in town.
Years ago, Oakland began with an extremely high 10% gross income tax on cannabis companies. For every dollar that came through the door, a cent went to the city’s tax collector. That’s 417 times higher than Oakland’s gun trade tax.
In 2019, Oakland cut its weed tax by several points. Right now, the very smallest companies – those that bring in less than $ 500,000 a year – don’t pay city cannabis taxes. Prices vary and go down for larger companies. By next year, they’ll be up to 5% of gross receipts – that’s still 208 times what an Oakland gun shop pays. Five percent is the profit margin for many companies.
The city council unanimously approved the cut in 2019 despite opposition from Mayor Libby Schaff, who warned of the fiscal implications for the city budget.
With all the slumps, taxes need to be cut even further, or eliminated altogether, say many cannabis executives.
Related
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At the November 29 press conference, Salwa Ibrahim, owner of Cookies Oakland pharmacy, called for a tax strike until the city seriously addressed the issue. It is not yet clear how many operators have joined this idea.
Oakland Councilor Rebecca Kaplan has harshly criticized both police responses to the crime waves and the hostility of both senior police officers and Mayor Schaff towards the cannabis industry.
Earlier this month, Kaplan proposed a measure to extend or defer city loans to cannabis companies and give those companies cash to help them better secure and fasten their front doors.
Kaplan called the mayor and police officers of Oakland “right-wing”, at least in terms of their stance on legal cannabis.
As the council ponders its regulation, Kaplan urges the city council to treat cannabis like any other business and the police to ensure the industry receives adequate protection, which they believe is pathetically lacking.
“Oakland has a proud history in the cannabis movement,” said Kaplan. “These are legal, licensed, taxable companies and fully deserve the same legal protection.”
Dan Mitchell
Dan Mitchell has written for the New York Times, Fortune, the San Francisco Chronicle, Wired, and other publications. It is based in Oakland, California.
Show article by Dan Mitchell
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