Sacramento’s first social equity cannabis dispensary opens

A new cannabis dispensary that opened Monday is the first in a city program designed to give Sacramento residents affected by the war on drugs an opportunity to legally sell marijuana to customers.

Personal trainer Robert Jackson is the majority partner in the new business at 6233 Mack Road in South Sacramento, one of 10 applicants approved by Sacramento city officials in the spring of 2021 to open dispensaries as part of the city’s social equity efforts.

Jackson, who is 62, said in his application that when cannabis was illegal he had been “pulled over by the pretext that the officer smelled cannabis when none is present and stopped on other occasions for simply being in a high drug area. I have a family member that was arrested and jailed for having less than an ounce of cannabis.”

But a reality for Jackson — and most of the other approved dispensary applicants —is that a program aimed at disadvantaged mom-and-pop operators also provides a back door from much larger cannabis operators to expand their empire.

Successful cannabis entrepreneur Lauren Carpenter, who owns five other dispensaries in Northern California, has provided the bulk of the $1 million plus funding for Jackson’s new Sacramento business and is the second owner of the business.

Embarc Sacramento adds to a dispensary chain that has locations in South Lake Tahoe, Fairfield, Alameda, Fresno, Martinez and a planned location in Chico. Carpenter is CEO of Embarc.

Carpenter wouldn’t have been eligible for one of the city’s new licenses because she grew up in Land Park, not a poor Sacramento neighborhood, and wasn’t a victim of the war on drugs.

While the Sacramento cannabis social equity program is enabling her to expand her cannabis business interests, Carpenter said she would not have made an investment if Jackson was not involved.

Carpenter said she considers Jackson “a family member,” someone who started personal training with her parents Mike and Phyllis 17 years ago. Around 10 years ago, Lauren Carpenter also became Jackson’s client.

Jackson in an interview said he is happy with the business arrangement with Carpenter and he, likewise, considers Lauren Carpenter, “a family member.”

Jackson said he wanted to operate a cannabis business that could have a positive impact on his community.

“They said they always gave back to the community,” he said of what Carpenter and her husband, Dustin Moore, told him of their other dispensaries. “That was one of the things that intrigued me.”

He said 1% percent of gross profits at the Sacramento dispensary are given to community organizations and that the 20 workers will make a minimum of $18 an hour and be enrolled in a profit-sharing program if they stay at least a year.

Social equity ownership

Sacramento already had 30 cannabis dispensaries stemming from the days of medical marijuana when the city council passed new rules in August 2018, allowing the 10 new licenses.

With the sale of recreational marijuana becoming legal earlier in that year, the aim was to allow those affected by the war on drugs a chance to open a dispensary.

The city approved 10 dispensary applicants in April 2021, selected from more than 125 applications. But the applicant approvals were only the beginning of the licensing process, not a guarantee that the applicants could open a dispensary.

The applicants were also allowed to find outside funding partners as long as the social equity or what the city calls core applicants retained 51 percent of the ownership.

Jackson, a South Sacramento native, who had several relatives arrested for possession of marijuana before legalization, owns 51 percent of Embarc Sacramento.

Carpenter owns the other 49 percent.

Her husband is one of California’s most influential power players when it comes to legalized marijuana.

Carpenter’s husband, Moore, helped develop Proposition 64, the California ballot measure in 2016 that ended up legalizing recreational marijuana. He was also the campaign manager for the proposition.

Moore is Co-founder & Chief Strategy Officer of Embarc, the company Carpenter serves as CEO. Moore said he does not have an ownership interest in the Sacramento dispensary but does in the company’s five other dispensaries.

Moore has also consulted for hundreds of other California dispensaries, helping them win license approval.

Other major players involved

Embrac won’t be the only cannabis company profiting from teaming up with a social equity partner in Sacramento.

One of the largest cannabis companies in the U.S, The Shryne Group, has teamed up with another approved applicant, Mark Mabatus, who plans to open a Sacramento dispensary, city records show.

The Shryne Group owns more than 20 Stiiizy dispensaries in California and Michigan, cultivation and manufacturing facilities and produces its own product line of vape pens and other marijuana products under the Stiiizy brand.

Mabatus, who identifies as a disabled Air Force veteran in his application, stated he has 51 percent ownership in his planned dispensary and that the Shryne Group holds the other 49 percent.

Mabatus told the city of Sacramento in his application that he is a victim of the war on drugs because his father has been in jail since he was 5 years old for drugs and other offenses under the state’s three strikes law. He also said his grandfathers’ and uncles’ 12-acre cannabis cultivation facility was confiscated by the federal government in 2011 as part of the war on drugs.

The Shryne Group said on its website that it plans three new dispensaries in Sacramento, so it’s unclear if it’s also teaming up with other approved Sacramento social equity applicants.

Another approved applicant to open a Sacramento dispensary includes Glass House Farms, a major California cannabis dispensary and cultivation company, as part of a consortium that will control 49 percent of his company.

Only four of the 10 approved dispensary applicants chosen by Sacramento officials list their business partners, but five applicants say they will be having minority investors control 49 percent of their company. A seventh applicant is self-funded.

Shryne Group officials and Mabatus did not respond to requests seeking comment.

Eligibility rules

Sacramento rules are broad in terms of a social equity dispensary applicant qualifying for the program. If an applicant isn’t directly convicted of a drug crime, a family member being arrested also qualifies or an individual living in a low-income area of Sacramento for five years.

None of the 10 applications approved to open a dispensary in Sacramento would qualify for Los Angeles’ more rigid social equity dispensary program that was amended in 2020 after criticism that eligibility requirements were too easy. Applicants now have to be arrested for a prior drug offense to qualify.

Oakland and San Francisco, on the other hand, have more board rules for applicants.

Jackson stated in his city application. that the arrest of family members, along with health concerns, led him to avoid alcohol and drugs.

He’s now had a charge of heart as least as far as cannabis goes. He stated in his application that when he saw Carpenter and Moore become involved in cannabis dispensaries (outside of Sacramento) he decided that a local, community-based approach to selling legalized marijuana through a dispensary could be beneficial.

Jackson said selling cannabis through a dispensary requires all products to be tested, under state rules, ensuring the purity of products, compared to those sold illegally.

It’s unclear if any of the other nine Sacramento dispensaries will open this year. Only two other dispensary plans, besides the Carpenter and Jackson application, have received a conditional use permit, which is required before a formal business permit can be granted by the city.

One dispensary application stalled in September after drug rehabilitation center officials objected to plans for a new South Sacramento dispensary near their facility. The city planning and design commission adjourned a hearing. to decide whether a conditional land permit could be granted, without making a decision.

The commission is now not expected to make a decision on the matter until sometime next year.

The next dispensary

Another approved applicant for a social equity dispensary, Maisha Bahati, has received her conditional use permit and says she is on track to open by next April at a location on J St. and 23 St.

Bahati said the city process to open a dispensary takes months. She had had to wait six months alone for her conditional use permit hearing.

Bahati is unique among the 10 applications. She and her three business partners have not given up 49 percent of their business to outside funders. Bahati’s advantage is that she has run a successful Sacramento cannabis delivery service since 2019.

Bahati in her dispensary application said she grew up in Meadowview, a low-income area of Sacramento “that still suffers from the economic disparities caused by disproportionate drug enforcement.”

She said her life changed when she convinced her mother as a junior in high school to allow her to go to school in a suburban area.

“I went from seeing armed police officers stationed in our school parking before and after school,” she said, “ to interacting with college counselors, participating on the speech and debate team and making the cheer leading squad my senior year.” .

In an interview, Bahati said she understands that most of the winning dispensary applicants will need outside funding to fulfill their dream of opening a dispensary.

“A storefront dispensary is the most sought-after license in cannabis,” she said, because of the profit potential.

But Bahati said banks won’t make loans because of federal prohibitions on marijuana businesses, leaving those who want to open a dispensary to find outside funding from a cannabis company.

“Especially for storefront dispensary, you’re looking at a million plus to open,” she said. “So, you have to make the decision to either partner up or lose your dispensary license”

Use it or lose it

The Sacramento-approved applicants for dispensary licenses will have until April 2024 to open or they will face relinquishing their opportunity to run a licensed dispensary.

Moore said it took Embarc almost a year and a half year to negotiate the city process to open the new dispensary even after being selected for the license in April 2021.

He said that includes filing hundreds of pages of required documents that need to be filed under the city program.

The process is so complicated, Moore lamented, that he is not sure that all the approved applications may make the three-year timetable.

“We’re just glad it’s over and the dispensary is open,” he said of Embarc’s new Sacramento dispensary.

This story was originally published November 8, 2022 at 6:00 AM.