Is Oakland Becoming the Silicon Valley of Cannabis?
Entrepreneurs and investors are flocking to The Town in pursuit of California’s newest gold rush: the cannabis industry.
Photo courtesy of Mesh Ventures
This year, investment group Mesh Ventures opened its sprawling new “innovation campus” on Edgewater Drive. The 200,000-square-foot, multiuse location is now home to multiple established cannabis companies, including Kin Slips, Guild Extracts, and Dosist.
For the second year in a row, New West Summit chose Oakland’s Marriott City Center for hosting its cannabis technology conference.
EVB Gallery, in the Uptown just a few doors from Oaksterdam University, hosted the Stories from the Underground photo exhibition over the summer and continues to be the spot for cannabis industry parties and events, thanks in part to its consumption-friendly rooftop.
In short, as the Golden State continues to transition from a medical to a recreational market in 2018, Oakland keeps getting thrust further into the spotlight as a leader in legal weed. And for those who witnessed firsthand the gold rush madness of the early tech boom, the scene feels a little familiar.
“Oakland’s been the national leader in building a progressive cannabis industry,” said Adolph Ward, who is co-chair of the Oakland Cannabis Business Council, which is the new Oakland chapter of the California Growers Association (CGA), over email. “We were one of the first jurisdictions in the country to allow cannabis activity, the first to launch an equity program, and the first to offer licenses for-delivery-only businesses. And now that state licenses are being issued, we have the highest density of cannabis applications in the state, with more temporary permits here than in San Francisco and San Jose combined.”
The CGA is in the process of starting an Oakland chapter to focus specifically on The Town, which originally fell under the umbrella of its San Francisco chapter. “The challenges in Oakland are unique,” Ward explained. “We saw a need for a local chapter composed of existing operators with roots in the community and experience with overcoming issues in the newly regulated market.”
Oakland has long been a draw for advocates, activists, entrepreneurs, and investors looking to make an impact in the space, and the emergence of the adult-use market seems to have made the attraction even stronger. “I’d say 80 percent of our clients are cannabis or cannabis adjacent,” said Shabnam Malek, partner at Brand & Branch LLP, a law firm specializing in intellectual property and regulatory compliance.
When it was time for Malek and firm partner Amanda R. Conley to move from a virtual to a brick-and-mortar location, Brand & Branch chose Oakland. “In part, it was just sort of how things went, and, in part, it was that it is cheaper to get an office in Oakland than San Francisco obviously,” Conley explained. “But also Oakland is a really interesting place for the cannabis industry right now. It’s where so much is happening; there’s so much grassroots activism happening here.”
The city’s reputation as a hotbed of political activism is as much of a draw to the local weed industry as the industry itself. “We just saw the social equity and the racial justice issue brewing in the legal cannabis industry, and Oakland is the epicenter of California weed culture in a lot of ways,” said Ebele Ifedigbo, co-founder and co-executive director of The Hood Incubator. “The city of Oakland was already trying to figure what to do — they weren’t just turning a blind eye; they were trying to be proactive.”
Through community events, educational workshops, and its accelerator program, The Hood Incubator works to ensure that black and brown people are well represented among the entrepreneurs capitalizing on legal cannabis. Ifedigbo said of the decision to base Hood Incubator here, “It all made sense, versus another city like New York City, where, yeah, there’s a lot of people, but maybe the communities aren’t as collectively organized and the legislation around marijuana is not as far along as it is in California.”
From the 1995 founding of the Oakland Cannabis Buyers Club and the invention of the medical patient identification card, to the dispensaries that popped up in the aftermath of Prop. 215’s passage, Oakland has been part of the legalization narrative from the beginning. Still, The Town’s transition into the adult-use market has not been easy.
Oakland’s legal cannabis industry is forecast to eventually create jobs for more than 12,000 people and generate $16 million in annual tax revenue for the city. As wonderful as that sounds, the increasing number of entrepreneurs seeking to launch their businesses here has overwhelmed the city to the point that it’s had to hire additional staff to review and process applications. Critics also say the city’s complicated and cumbersome cannabis equity permit program, which was designed to help people of color impacted by the Drug War, while well-intentioned, has been difficult to navigate. And businesses have been trying to get their regulatory ducks in a row while also paying rent on a location, retaining lawyers to draw up contracts, and setting aside funds to pay for licensing fees and other operational costs. For many green rush entrepreneurs, costs really add up, especially since they can’t make money in the meantime as they await permitting and financing.
“We were around for about five years; at a high point, we were in about 30 different dispensaries in the Bay Area,” said Terryn Buxton, owner of cannabis brand Oakland Extracts. But the company can’t legally operate while it works its way toward compliance under the new city and state laws, and Buxton is hoping that forming a partnership with a licensed lab will ease some of the burden.
“We’re just doing that until we can actually raise the money to build out a lab,” he explained. “But because of permit compliance and all that’s required, it’s going to cost over $1 million and take almost a year — even if we started today. We can’t afford to get a building and hold the rent for eight or nine months before we can even start making a dime.”
Buxton transitioned from the underground into the legal market more than two decades ago, working on and managing grow operations before learning the retail side as an employee at Harborside and Magnolia dispensaries. For the Oakland native, the city’s high profile as the land of weed opportunity has been a double-edged sword.
“It’s great for all these people who aren’t actually from here, who are coming here and taking advantage of our permissive environment and making lots of money,” Buxton said. “That’s why every real cannabis company’s here. It’s because Oakland’s always been chaotic and was super permissive for a while.”
But Buxton also recognizes that this wasn’t a complete surprise. “We can’t resent this too much. People wanted this to be legal, and this is what was going to happen when it got legalized. So, I kind of feel like these are all the unintended consequences of legalization, which we’ve been screaming and begging for 50 years.”
So is Oakland becoming the Silicon Valley of weed?
“There’s clearly an opportunity for Oakland to become the same kind of hub for innovation and creation in cannabis that Silicon Valley has been for technology,” said Ward of the CGA. “At the same time, there’s a lot that’s unique to Oakland. Cannabis here predates the name Silicon Valley itself and has deep roots in the community, so we need to shed light on what’s occurred here in the past at the same time as we stay focused on the present and future.”
Ifedigbo agreed that while there are parallels, an altogether different foundation is being set thanks to lessons learned. “I actually feel that part of our vision at the Hood Incubator is to make sure that the weed industry does not become Silicon Valley in terms of equity,” said Ifedigbo. “We want to make sure, that now that this industry is growing and expanding, that we have a fair stake.”
Staying aware of what fueled legalization in the first place — giving patients access to medicine, ending the disproportionate arrest and incarceration of black and brown people — is integral to the cannabis industry, and that’s part of what makes it special.
“The equity program will be a big part of how Oakland fares in the future,” Shabnam said. “People have their eye on how the shifting legal landscape is going to positively benefit or impact those who were most affected by the War on Drugs. People are going to be watching to see what happens in Oakland in particular.”
Conley agreed, adding, “We see this industry as an opportunity to do things differently in terms of having greater representation, not just white men. That’s going to require a lot of intentionality and a lot of policy changes and a lot of evaluating and reevaluating and continuing to adapt.
“If anyone can do it, maybe it’s Oakland.”