WATSONVILLE >> During its regular weekly meeting on Tuesday, the Watsonville City Council voted 5-2 to approve amendments to the Watsonville Municipal Code regarding the city’s cannabis equity program.

These changes included updating the language to refer to approvals by the city as permits or permittees rather than licenses or licensees. Additionally, the council removed eligibility criteria for businesses that are at least 50% women-owned, as the criteria reportedly violated the Equal Protection clause from the U.S. and state constitutions.

Associate Planner Ivan Carmona said Watsonville added a new chapter to the municipal code providing regulations for medical cannabis cultivation and manufacturing in the city in 2017 and repealed its prohibition on recreational cannabis businesses a year later. In 2019, the council adopted an ordinance establishing a cannabis equity program to allow legal cannabusinesses to enter the marketplace.

However, the Cannabis Equity Program grant was modified at the state level in 2023 as more cities developed their own programs, making the grant more competitive. Despite going through an equity assessment the previous year, Carmona said that the state found two deficiencies in Watsonville’s program. One was a subsection of the municipal code that violated the Equal Protection Clauses of the U.S. and California constitutions, which guarantee equal treatment under the law for people of all genders. The subsection reportedly violated these clauses as it allowed businesses at least 50% women-owned to be eligible for the program.

The other inadequacy cited was the limitation of one cannabis equity permit being set aside for each business category, which the California Governor’s Office of Business and Economic Development found to be too limiting and in conflict with the goals of the program.

In response, staff modified code language to remove the eligibility criteria for women-owned businesses as well as the set-aside permits for cannabis equity businesses.

Councilwoman Kristal Salcido felt the exclusion of criteria for 50% women-owned businesses was contrary to the goals of achieving equity, citing data that 36% of CEOs in the cannabis industry were women.

“We’re trying to encourage women owners to participate, so I think there’s other statutes in which this requirement has passed muster for any discriminatory analysis,” she said. “I’m not satisfied at this point with that answer that somebody just said so.”

Councilwoman Ari Parker agreed and said she did not want to vote on the matter that evening.

“I know college students all over who have studied our equity program and have looked at it and have been really positive about it,” she said. “I thought it was really very fully developed.”

Carmona said without changes to the amendments, the city would not be competitive in the application process and would risk not receiving grant funding as more jurisdictions with updated equity guidelines apply. Parker asked if the council was required to strike the eligibility requirement, and Carmona noted it would make Watsonville more competitive and in line with equity guidelines.

Parker asked if there was any rationale as to why the city was out of compliance.

“The rationale is we cannot discriminate based on gender or race,” said Carmona.

City Manager Tamara Vides said the council does not need to amend the ordinance to strike the language, but staff suggested it to maintain competitiveness for the equity grant.

“The council may choose not to do that,” she said. “We’ll still be able to apply. Whether we remain competitive against other applicants who are in compliance with the state guidelines, that’s to be determined.”

In a public comment, James Cunningham of BTW Industries said oversaturation in the cannabis industry has created a financial burden for many cannabis business owners.

“We’re just trying to pay our bills each month and build these brands and compete in the space as a family business that’s very locally run,” he said. “If we need to bring on resources, we have to do private funding because we can’t go to the bank.”

Cunningham said businesses would be greatly assisted by the equity program.

Jonathan Kolodinski, CEO of Creme de Canna Collective, said the industry “has dealt a level of compression that is greater than the bottom of the Mariana Trench.”

He continued, “I don’t think our business would be here if this grant hadn’t come through. Everybody hoped that we were gonna pave the streets with gold and that we’d all be able to do all these amazing things for our family and the people around us, but the reality is the state over-licensed, there’s more cannabis grown than can be consumed, it’s driven the value through the floor of everything, and as entrepreneurs, we’re having to compete with corporate behemoths.”

Salcido reiterated that she would not vote for the amendments because Watsonville already does not have any businesses that are 50% women-owned. Mayor Vanessa Quiroz-Carter agreed the language was an issue but still voted in favor to help the businesses.

“I don’t want businesses to not get the funding that are already here,” she said.

The council voted 5-2 to approve the amendments, with Parker and Salcido voting against.

In other business, the council unanimously approved a 13-lot subdivision for Habitat for Humanity homes on Airport Road and also appointed Vanessa Meldahl to the Planning Commission to succeed Martha Vega.