By Teresa L. Benns
HUNTINGTON BEACH, Calif.— One of the marijuana industry’s leading online news websites is reporting widespread corruption across the state of California as cannabis-related businesses crowd in to file for local licenses and municipalities and county governments scurry to maximize profits, in some cases illegally.
Marijuana Business Daily (https://mjbizdaily.com) reported last week that rumors of backdoor wheeling and dealing between companies and government officials have circulated in the state for years before the drug could be purchased legally. Legalization, however, has brought business dealings out in the open because local licenses must be purchased before would-be retailors and cultivators can set up shop.
This differs from Colorado law, which requires license seekers to obtain state approval first before filing applications with municipalities or counties.
While the article points out that the local bureaucrats are more easily coerced than state officials and this is what is causing the problem, some problems have been encountered in Colorado with State officials. MED enforcement officer Renee Rayton was indicted by a grand jury in June of 2017 for agreeing to work as a “compliance consultant” to the tune of $8,000 per month for a company presenting as a legal cannabis operation.
The company, however, was never registered in Colorado and shipped millions of dollars of cannabis out of state. The state of Washington also has reported problems with cannabis and government corruption.
Recent evaluations of licensures by MED also raise questions about the thoroughness of background checks completed by the agency and the character of those permitted to obtain the licenses. Other questions have been posed concerning certain business practices that suggest the potential for criminal activity.
Some of the situations described in the article are not unlike recent deals with the town of Moffat and raise questions about other grow applications with Saguache County which have later proven suspect or at least problematic.
In Huntington Park, several marijuana dispensaries have sued the town in federal court, claiming town officials conspired with private companies to pre-arrange the award of a limited number of dispensary permits to certain companies. This caused other bidders to forfeit their $5,000 application fees. Later a federal judge declared the city’s licensure ordinance unconstitutional, placing an indefinite hold on retail licenses in the city.
A licensed retailer in San Francisco filed suit against the county’s board of supervisors for his failure to obtain a license when his competitor, who had allegedly donated money to the supervisors’ political campaigns, was granted a license instead.
The Federal Bureau of Investigation (FBI) is investigating the case of a mayor and vice-mayor in Adelante who may have taken bribes to expedite a marijuana business approval there. And a planning and building department inspector in Humboldt County was arrested on fraud and bribery charges, some of them involving marijuana businesses.
MJBiz Daily notes several other jurisdictions are preparing to file similar cases. An attorney for the Huntington Park plaintiffs predicted there would be a host of such cases in the future. One comment in the article especially stands out: The key is whether companies are dealing legally and transparently with public officials.
A California marijuana industry official maintains that generally government entities are trying to do the right thing and denies there is any more corruption in the cannabis industry than in any other industry.
But those cited in other articles disagree, noting that the behind-the-scenes arrangements with local officials taking hush money to turn a blind eye to illegal grows dates well back into the last century in California, and has become a part of the culture and the day-to-day business of some municipalities. The article notes that while the court cases are all pending, there is definitely problems looming for California’s cannabis entrepreneurs.