LA Magazine appears to have uncovered some serious corrupt practices in SB County. The ramifications are going to run and run
Here’s a taster
In California it is rare for a city to run its own marijuana-growers approval process due to concerns about conflicts of interest and the potential for corruption. Dispensary applicants spent enormous sums preparing the applications and lobbying the city. Malante Hawthorne, co-owner of Coastal, a dispensary that eventually secured one of the licenses, said his partnership alone spent close to $1 million in the process.
In July 2018, following an eight-month review, three of the eight recreational cannabis dispensaries were selected. Golden State Greens, owned by Wagner’s friends Knopf and Anderson from San Diego, was the recipient of one of the coveted licenses.
“I was shocked when the scoring came in,” McFarland of Santa Barbara Care Center recalls. “After I applied, they refused to let me know what the scoring was. I wanted to know my score so I could better my application, and they wouldn’t tell me until I got word a couple of months ago that I was out. They eliminated me at round one, and it was two years ago when I applied.”
McFarland is hardly the only applicant who found the process baffling. In October of 2018, a lawsuit was filed against the city on behalf of another rejected dispensary applicant, Sunday Goods Santa Barbara, Inc.
“When the city launched a competitive application process to award permits for storefronts for the sale of commercial cannabis, it had to abide by the highest standards of fairness and integrity. Unfortunately, it did not,” the lawsuit states. Other applicants have complained but were unwilling to speak on the record because they have permits before the city and their livelihoods depend on their approval.
“Adam K and Micah,” McFarland comments, “are all from San Diego and Wagner knew them personally.”
Shortly after receiving the green light for the dispensary on State Street in the heart of downtown, without any construction and without opening the store for even a day, Golden State Greens flipped the license, selling it to Jushi, a company based out of Boca Raton, Florida. The purchase price was not disclosed, but multiple knowledgeable sources within the Santa Barbara weed business community speculate the price was approximately $7 million dollars, $5 million for the business and $2 million for the building.
Even though Golden State Greens never opened a store and simply sold the license at what many believe was a windfall profit, the city did not restart the scoring process or notify the next company that had likely spent significant funds to prepare an application. If, as Wagner said, “it was close,” why wouldn’t the next-highest-rated applicant take over the license?
Furthermore Jushi was not scored on the point system at all. Instead MuniServices, a municipal auditing company was assigned to simply evaluate Jushi’s ability to purchase and build out the property.