State launches probe of cannabis licensing to ‘clean house’ of corruption
Corruption in the California cannabis industry has become widespread and outright.
There have been pay-to-play schemes, including a demand for cash in a brown paper bag for a marijuana license, threats of violence against local officials, and city council members accepting money from cannabis companies even when they regulate them.
Those problems and more were uncovered by a sweeping Times investigation last year. Now state officials are launching an audit aimed at curbing bribery, conflicts of interest and other wrongdoing.
The investigation, requested by Assemblyman Reggie Jones-Sawyer (D-Los Angeles) and authorized Wednesday by the state’s Joint Legislative Audit Committee, comes more than six years after California voters approved Proposition 64, the A ballot measure that legalized recreational cannabis and unleashed a wave of corruption that has affected local governments in rural enclaves of Northern California and towns like Calexico near the border with Mexico.
Other state legislators proposed hearings and reforms after The Times’ investigative series “Legal Weed, Broken Promises,” which also highlighted the failures of public officials to stamp out the illegal cannabis market and protect workers who work and die in The farms.
State auditors plan to identify six jurisdictions with licensed cannabis businesses and review the criteria used to approve permits, reviewing local governments that have been rocked by corruption allegations and others that appear to have fewer such problems.
They will be looking for patterns in the licensing rules that indicate whether certain practices are “more susceptible to fraud and abuse,” state Auditor Grant Parks told lawmakers Wednesday. They will also review a “pretty good sample” of cannabis permits to see if local authorities followed the rules they had set, he said.
The findings could form the basis for legislation and new regulations governing licensing, Parks said.
In an interview, Jones-Sawyer hailed the move as a step toward reform.
“If we don’t clean the house, no one else will. I think this will show the public that we take corruption very seriously,” said Jones-Sawyer, who declared himself the state’s “cannabis policeman” after the publication of the Times investigations.
Proposition 64 left final business licenses in the hands of cities and counties. Part-time local elected officials, often underpaid, became gatekeepers of decisions potentially worth millions of dollars to business owners in the hyper-competitive cannabis market.
The dual state system of state and local licenses is widely blamed for creating fertile ground for corruption. The Times investigation uncovered a potential six-figure bribery demand by the former mayor in Baldwin Park, later corroborated by a federal plea deal, and other potential conflicts of interest across the state.
At Wednesday’s hearing, Amy Jenkins, representing the California Cannabis Industry Association, blamed local regulations for the corruption problem, arguing that measures like license caps allowed city leaders to pick winners and losers in the market and open bribery opportunities.
Less than half of California cities and counties allow any type of cannabis business (retail, cultivation, manufacturing, or other types of licenses) to operate within their borders. The audit, Jenkins said, could lead to more “liberal” local regulations that reduce payment opportunities and allow more cannabis businesses to open.
“Legal cannabis has failed and will continue to fail until we can fully integrate cannabis into our economy,” he said.
Assemblyman Jim Patterson (R-Fresno) agreed that there was an “undercurrent of misconduct” in cannabis licensing. He suggested that his own community be one of those examined to determine which practices are least likely to lead to corruption.
“Fresno is now the fifth largest city in the state of California, it is the capital city of a major region of the state. Whatever it is, I think the Fresno region should be considered a part of that,” Patterson said.
Previous attempts by Jones-Sawyer to investigate corruption in the marijuana industry were thwarted, and lobbyists from local communities argued against such proposals, calling them politically motivated, he said.
But with the Times series on the failures of Proposition 64, a new committee chairman and the freedom to choose which cities to target, Jones-Sawyer said she was finally able to muster enough support to pass the audit.
No one at Wednesday’s hearing opposed the plan.
“I had to fight just to get it heard until now it’s a unanimous decision, I think people now understand how important it is to uncover corruption, even if it’s just one elected official,” he said.