“Corruption, Cronyism, Political Maneuvering”: Shocking Nobody, Pay to Play Schemes Uncovered at the Root of Cali’s Struggling Cannabis Market

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At a time when thousands of eligible applicants are on the verge of being starved out of the California cannabis industry before they can even get into it, we are starting to see real evidence coming to light confirming the age-old suspicions about lawmakers and their lack of ethics.

When Prop 64 was passed back in 2016, most grassroots cannabis activists and advocates were actually not in favor of the new law as it was written. The flaws in the legislation became apparent immediately, and to the credit of the bureaucratic agencies overseeing this enormous endeavor, they did spend a majority of 2018 asking for feedback from the community and trying to implement some improvements.

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Still, there are over 10,000 temporary cannabis businesses licenses that are due to expire this year and as many as 6,200 are set to expire by April and the state has no plan in place to extend or reissue those temps, nor does it have the manpower to process all of the applications before they inevitably expire.

So far, the state has issued just 52 annual licenses to serve what is touted as the largest cannabis market in the world. Only nine licenses have been issued for cultivation – in the entire state.

But before you can even get to that frustrating stage, you have to get past your local lawmakers and another major problem with Prop 64 is how much decision-making power it bestows on individual cities and counties when it comes to who will get the proper local permits in order to satisfy the state to receive an operating license.

That power is now resting idly in some of the most ass-backwards city council chambers and mayors offices in the state and the result is vast swaths of California currently unserved by the cannabis industry. These “pot deserts” make up a large portion of the inland/eastern sectors of California and that is exactly where we find a couple stories of corruption, cash, and cannabis.

In October of 2017, lawmakers in Kern County held a vote to ban all commercial cannabis activity within their jurisdiction. Kern County Supervisor Leticia Perez put forth the only vote against the ban and it was soon revealed that her husband and his consulting firm had conflicting financial interests in the legal cannabis industry, casting a shadow of impropriety over her vote on the issue.

One of two separate misdemeanor charges against Perez stated that she “did make, participate in making or attempt to use her official position to influence a government decision in which she knew or had reason to know she had a financial interest.”

She vehemently denies the charges against her and her case has carried on to this day.

But now two people have come forward with claims that they paid Perez’ husband $25,000 specifically for special access to officials who could be instrumental in helping these whistleblowers expand their cannabis operations.

Stephanie and Martin Smith say that they met face to face with Perez in her office on April 5th, 2017 due to their relationship with, and payment to, her husband through his consulting firm.

This is a classic pay-to-play scheme and is at the heart of all that is wrong with our political system today. These latest allegations are damning for Perez and now her hearing has been delayed once again until May. But remember the name Stephanie Smith, we’re just getting started.

A bit further south from Kern County, everyone from local investigators all the way up to the FBI are having a hell of a time trying to wrap their heads around just how deep the corruption goes with regard to municipal officials in San Bernardino.

On February 21st of this year a vote was held to decide the fate of 39 applicants vying to kick off commercial cannabis operations in the region. Of those 39, just 16 were approved even though the area has supported dozens of quasilegal storefronts and businesses for years under Prop 215.  

But the low number of approvals is not the controversy here, it’s how they got approved that has local cannabis advocates raising red flags and pointing fingers.

After further examination, it appears that at least seven of the sixteen approved applications are clearly out of compliance with the guidelines supposedly mandated by the county and its decision-makers. Additionally, at least four of the applications that were denied have been found to be fully compliant.

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Now evidence is emerging of a deep-rooted kickback, or pay-to-play – scam where city officials were allegedly shaking down applicants from the cannabis sector for campaign donations or outright bribes in order to gain favor with the people who would decide the fate of their proposed businesses.

Allegedly, seven of the approved applicants actually received some form of “letter of authorization” back in December, months before such approvals were granted.

One day before that crooked hearing on February 21st, law enforcement officers from San Bernardino traveled nearly 80 miles across county lines into Pacific Palisades to bust into the home of – guess who? – Stephanie Smith, the whistleblower at the heart of the Perez case in Kern County.

It turns out that Smith was one of the applicants hoping to have her prayers answered on the 21st, only to answer her door to a search warrant on the 20th.

Smith shares the home with her significant other, a plastic surgeon named Dr. Craig Alan Bittner, and four of their five children.

Once inside, officers seized $200,000 in cash and a trove of painkillers that Dr, Bittner had stored for his medical practice. The money was horded due to the fact that Smith leases roughly two million square feet of industrial space across the state and much of it is filled with cannabis businesses that, like her, are not allowed to bank their money and must instead deal in cash.

They arrested Smith and denied her $30,000 bail for two full days claiming that the funds to get her out could not be sourced from a “criminal enterprise”.

She was released on February 22nd and by the 25th she and her attorney had filed an explosive lawsuit against the city of San Bernardino alleging that “over 50 percent of the issued licenses were illegal”.

In her suit, Smith walks us through the process from the inside since, she claims, she saw it all go down.

Accused city officials are trying to pass her claims off as sour grapes for having been denied a permit, and they defend their process for granting them.

But Smith ain’t playing, and she hired a private investigator who has uncovered texts and emails between city officials and prospective applicants specifically discussing how to exchange money for favors.

It appears that her accusations have merit, and the fact that so many of the approved applicants were so clearly out of compliance only backs her up. The San Bernardino Superior Court seems to agree as well and has issued temporary restraining orders to the seven approved applicants until the mess is sorted.

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Even more recently, another lawsuit was filed against the city, this time by Connected Cannabis Co. who present many of the same gripes as Smith with the added demand that all 16 approved applications be scrapped and the entire process started over.

Attorney Jeff Augustini says, “the credibility of the city’s selection process” has come into question “amid growing rumors and allegations of corruption, cronyism, political maneuvering, and the use of the process to score political points and to carry out political vendettas.”

They point to City Councilmember Wendy McCammack who has a financial interest in Central Avenue Nursery, one of the applications that failed to meet the basic criteria but was mysteriously approved anyway.

City officials now blame the undue pressure put on them by the state and the impending expiration of so many temporary licenses for their undue diligence. They are also pointing a crooked finger at a company called HdL who was hired to consult the city on how to optimize the application process.

It seems there is enough blame to go around and it all stems from a flawed piece of legislation that appears to be incentivizing greed and corruption.