Judge issues Injunction barring Marijuana Licenses in San Bernardino

By Jim Steinberg

SAN BERNADINO>>Judge Rules a lawsuit alleging a “pay for play” environment surrounding the city of San Bernardino’s recent award of cannabis licenses has enough merit to proceed and awards injunction – all suspect licenses have been blocked.

A San Bernardino Federal Court Judge ruled on Wednesday morning that a lawsuit alleging a “pay for play” environment surrounding the city of San Bernardino’s recent award of cannabis licenses has enough merit to proceed. The lawsuit alleges that licenses were granted to numerous businesses that failed to meet city developed requirements related to zoning and the city’s own general plan, a blueprint of what San Bernardino should look like for years to come.

“The issuance of all licenses were illegal due to the tainted process from the apparent campaign donations by otherwise disqualified applicants being allowed to obtain licenses,” said the lawsuit filed by Ben Eilenberg, a Riverside attorney.

In the hearing held this morning 8:30 a.m. Wednesday, Feb. 27, in Department S29 of the San Bernardino County Courthouse, 247 W. 3rd Street, Eilenberg argued vigorously that there was enough evidence for the suit to move forward and for the suspect licenses to be blocked and Judge Frangie agreed issuing an injunction barring those licenses from being used to open cannabis operations in San Bernardino.

“By issuing the temporary restraining order Judge Frangie inherently made a finding that we are likely to succeed on the merits of the case,” Said Eilenberg.

In an earlier interview, Eilenberg said he was going to ask Judge Janet M. Frangie to undo the council’s faulty license award process until the matter can be fully adjudicated.

In Monday’s filing of Washington, LLC, MTV Holdings, LLC and Bubba Likes Tortillas LLC versus city of San Bernardino, Andrea Miller and (John) Does 1-100, Eilenberg alleges “there was a pay for play” scheme involving the marijuana permitees, City Manager Andrea Miller, and former Mayor Carey Davis’s campaign funder, Scott Beard and the marijuana groups that should have been disqualified under municipal code and state law.”

“The marijuana groups texted to confirm campaign contributions to the former mayor’s campaign, both on and off the books,” the lawsuit alleges.

As part of the lawsuit, an exhibit shows text messages suggesting that some of the groups who did win contracts were giving money to the Davis campaign.

Eilenberg declined to say how he obtained those text messages.

“These same businesses received marijuana permits from City Council despite being disqualified,” the lawsuit alleges.

“This was accomplished through a combination of intentional acts by some within the city, and incompetence through others at the city directed by those taking intentional acts,” the lawsuit says.

QUESTIONS ABOUT APPROVAL PROCESS

Many businesses were awarded licenses when their projects should not have qualified for even submission of an application because they were promoting unacceptable locations in terms of zoning or general plan considerations, the lawsuit alleges.

Yet in documents presented to city council, their scores in both these areas were suddenly above other businesses which had no such zoning or general plan flaws, the lawsuit contends.

For example, AM-PM MGT Inc., doing business as Cold Creek Organics, was denied a “Zoning Verification Letter” because its proposed site was within 600 feet of eight residential dwellings, the lawsuit said.

With no zoning approval letter, Cold Creek’s application, which seeks to manufacture cannabis products,  should have not been allowed to proceed further, as per the city’s municipal code, according to the lawsuit.

Nevertheless, Miller, the city manager, “allowed the application to proceed and awarded it a high enough score to allow it to receive a permit.”

That permit, along with 15 others, were awarded during the Feb. 21 City Council meeting.

The plaintiffs allege that Miller did not advise the City Council not to issue permits to the ineligible applicants.

On April 28, 2018, AM/PM management was notified that following an inspection of the property and the neighborhood, a few days earlier, that the site did not meet the zoning requirement because eight residential parcels were within the 600 foot boundary, according to a city letter sent to AM/PM.

Asked how the proposal ultimately won a license when it failed the zoning requirement, AM/PM owner Mark Estermyer said, “you will have to ask the city.”

A text message, which is included in the lawsuit and attributed to Estermyer, reads: “AMPM has give (cq) the association (of cannabis-related businesses) a total of $4,500. Plus additional contributions to help us that David doesn’t want counted…$5,000 towards the Mayors campaign. Since we start this April, AMPM is at 9500.”

Asked what this is about, Estermyer replied by text message: “No idea, no money was ever given to the Mayor’s campaign. AMPM gave money to the association” which was related to Measure W, the marijuana tax and Measure X, which was marijuana business regulation.

Those measures, approved on Nov. 6, 2018,  were the real topic, Estermyer said,  of another text message chain that is part of the lawsuit.

The lawsuit alleges that another text conversation describes money and donations to former Mayor Davis’ campaign and it goes like this:

Feras:?

Chad:?

Victor:?

Jacob:?

Mike Lee:$2.5 K

AMPM:$2K

Am I missing anyone?

Estermyer, in an interview, was adamant the conversation in this text was about the two Measures and has nothing to do with mayoral campaign finances.

Estermyer said that Scott Beard’s only purpose for his role in setting up a meeting was to bring the city and cannabis businesses together was “to do the right thing for the city and the industry.”

THE HEARING WEDNESDAY MORNING

Less than half of the 16 cannabis-related businesses issued city of San Bernardino licenses on Feb. 21 were compliant with both the Zoning Verification Letters and the General Plan, plaintiff’s attorney Eilenberg alleged in legal documents filed to support a temporary restraining order blocking San Bernardino from issuing marijuana permits.

The plaintiffs asked Judge Frangie to set a preliminary injunction hearing to restrain the city of San Bernardino from issuing or allowing the use of the licenses issued.

In these hearings, the plaintiffs are not asking the court to “address the corruption issue, only its effects,” Eilenberg wrote, in documents filed Monday, Feb. 25.

The filing asks the court to consider immediately staying the implementation of all newly approved cannabis licenses or delaying the implementation of the implementation of what the filing calls  “illegal” licenses, meaning issued despite Zoning Verification Letters and despite noncompliance with the General Plan.

ANOTHER SAN BERNARDINO INSIDER CONNECTION

Former long-time San Bernardino City Attorney Jim Penman represented Central Avenue Nursery LLP which was awarded a contract, among the partners in this venture is Wendy McCammack, a former San Bernardino city councilwoman.

“We will argue that there is not enough evidence to warrant throwing out the award of all the licenses,” Penman said.

“Our goal today and throughout this case is to force the City of San Bernardino too simply comply with its own laws and the laws of the State of California,” said Eilenberg. “There are many applicants whose applications do not violate those laws who were not given a fair hearing during the process and this needs to be remedied.  We look forward to the court fixing this situation and bringing sunshine, light, transparency and the best operators to the City of San Bernardino.”