Sacramento’s Cannabis Cronyism

Last week we reported California’s legal recreational and medicinal cannabis industry is not only “the biggest government-sanctioned market in the nation,” but also the “biggest legal marijuana market in the world,” according to a new report issued by the Government Accountability Institute. However, the reach of the unregulated market remains a major concern as estimates have revealed about $8.7 billion in black market sales of the total California market, which was $12.0 billion in cannabis and related products in 2019.

The GAI says, “evidence suggests that the current California framework allows for increased corruption in a system where ‘money talks.’”

GAI reported on one of the key individuals linked to Sacramento’s cannabis licensing scandal, Joe Devlin, an experienced political consultant who helped shape the policies and standards of the local and state cannabis markets and eventually became Sacramento’s first “Cannabis Czar.”

Even though Devlin was terminated as Sacramento’s “Cannabis Czar,” five weeks later, Devlin became vice president of new market development at Ikänik Farms, which offers, “handcrafted cannabis brands,” GAI reported.

But, the tangled web GAI uncovered was that Devlin had granted a cannabis cultivation license in September 2017 to Kimberly Cargile, for one of her other companies, which she then transferred ownership of the permit to a stock corporation that Cargile registered under the fictitious business name A.T.A.C.H.S.  Joe Devlin was the signatory authorizing the permit on behalf of the City.

“By spring 2019, Ikänik Farms “acquired” ownership of THCA Inc. from Cargile and listed it as an asset on a corporate presentation document to the City of Pleasant Hill.41 Based on the most recent California Secretary of State filing, Ikänik Farms CEO Brian Baca is listed as the president of THCA,” GAI reported.

We also reported politicians and dozens of former government officials are involved. GAI found many left government to work for cannabis companies and the lobbying firms representing them. And the tangled web of state and local regulations has only boosted corruption.

“With its new hire in place, Ikänik Farms not only opened its new administrative office in the capital, but also touted ‘the regulatory environment that Devlin helped shape in Sacramento as part of its reason for choosing him, including the generation of $250 million in annual gross sales from the local cannabis economy,'” GAI reported.

“At present, Ikänik Farms can be counted among the exclusive companies that have a foothold in Sacramento’s booming cannabis market. Moreover, corporate updates have revealed that the company is in the midst of opening one of California’s few cannabis lounges in late 2020, which would be the ‘flagship Ikänik Farms dispensary and consumption lounge in Palm Springs.’ The property owner for this future lounge is Kathy Vercher, president of Spearmint Rhino Gentlemen’s Club, a leading adult entertainment establishment in the United States.”

More recently, the City of Sacramento announced it has been awarded $1.8 million in state funding to increase equity in its local cannabis industry. The funding — part of the “Cannabis Equity Grants Program for Local Jurisdictions” — comes from the Governor’s Office of Business and Economic Development, in partnership with the Bureau of Cannabis Control.

The grant program “seeks to advance economic justice for populations and communities disproportionately affected by cannabis prohibition by providing funding to local jurisdictions that are committed to promoting equity in the legal cannabis marketplace and eliminating barriers to entering the regulated cannabis industry,” the Governor’s office said.

Next: The Rise of the Sacramento “Pot King”

The Government Accountability Institute’s full study, Cannabis Cronyism, is available here. It covers California, New York, Florida, Illinois, Maryland, Missouri and Washington State.