The legalization of marijuana in California saw dozens of cities allow dispensaries in a bid for tax revenue. But as more opened up, civic corruption slipped in.
Ever since California legalized cannabis in 2016, the state’s weed market has become a multi-billion dollar industry. It’s estimated to be the largest legal market of its kind in the world. But whenever you get that much money anywhere; well, you’re gonna get political corruption.
Today, our investigation into how illegal moves around marijuana are plaguing city halls across the state. Read the full transcript here.
Host: Gustavo Arellano
Guests: L.A. Times investigative reporter Adam Elmahrek
More reading:
$250,000 cash in a brown paper bag.’ How legal weed unleashed corruption in California
Legal Weed, Broken Promises: A Times series on the fallout of legal pot in California
GUSTAVO ARELLANO: Ever since California legalized cannabis in 2016, the state's weed market has become a multibillion-dollar industry. It’s estimated to be the largest legal market of its kind in the world. But whenever you get that much money anywhere, well, you’re gonna get political corruption.
SYLVIA ORTIZ (TAPE): If you're not in bed with the right people, you're not gonna get in, you know. What's sad is that, you know, they're, they're ruining the whole process that all of us work so hard to make it happen.
GUSTAVO: So how did an effort to squash lawlessness create more lawlessness?
I'm Gustavo Arellano. You're listening to The Times, essential news from the L.A. Times. It's Wednesday, Sept. 21, 2022.
Today: the Golden State of ganja? More like the Grifter State. A multi-part L.A. Times investigation has found all sorts of shadiness in city halls across the state, from small forest towns to border cities — and everything in between.
Joining me to talk about just some of this is L.A. Times investigative reporter Adam Elmahrek. Adam, welcome to The Times.
ADAM ELMAHREK: It's good to be here.
GUSTAVO: Man, your investigation into the impacts of legal weed in California revealed all sorts of shadiness: like public officials that demanded cash from cannabis business owners to approve licenses; or government officials being threatened with physical violence over pot regulations…. elected officials accepting money from cannabis businesses, both through campaign donations and not through campaign donations. But one of the spots you focused on specifically was the city of Lynwood. Why there? And what'd you find?
ADAM: Yeah, Lynwood is one of these cities in what's famously known as the corridor of corruption. It's basically a part of southeast L.A. County where several towns have just had long-standing issues with corruption. Lynwood was actually one of the first towns in California to adopt recreational cannabis. And what we found there was basically a cannabis association was offering $15,000 in campaign contributions to any candidate directly in exchange for, uh, supporting legislation that they wanted.
ADAM (TAPE): When you saw this email and it said, you know, please sign the attached pledge from supporting our industry and see whether to receive a contribution from our organization. What was your first impression of this?
CANDICE NUNEZ (TAPE): Oh, I was selling my soul, honestly. Yeah.
ADAM: So Candice Nunez ran for city council in Lynwood back in 2018. At that time, cannabis interests had become a major power broker in the city's political machine. She was one of the candidates who the Lynwood Cannabis Assn. asked to sign a pledge card promising to fully support the association. In exchange the association then sent those candidates who signed the pledge a $15,000 check.
There's nothing wrong with campaign contributions per se, but when it's a direct quid pro quo, when it's explicitly in exchange for something, and this was written down in an email, this quid pro quo, that's when experts say that it becomes a problem. It could even cross the line into bribery.
ADAM (TAPE): Did you think of this as an attempt to bribe?
CANDICE (TAPE): After.
ADAM (TAPE): Afterwards?
CANDICE (TAPE): Yeah. Yeah. I didn't cash a check…
ADAM (TAPE): When you didn't cash the check.
CANDICE (TAPE): Yeah.
ADAM (TAPE): Uh…why did you ultimately decide not to cash the check?
CANDICE (TAPE): It just didn't feel right.
ADAM: So she never cashed it instead. She took a picture of it and gave it to us. We found actually two council members who accepted $15,000 contributions, another one who accepted $10,000. One of them denied that they had signed the pledge. The other one said he would've never signed it, it's an insult to the community, and he told them as much. Whether they did or not, it's an open question, but they deny it.
GUSTAVO: But they accepted the money?
ADAM: But they accepted the money. Exactly.
GUSTAVO: And how did those council members end up voting on issues related to cannabis in Lynwood?
ADAM: So they did end up voting for some things that the association wanted – they wanted to be able to sell their licenses – but not everything. So the association wanted lifetime licenses for their members. They didn't actually get that. The council took that part out and replaced it with a 10-year term for the licenses instead.
GUSTAVO: Hmm. So you've been covering civic corruption as long as I've known you – over a decade at this point – how bad in your roster of stuff that you've covered is Lynwood?
ADAM: The thing about Lynwood is not that it's like such astronomical corruption. It's really more the fact that we found so many instances of this kind of stuff going on across California, from Calexico on the border with Mexico, to Trinity County on the border of Oregon. It's the sheer volume of instances and allegations. It's been like a flood up and down the state ever since recreational cannabis was legalized by the voters in 2016.
GUSTAVO: What are some of the other stories that you and our colleagues were able to find? What were some of the least greatest hits, I guess?
ADAM: Yeah. You know, the most interesting one to me actually is from up north in Trinity County. Trinity is in the heart of California's park country. A place called the Emerald Triangle. It's a neighboring county to Humboldt. So sort of like the lesser-known part of weed country. But basically it's this impoverished county that banked all its hopes and dreams on pot.
BARBARA ‘BOBBI’ CHADWICK (TAPE): Our county needs revenue. We don't look over the whole millions of dollars.
ADAM: One politician there in particular was selling this dream: a local rancher named Bobbi Chadwick.
BOBBI (TAPE): We have a full team now. We did not. We have initiated the program environmental impact report for the county's cannabis program.
ADAM: She ran for county supervisor, promised that a regulated pot market would bring all these great things for this poor county. You know, services for senior citizens, better hospital care, higher-quality education – you name it.
BOBBI (TAPE): It’s unthinkable to me that we would, after the burden of, uh, the cost of regulation, drive out those few farmers that are willing to risk everything to be in the legitimate market.
ADAM: She even at one point told the voters at a community forum that she had no relationship to a cannabis farm. But what she didn't tell them was that her and her husband were quietly receiving hundreds of thousands of dollars in loan payments from a cannabis farm that had purchased their ranch, and this farm was lobbying the county for certain legislation that they said they needed, that they would benefit from, basically allowing them to grow more pot. And she was the number one champion in trying to get this passed.
BOBBI (TAPE): I love America. And one of the things I love about America is that we don't like taxation without representation.
GUSTAVO: So what was Bobbi Chadwick’s response when The Times asked her about the potential conflict of interest?
ADAM: When we reached out to her, she denied to us that she had any financial interest in cannabis and said that we should look at other officials that maybe do.
GUSTAVO: How did you and some of our colleagues, Ruben Vives, Robert Lopez, Paige St. John, how did all of you even wrap your brain up around what cities, what towns, what municipalities to cover?
ADAM: You know, it was kind of a, just a mad sort of scramble up and down the state. This is something we have been following ever since recreational cannabis was legalized. Almost from the get-go, people were screaming about allegations of corruption. Every other day we'd be getting some tip, and Ruben Vives as well, about some corruption in some town related to pot. So we got together and we said, let's just do a big takeout investigation on what is happening with this. We basically just chased down the strongest leads we had and uncovered a number of instances of corruption that have not yet been reported.
GUSTAVO: How did cannabis corruption get so bad in California? More after the break.
GUSTAVO: Adam, you know my wife runs a business and has a liquor license and just seeing her apply for it, the state's so hardcore on regulating who can get a business license, what the regulations are, what you can sell – what not. And I understand, you know, you want to keep criminals out of that industry, going all the way back to Prohibition. What makes California's approach to marijuana different from its approach to liquor?
ADAM: Well basically, the difference is that California prioritizes local control over these cannabis sales licenses. So the primary decision-makers on who gets the license are at the city and the county level.
GUSTAVO: Which is weird because for the state it's like, for liquor, it's like the state's in charge of that. Not local.
ADAM: Primarily. Yeah. Although you can do a conditional use permit, but primarily the decision rests in the hands of the state. And so that's a big difference. And what happened is you have hundreds of local officials across these different counties and cities, very little scrutiny, oftentimes they're elected officials, and they're making decisions on who wins and who loses in the pot market. With one vote, they could turn somebody into a millionaire potentially. And that creates a lot of temptation on the side of the businessperson and the politician.
GUSTAVO: How did it end up to have so much local control over who gets cannabis, instead of putting most of that regulatory power with the state?
ADAM: Basically it was a deal cut early on when state officials were negotiating a bill to legalize cannabis. And the deal they cut in order to get local police departments and other local officials on board was to say, look, if you don't want to have cannabis shops in your city or your county, you don't have to have it. We're gonna keep control over these licenses entirely in your hands. And actually the majority of cities and counties still don't allow any licenses in their jurisdictions, which of course drives up the competition for the limited number available and creates even more ripe conditions for this type of corruption in the places that do offer it.
GUSTAVO: And one of those places that the investigation focused on was Calexico, right on the U.S.-Mexico border. What ended up happening there?
ADAM: So in Calexico, there were these major cannabis projects that were pitched, but they never materialized. They were supposed to bring in $700,000 in new tax revenue a year. The city's only taken in about $220,000 since first issuing the licenses. It's this little border community in Imperial County, it was desperate.
So basically in Calexico in 2019, a businessman known just as Manny met with a couple of local government officials, a councilman named David Romero and a city commissioner named Bruno Suarez. Manny had this really fancy getup. He drove a white BMW. He wore a leather jacket, guayabera shirts, clean-cut guy, NFL fan – just a guy you'd wanna have a beer with. And basically he wanted to open a dispensary, and Suarez said, we can help you, but only for a price. And that price was $35,000. That money was supposed to guarantee him, guarantee Manny a, a top spot in the queue for a license.
Long story short, in early 2020, they met at an Italian restaurant in the neighboring community of El Centro. They bonded over some beers and wood-fired pizza, headed to a parking lot, and Manny handed Suarez two envelopes with $17,500 in cash. They met again at the same Italian restaurant and Manny handed Suarez envelopes stuffed with the same amount in cash. Moments later, federal authority swooped down and arrested both officials. Manny, it turns out, was an undercover FBI agent.
GUSTAVO: Oh man. So what ended up happening to the two officials that he gave money to?
ADAM: Basically Romero and Suarez pleaded guilty to conspiracy to commit bribery and were sentenced to two years in prison.
GUSTAVO: So what happened in Calexico? What is that emblematic of?
ADAM: Well, basically, you know, what happened in Calexico is what happened in a lot of places. Instead of this dream of enriching the residents, cannabis legalization ended up enriching certain businesspeople and certain politicians who then got in trouble.
GUSTAVO: So there hasn't been this windfall, then, to local municipalities. ’Cause all I ever hear, especially in the city where I live – oh yeah, uh, marijuana revenue. It's gonna fund arts and pave roads and all this other stuff.
ADAM: Yeah, no, that’s a common theme, that these places that wanted to open up for cannabis legalization, instead of getting these, all these wonderful things with all this tax revenue, they just got a wave of political corruption and distrust in government instead.
GUSTAVO: More after the break.
GUSTAVO: Adam, we've been talking mostly about a couple of cases in California and just how legal weed infected the politics of them. What's been the response from the feds and the state? I know you mentioned the FBI sting in Calexico, but are you seeing a lot of that across the state?
ADAM: We are seeing FBI stings in the state. Basically the corruption grew so bad so quickly, that FBI agents in 2019 publicly warned about the problem. They sent out a public broadcast warning about it.
FBI TAPE: As an increasing number of states change their marijuana legislation, the FBI is seeing a public corruption threat emerge in the expanding cannabis industry. States require licenses to grow and sell the drug, opening the possibility for public officials to become susceptible to bribes in exchange for those licenses. Supervisory special agent Regino Chavez. Tape: We've seen, in some states, the bribes go as high as $500,000 for a license to sell marijuana. So we see people willing to pay large amounts of money to get into the industry
GUSTAVO: What about the state? Have they done anything?
ADAM: The state on the public corruption side so far, not a whole lot. They haven't really implemented any kind of reforms or offered new tools to combat this wave of cannabis corruption. You know, at this point, I think it just hasn’t really been on the forefront, it's not on the front burner for these state officials. It hasn't really been presented to them in this way that there's this wave of public corruption that's swept the state. Basically, they haven't read our story yet.
GUSTAVO: (Laughs) They gotta read The Times more. Have we seen that same level of corruption in other states that have legal marijuana, like, say, Colorado or Arizona?
ADAM: In some places, yeah, there's been a lot of corruption, but actually in Colorado and Arizona specifically, not as much. And the reason for that is there's either not a decentralized system for awarding licenses the way that California has it. Or in Colorado, for example, they haven't historically had this competitive licensing bidding where local officials are, you know, deciding who has the best application and all these applicants are sort of desperately bidding for these things and trying to impress the local official. So there's no reason for the bribe, per se. Arizona has a blind lottery for the licenses. So the decision is just taken away from the officials altogether and just done through random chance. So that really removes the opportunity for corruption there.
GUSTAVO: Finally, Adam, this is an election year and on the ballot in states like Arkansas, Maryland and Missouri, is this question of whether there should be legalization of marijuana in those states. What can they learn from everything that you and our colleagues covered about cannabis in California?
ADAM: Basically, decentralizing the license award system can create huge problems. And you have to have some sort of safeguards in place if you're gonna do that. Either go with a blind lottery system, the way that Arizona has it, or you beef up your protections on local corruption somehow, you keep a much closer eye on it. But yeah, decentralization is the number one sin and it's not just California, in Massachusetts they went with a similar system allowing local governments to award these licenses, and they had the same problems. And they basically said, this was our biggest mistake, ever, was allowing these towns to do this.
GUSTAVO: Do you think politicians have learned a lesson? Hey, don't be corrupt?
ADAM: Wow. That’s a great question. I'd like to think that every time that there is a conviction, or a big story in the newspaper, a politician reads that and is discouraged from ever doing something like that. But, as we see so often, corruption's always been there and, I'm sure we'll see more of it in the future, sad to say.
GUSTAVO: Oh, that's democracy for you. Adam, thank you so much for this conversation.
ADAM: Thank you.
GUSTAVO: And that's it for this episode of The Times, essential news from the L.A. Times.
David Toledo and Surya Hendry were the jefes on this episode and Mario Diaz mixed and mastered it. Our show is produced by Shannon Lin, Denise Guerra, Kasia Broussalian, David Toledo and Ashlea Brown. Our editorial assistant is Madalyn Amato. Our engineers are Mario Diaz, Mark Nieto and Mike Heflin. Our editor is Kinsee Morlan. Our executive producers are Jazmín Aguilera, Shani Hilton and Heba Elorbany. And our theme music is by Andrew Eapen.
And hey, we're planning on an episode for the Día de los Muertos that'll feature listener stories about their dearly departed – like an audio altar, you know. Wanna share your memories of someone you lost? Call (619) 800-0717. (619) 800-0717. And leave us a voicemail. Tell us who you are, where you live, and then tell us about your loved one – who they were, what you miss about them, whatever you want. Thanks in advance. And again, the number is (619) 800-0717.
I’m Gustavo Arellano. We'll be back Friday with all the news and desmadre. Gracias.