According to published reports, a state grand jury is investigating payments to advisors and councilors involved in cannabis licensing in Baldwin Park and two other cities in the San Gabriel Valley.
The investigation appears to be focused on Baldwin Park, but the FBI and Internal Revenue Service have also sought information on advisors who also moved to El Monte and Montebello, the Los Angeles Times reported.
The state investigation into Baldwin Park’s rocky cannabis rollout went public last year when agents raided the homes and offices of Baldwin Park City attorney Robert Tafoya, Compton City Council Isaac Galvan, and former San Bernardino County Planning Commissioner Gabriel Chavez. At the time, Tafoya’s attorney, Mark Werksman, pointed out that the investigation was about corruption in the cannabis industry. The summons, however, are the first real indication of the scope of the investigation.
Werksman declined to comment on the subpoenas.
Baldwin Park Mayor Emmanuel Estrada said in an interview that he is aware that subpoenas have been issued, but so far investigators have not contacted the city.
Promise to clean up
Estrada, who became the city’s first new mayor in decades following last year’s elections, has pledged to clean up Baldwin Park’s cannabis regulations because the process has been more beneficial for certain companies than others.
“We should focus on making this a socially just industry and the politicians seem to have made it a moneymaker for themselves,” he said. “Myself and my newest colleagues are not involved in any of this. We welcome these outside agencies to come to Baldwin Park and resolve this issue. ”
Baldwin Park City Council banned Tafoya from working on cannabis matters earlier this year after the Southern California News Group reported that Tafoya hired a former cannabis license recipient as its assistant city attorney.
A company run by attorney Anthony Willoughby II and his father secured one of its first cannabis permits and then sold the company to a third party still operating in town.
At the time, other cannabis operators raised concerns about a conflict of interest when Willoughby II showed up in their compliance hearings.
Baldwin Park is now hiring lawyer Julia Sylva to review and refine the city’s cannabis regulations. Sylva was specifically chosen because, according to Estrada, she had no ties to cannabis in Baldwin Park or neighboring towns.
Estrada said he was confident the city would develop fair – and uniform – standards for cannabis companies.
Past legal entanglements
A 2019 lawsuit charged Baldwin Park with extortion for requiring all cannabis companies to use a company for transportation. The alleged representatives of Rukli Inc. in the lawsuit threatened to charge up to five times the market interest rate because the companies had no alternatives.
Rukli Inc, gave up its exclusivity in March in exchange for other permits that allow the company to grow and manufacture cannabis products. The city waived $ 300,000 in fees under the settlement agreement.
In an independent lawsuit in September 2020, a former Baldwin Park police lieutenant who helped regulate the industry testified that he had received corruption complaints from three cannabis operators, including allegations that one had been asked to pay “up to 250,000 US dollars in cash “to pay a brown paper bag for city officials.”
Then, in November, Baldwin Park was forced to cut ties with one of the cannabis companies after El Monte police raided the company’s warehouse and found it was growing without authorization. The company had missed payments to City Hall for years and should be inspected annually.
In January, former Baldwin Park councilor Ricardo Pacheco pleaded guilty to accepting $ 37,900 in bribes from an undercover police officer to vote for a police union contract in 2018. Investigators confiscated more than $ 300,000 from Pacheco, including $ 62,900 buried in his backyard. The US Department of Justice has not made public the charges against Pacheco, who has agreed to collaborate and testify on other cases for seven months.
What investigators are investigating in the other two cities is unclear.
The El Monte cannabis story
El Monte has faced its own controversy surrounding its cannabis licensing. Seven cannabis companies have tried to convince a judge to dismiss El Montes picks for commercial licenses on allegations that city officials changed the evaluation criteria at the last minute to favor applicants making larger donations to the general fund.
Five of the companies said their results were miscalculated or deliberately manipulated. The other two argued that their applications were wrongly disqualified.
In an interview, El Monte city director Alma Martinez said that federal agencies have not questioned or subpoenaed any city officials or councilors. She denied allegations that the evaluation process was in some way unfair.
“I was surprised El Monte was even mentioned,” she said of the federal investigation. “The city staff and the city council followed the process set out in the Cannabis Advocate Ordinance. We had an external consultant and followed his assessment when the licenses were awarded. “
Montebello approved 18 cannabis companies in 2019, and while it was pushed back a bit by residents in particular, it didn’t experience the same level of turmoil as Baldwin Park or El Monte.