Who says city bureaucrats have no sense of humor? Or maybe
it was just a coincidence that City Hall extended its deadline for cannabis
dispensary applications a year ago so that it fell on April 20, also known as
4/20.
Get it, 4/20? International cannabis day?
Turns out, it wasn’t very funny back then, at least not for
the parties involved. And it hasn’t gotten any funnier in the intervening 365
days. In fact, it’s turned into a big nasty mess of a lawsuit over how City
Hall selected the top three applicants, awarding them a franchise agreement
worth many millions of bucks a year. That lawsuit promises only to get messier
as witnesses are deposed. In the meantime — two years after recreational
cannabis was legalized by state voters — Santa Barbara remains a city without a
legal recreational dispensary. Two of the three finalists have recently been
awarded building permits — even the one targeted by the litigation — meaning
city residents might have a storefront or two from which to purchase legalized,
recreational, adult-use weed products by the end of summer. Even without,
there’s no shortage. The City of S.B. has two medicinal storefronts up and
running and a million gray market delivery services.
The lawsuit in question involves allegations that the owners
and operators of Coastal Dispensary LLC, slated for 1019 Chapala Street, lied
on their applications to City Hall and derived from this deceit an unfair competitive advantage over an Arizona-based rival,
SGSB, which would eventually be deep-sixed from the final cannabis playoffs.
SGSB, which had proposed opening a dispensary at 913 State Street, is
complaining that City Hall either failed to detect this falsehood or did not
care for reasons that can only be guessed at.
Words such as “lies, deception and fraud” are charged with
high impact moral connotations. Such words are good for converting the already
converted. But the uncontested fact here is that the Coastal Boys — real-estate
flippers Julian Michalowski and Malante Hayworth — submitted notarized
statements claiming on March 28, 2018, that they owned outright the Chapala
Street property where the dispensary to be was to be located. In point of fact,
they did not own it. They were still in escrow. It had not yet closed escrow.
Did I say their declaration — made upon pain of perjury — was witnessed by a
notary public? In fact, the deal closed escrow on April 16, 2018.
All this nitpicking about dates goes to a point. Only
because City Hall extended the deadline for application by one month — to 4/20 —
could Julian and Malante said to be compliant with the application requirements
of either owning or controlling a property. In that intervening month, City
Hall re-evaluated the applications. The Coastal application came out on top,
whereas SGSB had been number one before. According to the city rules, no two
dispensaries could be within 1,000 feet from each other. Guess what, Coastal
and SGSB were. Because Coastal had the higher score — by eight points out of
maximum possible of 1,000 — SGSB was DQ'd.
I can’t say for certain whether Julian and Malante were
“lying.” That would suggest I can divine intent. What I do know is that they
were “red tagged” two times this spring for unauthorized construction work and
forced to stop. They were allegedly red-tagged on at least five other residential
properties they own under the rubric of West Bluff Capital. One Upper East
property was red tagged, the red tag taken down, and then they got red-tagged
again. A couple of neighbors took the matter to the City Council last November.
One of their partners, an older man named Neil Botts, showed up to take the
fall for them. Literally. When pleading mea culpa to the City Council, Botts
fainted. Twice.
All this would suggest City Hall is not too picky about with
whom it goes into the cannabis business. Having read the flowery language of
the Coastal Boys’ application, I can see why. The store, we were told, will be
“upscale, hip, inviting, fun, and comfortable.” What’s not to like? “Old surf
culture” fused with touches of “new school technology.” If that wasn’t enough,
we were promised an aesthetic that was “cool, classy and authentic.”
And then they totally blew it.
“Coastal is the store that Dad wants to go to while Mom is
happy to tag along.”
Are you kidding me? “Happy to tag along?”
Is the City of Santa Barbara — with a female mayor, a female
police chief, a female Public Works director, a female Parks director — really
going to reward this kind of old school, retro sexism with a multi-million-dollar
franchise?
The answer is yes.
It should be noted that Coastal has a tradition of skating a
little close to the edge. Way back when, Michalowski was charged with felony
assault for fracturing the nose of a guy at a free concert at UCSB. When Michalowski
and crew reportedly butted ahead in line, the victim reportedly had something
to say about it. Michalowski and crew reportedly had something to say back.
Apparently, they said it with their fists. His nose got broke. Michalowski was
charged. The jury reduced the charge from felony to misdemeanor. The evidence
was not clear who threw the punch that broke the nose.
According to the city’s application rules, cannabis
operations cannot be located close to schools and day care centers. At the time
of the application, the proposed Coastal Dispensary was located right next to a
ballet school. The ballet school has since relocated. Board members from that
school, it should also be noted, wrote a letter praising Coastal for going the
extra mile in helping get them relocated. Coastal reportedly offered to spend
up to $50,000 making the transition as painless as possible. What might be of
concern was the date of their letter: May 31. That’s a month after the second
deadline. That could easily have been a simple typo. Calls to the signatories
have not been answered, so I’ll just have to wonder.
Not to pile on, but another proposed Coastal operation — a
manufacturing site on Reddick Avenue — happens to violate the city’s buffer
requirement, too. It’s too close to a day care center. Coastal is attempting to
relocate the day-care operation, but thus far without success. Coastal has also
proposed opening a dispensary in Goleta as well. But it’s too close to the Goleta
Community Center to be considered. (The Goleta City Council, it should be noted,
just voted to reduce the total number of dispensary sites that can be located
within city limits from 15 to 6. How the 15 number was ever arrived remains a
great mystery, right up there where Jimmy Hoffa’s body is buried.) I know
Coastal has an application in Lompoc, too. I can state with almost complete
certainty that it’s not too close to anything in Lompoc, the City Council there
having imposed the most relaxed buffer requirements anywhere in the county, if
not the state.)
I don’t pretend to know how the lawsuit filed by SBSG
against Coastal and City Hall will play out. Nor do I necessarily subscribe to
conspiracy theories that City Hall rigged the deck because the powers that be
did not want a downtown dispensary on State Street. I just know there’s a few
too many close calls for my taste.
As for myself, I don’t much care for pot. I’m way too
paranoid as it is. But if I did like the stuff, I wouldn’t be caught dead
shopping in any place where “Mom will be happy to tag along.”