How legal weed became riddled with corruption
Limited licenses make owning a pot business a pay-to-play scheme in many municipalities
In the San Gabriel Valley, a city councilman demanded bribes from businesses seeking cannabis licenses, according to a source cooperating with the FBI.
In another small L.A. County city, a cannabis industry group offered $15,000 to council candidates who would pledge to support changes to city regulations that weed businesses wanted — an exchange one legal expert said “flirted at the edges” of the law.
And in rural Northern California, an elected official pushed to expand the amount of weed that farms could legally grow, a proposal sought by a cannabis business that was paying her and her husband hundreds of thousands of dollars to buy their ranch.
California’s decision to legalize recreational cannabis in 2016 ushered in a multibillion-dollar commercial pot market that officials in many small, struggling communities hoped would bring new jobs and an infusion of tax revenue to spend on police, parks and roads. But for some cities, the riches never materialized.
Instead, the advent of commercial cannabis unleashed a wave of corruption, prosecutions and accusations that has rocked local governments across the state and left them with few effective tools to combat the problem.
From the rugged mountains near Oregon to the desert along the Mexican
border, a Times investigation found corruption or other questionable conduct covering a vast area of activities: public officials demanding cash from cannabis business owners to approve licenses; government officials threatened with physical violence over pot regulations; and elected officials accepting money from cannabis businesses even as they regulated them. In addition, the industry has donated a torrent of campaign cash to local government officials as cannabis became a new and powerful special interest.
Lobbyists, pot entrepreneurs and public officials say bribery and shakedowns have become so commonplace in cannabis licensing that it feels like a normal part of doing business.
Ruben Guerra, board chairman of the Montebello-based Latin Business Assn., said he has worked with 10 applicants trying to obtain cannabis licenses from Southern California cities. He witnessed cash shakedowns of half those applicants and notified a retired FBI agent he knows.
“I was right in the middle of the negotiations, and [public officials] were telling me they need this much,” Guerra said, adding that the bribe request usually ranges from $150,000 to $250,000.
The corrupting flow of money has its roots in how California crafted its cannabis legalization law to regulate an industry that until recently operated underground. Proposition 64, the statewide measure that paved the way for commercial cannabis to launch in 2018, put the ultimate decision on where pot businesses could operate in the hands of cities and counties.
More than 12,000 licenses are active, a Times analysis of state data shows, but those are concentrated in a minority of California’s cities and counties, including many small, struggling communities that viewed cannabis and its potential tax revenue as a financial lifeline.
More than half of cities and counties refuse to allow any type of operation, including recreational sales or farming. Those that do authorize pot businesses generally restrict the number of licenses, creating fierce competition among entrepreneurs looking to cash in.
Giving thousands of often parttime, low-paid officials across the state the power to choose winners and losers in the new “green rush” created fertile ground for corruption.
“You pay your way into one of the few spots,” said Dominic Corva, a sociology professor and co-director of the Institute for Interdisciplinary Marijuana Research at Cal Poly Humboldt. “Once the game was limited licensing … it was like, who gets to have it?”
The link between bribery and cannabis grew so quickly that FBI agents issued a public warning in 2019, saying the corruption threat was especially acute in Western states like California that had implemented this “decentralized” system.
In May, a cannabis business operator, Helios Dayspring, was sentenced to 22 months in federal prison for paying more than $30,000 in bribes to a San Luis Obispo County supervisor. In June, Jermaine Wright, the former mayor pro tem of Adelanto, was convicted of taking a $10,000 bribe from an FBI agent posing as a pot businessman in the high desert city in San Bernardino County. The city’s former mayor, Richard Kerr, is awaiting trial on charges of accepting more than $57,000 in bribes and kickbacks in exchange for helping cannabis businesses. Two more former government officials in Imperial County are serving federal prison sentences for taking pot-related bribes.
Accusations of wrongdoing also abound in civil court.
A legal malpractice case over a pot business in the small L.A. County city of Maywood boiled over in July when a lawyer introduced candid emails from several years earlier in which he accused a client of paying off the city’s mayor at the time, Ramon Medina, to secure a cannabis license, according to trial exhibits filed in the case. In an interview with The Times, Medina denied accepting money from the client, or even knowing him. Medina, who is no longer in office, has also pleaded not guilty to unrelated bribery charges filed last year.
A former staffer to then-L.A. City Councilman Jose Huizar alleged in a lawsuit that he was fired as retaliation for informing the FBI, among others, that he believed Huizar was engaged in a scheme to obtain “cash payments” from cannabis applicants in exchange for permits. Huizar, who has pleaded not guilty to unrelated charges of taking bribes from downtown real estate developers, denied the allegation. The lawsuit was settled.
The situation has become so dire that some in the cannabis industry are calling for a radical solution. Adam Spiker, executive director of Southern California Coalition, a cannabis trade association, said corruption is so endemic in local cannabis licensing that cities and counties should consider banning people who want licenses from direct contact with the government officials who will make the decisions. Spiker said it’s the only way to ensure that licenses are awarded without any possible interference or influence by applicants.
“Is that a silver bullet? No,” he said. “But do things like that need to happen? Yeah, until [the corruption] goes away.”
Baldwin Park leaders saw cannabis as a financial boon for their struggling community in the heart of the San Gabriel Valley.
But from the start, pot licensing stirred allegations of corruption.
One of the licenses approved by Baldwin Park gave the exclusive right to distribute cannabis in the city to a local business, Rukli Inc. The city required other licensed weed businesses to use Rukli as their sole distributor. The arrangement prompted another cannabis business to file a lawsuit accusing Rukli of engaging in a conspiracy to secure an illegal monopoly and racketeering, including bribery and kickbacks. Rukli denied wrongdoing. The lawsuit was eventually dropped after Rukli pulled out of its exclusive deal.
Before the end of Rukli’s exclusive arrangement, a Baldwin Park police lieutenant visited the firm’s distribution center to make sure it was complying with the city’s requirements for securing the property. Lt. Chris Kuberry told The Times one of the firm’s partners mentioned paying $250,000 in cash to city officials.
Kuberry said that the comment was “certainly suspicious” and that he had heard the FBI was investigating possible corruption in the city. But he didn’t inquire further, file a report or contact the FBI. He said his department of about 50 officers was rife with complaints of retaliation and he feared for his job if he raised any questions.
“To be honest, [it was] out of self-preservation,” said Kuberry, who retired shortly after.
In a lawsuit the city brought against its former police chief, Kuberry said in a sworn declaration that pot operators complained to him about “questionable business practices which included paying as much as $250,000 cash in a brown paper bag to city officials.” His declaration did not name the firms or their owners, but Kuberry told The Times he was referring to Rukli.
Scott Russo, an attorney for one of Rukli’s partners at the time, said the company never paid a bribe. He declined to comment on whether any city officials solicited bribes, citing an ongoing federal investigation.
“There’s a process [the FBI] would appreciate I respect,” he said.
A source who is cooperating with the FBI told The Times he was present when Ricardo Pacheco, then a member of the Baldwin Park City Council, asked that Rukli pay him $250,000 in cash to ensure the city would approve a license for the firm.
The money was never paid, and at least one of the firm’s partners instead spoke to the FBI, said the source, who requested anonymity because of the ongoing federal investigation.
Pacheco and an FBI spokeswoman declined to comment.
Pacheco is awaiting sentencing after pleading guilty to a federal charge of bribery related to a contract with the city’s police union. FBI agents also raided the city attorney’s office and the homes of officials in other cities as part of an investigation targeting cannabis licensing in Baldwin Park and nearby cities.
Cruz Baca, who served on the council from 2013 to 2018, said in interviews with The Times that three men representing two other cannabis firms told her in 2018 that city officials shook them down for campaign contributions. All three, Baca said, alleged Pacheco solicited thousands of dollars in campaign money in exchange for approving a license.
They did not say whether they paid the money. Campaign records show a $6,500 payment by the owner of one of the firms to Pacheco’s political action committee and no contributions from the other business. Both firms got licenses.
Baca said she reported the allegations to Baldwin Park police officials.
Jason Adams, then a Baldwin Park police officer, confirmed that Baca informed him of complaints from pot businesses about cash “shakedowns” by Pacheco. He said he told the FBI weeks later about the bribery allegations against Pacheco.
Baca said that she was contacted by the FBI four years ago and that she reported the businessmen’s allegations about Pacheco and others soliciting bribes. Agents, she said, also asked about other elected officials and pot consultants, and were looking at their links to cannabis interests in nearby cities, including Montebello.
“They were connecting dots,” she said.
Vanessa Delgado was the mayor of Montebello when two local property owners asked her to meet in 2018 to discuss where the city would allow cannabis businesses to operate.
At the meeting, she said, the men demanded Delgado vote to limit the city’s cannabis zone in a way that would benefit their properties.
“I was told if I didn’t go along with limiting the zones that my friends or those close to me would be hurt,” said Delgado, who soon afterward was elected to the state Senate. “It’s just my daughter and I who live alone. I was afraid.”
She declined to name the men out of fear of retaliation but said she informed a Montebello police officer.
The officer, former Lt. Julio Calleros, confirmed that Delgado contacted him about the alleged threat. He said she declined to file a police report, fearing that it could lead to physical harm.
“I could tell she was concerned about it,” Calleros said.
Still, Delgado said she refused to vote in favor of limiting the cannabis zone: “I wasn’t going to let that threat stop me from doing what was right.”
Delgado was part of a majority on the council that embraced weed. City officials publicly predicted that money from pot licenses could be used for road improvements and other community needs. The appeal was obvious for a suburban enclave of roughly 60,000 residents whose city government had spent years in the red.
But residents warned at council meetings about increased crime, especially around schools. Two of the five members on the council voted against the city’s cannabis regulations.
Council members on both sides were threatened with recalls.
In her bid for reelection to the council in 2018, Vivian Romero alleged on a campaign flier that “marijuana special interests tried buying my vote for $50,000.” Romero, who had voted against the city’s cannabis regulations, told The Times that the offer came from a cannabis businessman seeking a license in Montebello.
“The state has created a breeding ground for bribery and favoritism,” Romero said. “This is not hyperbole. These are facts.”
She said a pot consultant threatened to have her ousted unless she changed her position on the issue.
Cannabis companies and lobbyists poured about $40,000 into the city’s election, finance records show, helping defeat Romero and the other council member who had voted against Montebello’s pot regulations.
Few cities in California were as bullish on pot as Lynwood, one of a cluster of small towns in southeast L.A. County that have long struggled with financial woes and municipal corruption.
City leaders said cannabis would bring good-paying jobs and