Isleton's plans for a massive medical marijuana farm have been scuttled by threats from prosecutors, but officials from the small Delta city insist they acted properly when they approved the project last year.

In a 52-page response to a Sacramento County grand jury investigation, Isleton officials say the panel's report on the project was filled with errors, ignored important facts and cost the cash-strapped town $100,000 to defend itself.

"Despite hearing testimony from twenty witnesses, the grand jury's eleven page report contains more than fifteen material errors of fact," the report from Isleton City Attorney Dave Larsen and other city officials states.

The city's response also notes that Isleton officials still have no idea what the state of District Attorney Jan Scully's investigation is.

"Are we entitled to know whether the grand jury was asked to indict anyone, and if it was whether it concluded there was insufficient evidence?" the city asked in its filing.

"So far we have been told that the city attorney will not be indicted, but the district attorney still has the discretion to prosecute him, presumably until the statute of limitations runs. Why hasn't the district attorney's office issued a statement concerning this investigation?"

There is no easy answer to that. Scully's office declined Monday to elaborate or answer whether her investigation is over.

But Isleton officials reject the grand jury findings that they did not act properly when they approved construction of the pot farm on the north end of town, a project that would have paid up to $25,000 a month to the city of Isleton.

Isleton's reponse also flatly rejects the grand jury finding that Larsen was being paid improperly by both the city and the project founders, Delta Allied Growers.

Larsen, one of only two people to whom the grand jury did not offer immunity during its probe, is paid $150 an hour for services provided to the city, but during the approval process for the marijuana farm was being paid $250 an hour, partly by Delta Allied, to help draft documents for the project.

Larsen and Isleton officials have said such an arrangement is typical for many cities and was not a conflict but an attempt to save Isleton costs.

"I was shocked to be accused of that," Larsen said in an interview Monday.

Delta Allied pulled the plug on the project despite spending hundreds of thousands of dollars on it after federal officials threatened prosecution earlier this year.

Larsen said the agreement the city signed with Delta Allied requires the would-be pot growers to pay Isleton's $100,000 in legal fees and that some payments already have been made.

Isleton officials complained that they could not win any cooperation from Scully's office as they sought advice for how they could legally proceed with the plan.

"We thought as sister agencies that we would be able to sit down and talk things through and mutually resolve issues," Larsen said. "And that just proved not to be possible at all."

They chafed at the fact that every city official was summoned to the Sacramento Superior Courthouse to sit in the hallways waiting to meet with the grand jury, and their disdain for the grand jury's recommendations is evident in the responses provided about whether or not they intend to implement them.

"This recommendation will not be implemented because it is not warranted," one typical response states.

The city notes that federal and state laws conflict over medical marijuana, and that officials were open about seeking input on how best to proceed.

And Isleton's response to the grand jury probe leaves little doubt that city officials believe they have been subjected to a pointless investigation that, so far, has resulted in no charges being filed against anyone.

"Isleton alone has incurred costs of over $100,000 to no avail, because the report fails to accomplish its stated purpose, and adds almost nothing of value concerning how Isleton conducts its business," the city response states.

© Copyright The Sacramento Bee. All rights reserved.

• Read more articles by Sam Stanton

Order Reprint