Opinion

Corrupt system? Lacking oversight, Sacramento cannabis industry broke rules, promises

“It’s the Wild West out there.”

That’s how one Sacramento cannabis dispensary owner describes the city’s legal marijuana business scene, which has come under intense scrutiny after the federal indictment of a Ukrainian-born man last week. The arrest of Andrey Kukushkin on charges of funneling foreign money into U.S. elections has shined an unflattering spotlight on the sorry state of Sacramento’s legal marijuana market. Kukushkin is part-owner of a cannabis dispensary on Fruitridge Road.

The revelations so far amount to an indictment of the city’s incompetence – or, possibly, corruption – when it comes to regulating legal marijuana businesses. The FBI is currently “investigating whether pot business owners in Sacramento have bribed local officials in exchange for favorable treatment,” according to an investigation by The Sacramento Bee.

The state of California has also launched an investigation, while Mayor Darrell Steinberg has called for an audit. Yet an examination of the city’s history with legal pot shops makes it clear that a previous audit of Sacramento’s cannabis businesses had already revealed serious problems due to lax oversight.

The key question is: Why did those responsible for regulating Sacramento’s cannabis industry look the other way while a few actors ran roughshod over the rules? Among the glaring violations reviewed by The Bee:

Opinion

The city’s “lax oversight has allowed the pot industry to consolidate far beyond what elected officials imagined when they gave their blessings to the city’s 30 pioneering marijuana dispensaries years ago.” Despite rules design to prevent a few companies from gaining control of Sacramento’s market, one man – Garib Karapetyan – has somehow been able to gain control of eight dispensaries. That’s nearly one-third of the city’s permitted cannabis businesses.

Permits for pot shops are being “bought and sold like candy” despite rules to prevent the practice, according to one Sacramento dispensary owner. “Despite city regulations that explicitly prohibit buying and selling permits for storefront pot shops, dispensary owners have been allowed to trade their businesses with ease,” according to The Bee. The city’s rules require cannabis business owners to surrender their permit to the city when they go out of business. Then, the city is supposed to hold a “public lottery” to redistribute the license. But that’s not happening.

Despite promises to create a sense of racial equity in the city’s cannabis industry, not one of Sacramento’s cannabis stores is black-owned. The demand for equity came from an African American community “that saw a disproportionate number of African American men imprisoned nationwide for possessing and selling marijuana.”

Sacramento’s leaders have clearly been derelict in their duty when it comes to minding the marijuana store.

“Obvious mismanagement has occurred in our permitting process,” said Councilwoman Angelique Ashby. “Several of us on the City Council have raised concerns many times about the lack of integrity and perceived equity in our marijuana permitting system.”

With respect, we expect more than mere complaints from the leaders we elect to run our city. When councilmembers don’t get answers to their questions and concerns from city staff, they have a responsibility to use their power to get answers and fix problems.

The question of why that didn’t happen has cast a dark cloud of suspicion over City Hall. Now the FBI is searching for answers. We look forward to their findings.

In the meantime, perhaps the City Council can think of creative ways to punish dispensary owners who have flagrantly violated rules, bring all of Sacramento’s marijuana establishments into compliance and keep the city’s broken promises to the African American community.

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