Editorials

There’s a strange smell wafting over Sacramento politics. Is it cannabis industry corruption?

It’s not every day that Sacramento finds itself at the center of an explosive international scandal involving marijuana, political corruption, City Hall and the White House. Yet, this week we learned the scandal that allegedly involves cannabis dispensaries, Russian money and attempts to bribe U.S. politicians may have “a considerable subplot in Sacramento.”

The story is a bit unusual. It’s also complicated, so let’s take it step by step.

First, the FBI has been quietly investigating for months whether local cannabis businesses “have made payoffs to public officials in the region in exchange for favorable treatment and license approvals,” per a story by Sacramento Bee reporters Sam Stanton and Ryan Sabalow.

The FBI declined to comment on the existence of any investigation to The Bee’s reporters, who noted that “the investigation comes two months after the FBI announced in a podcast that it was ‘seeing a public corruption threat emerge in the expanding cannabis industry’ and asked for any tips involving public corruption and the industry.”

Three sources told The Bee that FBI agents were “seeking information about whether payments had been made to local officials seeking favorable treatment.”

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The second part of the story involves a Ukraine-born man with ties to Sacramento’s cannabis industry.

“Andrey Kukushkin was among four men indicted last week in an intricate plan to funnel foreign campaign donations to U.S. politicians and enter the legal pot business in Nevada and other states,” according to a story by Sacramento Bee reporters Theresa Clift, Dale Kasler and Sabalow.

Kukushkin, a partner in two cannabis-related Sacramento businesses, was indicted along with three other men, including two Ukrainian men named Lev Parnas and Igor Fruman.

The case made international headlines last week when federal authorities arrested Parnas and Fruman as they tried to leave the United States with one-way tickets to Austria. Authorities allege Parnas and Fruman worked to illegally funnel foreign money – including $1 million from an unidentified Russian businessman – into the campaign coffers of American politicians.

“The two men were each charged by federal prosecutors in New York with two counts of conspiracy, one count of false statements and one of falsification of business records,” according to Reuters. “U.S. law prohibits foreign donations in American elections.”

Most noteworthy: The two men now accused of illegal money-funneling had also been tasked by Rudy Giuliani – President Donald Trump’s personal lawyer – with investigating bogus claims involving former Vice President Joe Biden and Ukraine.

Trump’s obsession with Biden – and the president’s decision to ask the president of Ukraine to investigate the former vice president and his family – finally pushed House Speaker Nancy Pelosi into launching an impeachment inquiry last month.

This brings us back to Sacramento, cannabis and corruption.

“There is no evidence that any of the money cited in last week’s indictment has been used to invest in the pot business in Sacramento,” reported The Bee. “However, the arrests draw a direct line from the alleged plan to funnel foreign donations to U.S. politicians, and the impeachment investigation in Congress, to the doorstep of Sacramento’s burgeoning legal pot industry.”

Kukushkin, the man with Sacramento ties, is listed as chief financial officer of a company that owns a Fruitridge Road cannabis dispensary called Twelve Hour Care (THC). THC is controlled by a man named Garib Karapetyan, who appears to have gained control of eight of Sacramento’s cannabis dispensaries.

Karapetyan took over these businesses – nearly one-third of Sacramento’s dispensaries – despite the fact that Sacramento’s cannabis regulations are supposed to prevent such consolidation. He also cut large campaign checks to Sacramento politicians, including Mayor Darrell Steinberg, Sheriff Scott Jones and Assemblyman Kevin McCarty and Councilman Jay Schenirer.

Steinberg’s spokeswoman told The Bee that he would give the money to charity. She also said the mayor had not been contacted by the FBI.

House Minority Leader McCarthy also pledged to give away the funds he received from Fruman and Parnas. The two indicted men also gave money to Republican congressional candidates Jeff Denham, Steve Knight and David Valadao.

There’s a strange scent wafting over California politics today and it’s not the skunky smell of legal ganja. Could it be the stench of corruption seeping into our political system from California’s growing cannabis industry? Do some people – including foreign actors – see the state’s cash-only marijuana industry as a perfect vehicle for buying favor from money-hungry politicians?

Steinberg has called for a full investigation of how the city has allocated its cannabis dispensary licenses. Alas, it appears the FBI already beat him to it.

One way or another, we must get to the bottom of how one man was able to gain control of eight Sacramento dispensaries in spite of the rules. The investigation should also include a clear explanation of why all of Sacramento’s leaders were asleep at the wheel – or looking the other way – as this travesty unfolded.

One thing’s certain: There’s more to come on this story. We certainly hope incompetence, rather than corruption, explains the lapses. Regardless, those responsible must be held accountable.

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