By Patrick McGreevy Los Angeles Times
WWR Article Summary (tl;dr) As Patrick McGreevy reports, "In the more than two years since California voters approved the licensed growing and sale of recreational marijuana, the state has had a half-dozen government corruption cases as black-market operators try to game the system, through bribery and other means."
Sheriff Jon Lopey was startled when a stranger offered him $1 million if he would keep deputies away from certain illegal cannabis farms in Siskiyou County.
Lopey called in the FBI, and, later, deliveries of envelopes stuffed with thousands of dollars in cash were recorded by cameras and microphones hidden on the sheriff's cluttered, wooden desk. Two people were later indicted by a federal grand jury on charges of attempting to bribe the elected sheriff.
"I was surprised and offended that a citizen would believe a law enforcement administrator would compromise his ethics and morals by accepting money," said Lopey, whose rural county abuts the Oregon border and outlaws outdoor marijuana farms.
In the more than two years since California voters approved the licensed growing and sale of recreational marijuana, the state has had a half-dozen government corruption cases as black-market operators try to game the system, through bribery and other means.
The cases are tarnishing an already troubled introduction of the state permitting of marijuana businesses as provided for when voters approved Proposition 64 in November 2016.
Opponents of the initiative say the cases confirm their campaign arguments that legalization wouldn't end the black market and the criminal behavior it has unleashed.
"We knew this was going to be an issue. The money is so great that the temptation is always there," said William Lowe, a leader of the group Americans Against Legalizing Marijuana.
California is awash in cannabis cash from inside and out of the state, partly because marijuana remains an illegal drug under federal law, so banks won't accept cash from the businesses. The state's black market for cannabis was estimated to be worth $3.7 billion last year, more than four times the size of the legal market, according to the firm New Frontier Data.
Proposition 64, approved in 2016, allowed the state to license businesses to grow and sell marijuana but required the companies to get approval from the cities and counties, most of which have outlawed marijuana operations.
Experts say local resistance explains why many of the corruption allegations center on illegal attempts to buy help from city and county officials.
"There is no doubt in my mind that the multibillion-dollar nature of the marijuana industry is corrupting public officials," said Lopey, a 41-year veteran of law enforcement who began his full-time career as a California Highway Patrol officer stationed in East Los Angeles.
Proposition 64 also outlawed the transportation of cannabis out of the state, which was an issue in the Siskiyou County indictments against Chi Yang and his sister, Gaosheng Laitinen.
Yang allegedly approached the sheriff in his county office in Yreka in the summer of 2017, and initially suggested the $1 million could go to a foundation headed by Lopey.
At one of the subsequent meetings where Lopey was handed the envelopes of cash, Laitinen allegedly sought assurances about what their payments would buy: "Are we talking about protection from being raided?" she asked the sheriff, according to a DEA agent's affidavit attached to the criminal charging document.
The two allegedly paid Lopey $10,500, including four $500 cash bonuses, before they were arrested, according to court records.
That case is one of several that have involved cannabis sellers and growers allegedly bribing or trying to bribe government officials, or public officials acting illegally to get rich from marijuana.
Last year, Jermaine Wright, then the mayor pro tem of Adelanto, was charged with agreeing to accept a bribe to fast-track a marijuana business. Wright's trial is scheduled for August. In May, FBI agents served search warrants at the home of Rich Kerr, who was mayor of Adelanto at the time. City Hall and a marijuana retailer were also served with warrants.
Also in May, Humboldt County building inspector Patrick Mctigue was arrested and charged with accepting $100,000 in bribes from marijuana businesses seeking expedited help on county permits, according to the Humboldt County Sheriff's Office.
Last March, a federal jury reached guilty verdicts on bribery and extortion charges against Michael Kimbrew, who was a field representative to U.S. Rep. Janice Hahn when he accepted cash from an undercover FBI agent while pledging his "undying support" to protect a marijuana dispensary that the city of Compton was trying to close.
Last Tuesday, developer Dorian Gray was held to answer by a judge in a preliminary hearing on charges of offering bribes to Oakland City Council President Larry Reid and Assistant City Administrator Greg Minor, according to court records.
Gray allegedly offered the councilman cash to help obtain a cannabis dispensary permit, and Reid reported the offer to authorities. Gray is charged with offering Minor, who oversees marijuana permitting for Oakland, a trip to Spain.
Reid said he was offended by the offer made by Gray in his City Hall office, and reported it to the city administrator's office.
"He (Gray) said he had an envelope with $10,000 and my name on it in his pocket, and I told him I don't work that way," Reid said. "Everybody thinks they can become an instant millionaire by getting a dispensary permit."
Autumn Paine, an attorney for Gray, said the two city officials offered "wildly different" stories about what occurred.
As for the allegation of bribery against Gray, "He absolutely denies that," she said.
An attorney for Laitinen declined comment beyond noting that she pleaded "not guilty." Yang has also denied the charge in court, but his attorney did not return calls for comment.
An attorney for Wright declined comment.
Not all of the recent cases involve elected officials. Los Angeles County Sheriff's Deputy Marc Antrim pleaded guilty two weeks ago to federal charges stemming from his arrest for robbing a warehouse of a half-ton of marijuana in October.
While some cases filed in the last year are still pending trial, there have been convictions in other corruption cases in recent years.
California was the first state to legalize the sale of marijuana for medical use two decades ago. The former mayor of the city of Cudahy was sentenced to one year in federal prison in 2013 for taking cash bribes in exchange for supporting the opening of a "medical marijuana" store in the city.
The head of the city's code enforcement division and a city councilman were also convicted of taking part in the corruption scheme.
Law enforcement agencies are investigating possible corruption in other Southern California cities, according to Ed Muramoto, a private attorney for medical marijuana dispensaries that have complained about cities locking them out of competition for permits.
"We have been contacted regarding a good handful of cities and jurisdictions with respect to investigations that law enforcement is engaging in," Muramoto said.
He declined to identify the cities involved, saying he has been asked by investigators not to talk about pending inquiries.
Gov. Gavin Newsom, a Proposition 64 supporter, declined to comment on the numerous bribery cases involving marijuana growers and sellers.
State law gives too much authority to local officials to dictate terms of city licenses, according to Dale Gieringer, director of California NORML, a pro-legalization group that supported Proposition 64.
"Corruption is always worse at the local level because there are so many more local officials and they aren't under as much scrutiny as those in Sacramento," he said. State agencies, he said, "have been doing their best to expedite licensing, but too many local players have been getting their hands in the pie."
The Siskiyou County case provides further evidence that California remains the largest exporter of marijuana in the nation. Yang allegedly told the sheriff he wanted to ship California-grown cannabis to Missouri.