Faced with heavy lobbying by the owners of the city’s four existing medical cannabis retailers, the West Hollywood City Council on Monday will consider extending once again their temporary recreational cannabis sales licenses, now set to expire on Dec. 31 of this year, until March 31, 2020. A proposal from City Hall staffers recommends that
The City Council voted in 2017 to give the medical cannabis businesses temporary permits to sell recreational cannabis beginning on Jan. 2, 2018. That was to permit such sales, legalized in California in 2016 by the passage of state Proposition 64, while the city put in place a complex and impartial system to review applications for up to eight licenses for recreational cannabis sales as well as eight licenses in four other categories. Applicants were not allowed to contact the judges, who were appointed by City Manager Paul Arevalo, and neither were members of the City Council
However, when the scores of the 94 applicants for recreational cannabis sales were revealed in December of last year, none of the existing West Hollywood businesses ranked among the top eight applicants. The City Council, under pressure from the medical cannabis shop owners and some of their employees, then agreed to extend the temporary recreational sales licenses until the end of this year. Several Council members have benefitted, at least tangentially, from donations from the existing cannabis businesses or their owners. Adam Bierman, CEO of MedMen, donated $500 to City Councilmember John D’Amico’s re-election campaign. MedMen also has been a sponsor of the Voice Awards of the Gay Men’s Chorus of Los Angeles, a non-profit group chaired until recently by Mayor John Duran that is frequent recipient of donations from city vendors, contractors and developers.
The latest proposed extension comes after heavy lobbying from the existing cannabis businesses. Those businesses have banded together as a group dubbed “The Originals.” They are Alternative Herbal Health Services at 7828 Santa Monica Blvd., Los Angeles Patients & Caregivers Group at 7213 Santa Monica Blvd., MedMen WeHo at 8208 Santa Monica Blvd. and Zen Healing at 8464 Santa Monica Blvd. They have engaged James Litz, a public affairs and land use consultant who has served on various West Hollywood boards and commissioners, to lobby in their behalf.
Owners and employees of those businesses regularly appear at City Council meetings to ask that the Council override its previously established application process to grant them recreational cannabis sales licenses. If the Council were to do that, the city would have 12 licensed recreational cannabis businesses. According to a report from city staffers, three of the successful recreational cannabis sales applicants have filed requests for the requisite city business license and it is likely that shops will be opening in the next three to six months. Members of The Originals were allowed to keep their medical sales licenses without undergoing the application evaluation process, but some them say they can’t run a profitable business without being able to sell recreational cannabis as well. Recreational cannabis purchases are easier to make because they do not require a doctor’s prescription while purchase of cannabis for medical purposes theoretically does require a prescription. However, it is easy in West Hollywood to purchase a doctor’s prescription for cannabis, usually priced at $100, without actually seeing a physician.
A report to the City Council from City Hall staffers notes that many members of the United Food and Commercial Workers Union (UFCW) Local 770 have spoken out at City Council meetings over the last several months on behalf of MedMen, whose employees are members of that union and who also show up regularly wearing MedMen branded red t-shirts. “Many of these employees have spoken about the quality of the jobs they have at MedMen and a concern for losing their jobs if MedMen is not granted a permanent adult-use retail license by the city,” says the city staff report. “These are legitimate concerns that the City Council should consider.”
However, while Local 770 has argued for MedMen being able to keep its license for the benefit of its workers, when questioned by WEHOville, a spokesperson for Local 770 said the union was aware of a lawsuit filed against MedMen by two of its former West Hollywood employees who allege they were mistreated by MedMen, with the company refusing to pay them overtime and give them required breaks. However, he argued that that lawsuit was filed before Local 770 began representing the workers. Daniel Srourian, the lawyer representing the former workers, estimates that more than 100 current and former employees of MedMen could be included in the class for which he is filing the suit.
Another issue confronting MedMen is allegations that it has taken tips away from its California employees. Equity Guru, a website that provides investment information about the tech and cannabis industries, reported in July 2018 that it “has been approached by several employees of MedMen’s … California dispensaries who are telling us colleagues are walking out, upset about a new and unexplained pay cheque deduction that hit this week.
“MedMen, a CSE-listed (Canadian Stock Exchange) U.S. cannabis dispensary chain, built around high-end retail outlets geared towards urban professionals, boasts that its stores are staffed by knowledgeable ‘budtenders.’
“But those budtenders, who tell us they are paid minimum wage, are furious to see their pay cheques being deducted, without explanation, for amounts they were paid in tips through credit and debit transactions. Some of those staff tell us their take home pay was turned into a negative through the unexplained actions.”
MedMen’s reputation among progressives also has been smudged by revelations that it and its CEO, Adam Bierman, donated a total of $10,000 to a political action committee that supported anti-immigration candidates in the 2018 midterm elections. The PAC was formed by Florida Congressman Carlos Curbelo, a Republican, in 2015. Cannabis Wire, which reported the donations, speculated that they were made to win support from Curbelo in establishing cannabis businesses in Florida. In a June 6, 2018, press release, MedMen Enterprises announced that it had purchased Treadwell Nursery, which is based in Florida and operates as Remeny Wellness, for $53 million. “The acquisition allows MedMen to open twenty-five medical marijuana facilities in the state,” Cannabis Wire reports. MedMen has since said it was unaware of the anti-immigrant stance of the PAC and has requested a refund of its donation.
Bierman also is the subject of a lawsuit filed on Jan. 29 in Los Angeles Superior Court alleging misbehavior that includes sexist, racist and homophobic slurs as well as financial improprieties. The suit was filed by James Parker, the company’s former chief financial officer. Barron’s, the financial publication, reports that Parker claimed Bierman used company money to pay for “24-hour armed guards for the founders and their families; private jets; special-order pearl-white Cadillac Escalades for Bierman and a custom Tesla SUV for (Andrew) Modlin (the company’s co-founder and president.) The company allegedly hired Bierman’s personal therapist and marriage counselor as a full-time ‘performance improvement expert,’ at more than $300,000 a year.” MedMen has denied the allegations.
On the other side of the lobbying effort is the Adult Use Retailers Association of West Hollywood (AURA), a group representing the eight successful applicants for recreational cannabis licenses. According to the report, AURA is considering a way to address the complaints by MedMen employees that they will lose their jobs if their employer doesn’t get a recreational sales license. “AURA discussed a potential employment stabilization program would help to connect employees in the existing four medical dispensaries with employment opportunities in the new adult-use retail businesses,” the report says.
“Implementation of the city’s cannabis ordinance is a lengthy and difficult process, particularly because it is new territory for the city, state, and operators,” the report states. “With this in mind, the selected cannabis applicants are still in the process of obtaining licenses from the city, obtaining their state licenses, and completing their tenant improvements. For this reason, staff believes that the city temporary permits allowing the existing four medical dispensaries to sell adult-use cannabis should be extended for an additional three months until March 31, 2020, and that notice should be provided that the adult-use (recreational) permits will not be extended past this date.”
The staff report says the Council also could consider extending the temporary recreational sales permits until June 2020, still notifying the holders of those permits that they won’t be renewed. Noting that members of The Originals have asked that the City Council override the results of the application process and grant them recreational sales permits, the staff report states:
“However, this action would deviate of the city’s established process for implementing its cannabis ordinance, because it would grant permanent adult- use licenses to four businesses that did not score within the top eight in the adult- use retail category. It would also deviate from the City Council’s original intent that in order to receive a permanent adult-use retail license the existing four medical dispensaries needed to compete with all other applicants and score within the top eight to receive a permanent license. Lastly, this action would take the decision making out of the hands of the independent application evaluation committee and instead place it with the City Council, where there has not been a ‘firewall’ against lobbying.”
The City Council will consider the staff report at its meeting on Monday at 6:30 p.m. at the City Council Chambers, 625 N. San Vicente Blvd. Parking is available free of charge in the five-story structure behind the Chambers with a ticket validated in the lobby.