The City of Santa Barbara issued a statement and fact sheet on Thursday disputing what it called “seriously misleading and false assertions” published in a Los Angeles Magazine article.
“Despite the known errors and misstatements in the article, the city has and will take all appropriate action in response to factual allegations of corruption,” City Administrator Paul Casey said. “We take these allegations seriously and will ensure that every issue raised is addressed.”
Anthony Wagner, the Santa Barbara Police Department‘s public information officer and spokesman, has been placed on temporary paid leave in the wake of the article published Friday.
Wagner was the primary focus of a story that highlighted Santa Barbara’s cannabis dispensary licensing process. The city decided to license three retail cannabis dispensaries, and Wagner was involved in the selection process, as Noozhawk has previously reported.
Police Chief Bernard Melekian swiftly put Wagner on leave. He issued this statement on Thursday:
“We are close to retaining a firm to conduct the investigation I launched on Monday, March 15, when I placed Anthony Wagner on administrative leave,” Melekian said. “Mr. Wagner has been extremely cooperative and looks forward to an opportunity to clear his name.
“Nevertheless, the article raised some potentially new information concerning Mr. Wagner’s relationship with two people from San Diego who allegedly had connections with Golden State Greens.”
One of the statements in the original article alleged that Micah Anderson, a former business associate of Wagner in San Diego, had ownership of Golden State Greens, an entity that won a cannabis dispensary license in Santa Barbara. Golden State Greens never opened. Instead, it sold the license to Canadian cannabis retailer Jushi for several million dollars.
Los Angeles Magazine, however, published a correction to the story on Thursday, stating that Anderson was not involved with Golden State Greens’ application process.
“A prior version of this story incorrectly identified Micah Anderson as one of the owners that applied for a cannabis dispensary license for Golden State Greens in Santa Barbara,” the correction stated. “The information we have been provided since the article was published shows that Mr. Anderson was neither an owner of Golden State Greens nor involved in the application process in Santa Barbara. We apologize for any confusion.”
The correction came after Wagner sent a seven-page demand for retraction letter alleging 32 errors in the story. It is unclear whether the correction was in response to Wagner’s letter.
The City of Santa Barbara’s statement on Thursday also stated that the Wagner investigation would be completed in six to eight weeks.
“The results of that investigation will be made public to the maximum degree permissible,” according to the statement.
The statement from the city also attempts to outline the city’s permitting process.
One issue that still remains is why the city allowed Golden State Greens to sell the application on the private market. The city’s commercial cannabis ordinance prohibits permit transfers and closely regulates stock reorganization or other ownership changes — with some exceptions.
“No permittee shall transfer ownership or control of a commercial cannabis business unless and until the proposed new owner submits all required application materials and pays all applicable fees, and independently meets the requirements of this chapter such as to be entitled to the issuance of an original commercial cannabis business permit issued by the City Council,” the ordinance states.
The language of the regulation, according to the city’s statement, requires the city to evaluate any proposed ownership change against the exact same rigorous standards as the original applicant. The purpose of the regulation is to prevent a “bait and switch” where an unqualified transferee slips into the Santa Barbara market after a fair competitive process.
A city staff team and an outside consultant examined the business qualifications of the new owner, Jushi, which was previously reported in August by Noozhawk, under a headline of “Florida Cannabis Company Swoops In to Run Third Santa Barbara Retail Dispensary.”
The retail shop, at 3516 State St. across from Loreto Plaza, is scheduled to open in late September under the name Beyond / Hello.
The city quietly signed off on the ownership transfer in May, after hiring Avenu Insights & Analytics of Westlake Village to conduct a financial analysis of Jushi at a cost of $2,400. Assistant City Attorney Tava Ostrenger and Matt Fore, senior assistant to Casey, approved the financial review, Fore told Noozhawk.
According to the review, as of Sept. 30, 2019, Jushi had $27 million in cash and cash equivalents in the bank.
“Santa Barbara is a perfect example of what we are looking for in acquisition in the California market,” Michael Perlman, Jushi executive vice president of investor relations and treasury, told Noozhawk at the time.
In its statement, the city said it also obtained and reviewed criminal background checks on each proposed transferee for compliance with the law.
The city also fought a lawsuit with SGSB, which lost out in the 2017 process when the city awarded three licenses. The city spent $101,425 in legal fees, and it eventually won the case.
— Noozhawk staff writer Joshua Molina can be reached at jmolina@noozhawk.com. Follow Noozhawk on Twitter: @noozhawk, @NoozhawkNews and @NoozhawkBiz. Connect with Noozhawk on Facebook.