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L/'W OFFICES OF
OMAR rIGUGROA
March 6, 2019
Honorable Mayor & City Council Members
ATTN: City Council Office
City of San Bernardino
290 North D Street, 8th Floor
San Bernardino, CA 92401
Phone: (909) 384-5188
Email: council(cDsbcity.org
Copy to (via email and certified mail):
The City Clerk's Office
ATTN: Georgeann Hanna, City Clerk
201 North E Street, Bldg. 201 A
San Bernardino, CA 92401
Phone: (909) 384-5002
Email: hanna gi(a)sbcity.org
The City Attorney's Office
ATTN: Gary D. Saenz, City Attorney
290 North D Street, 3rd Floor
San Bernardino, CA 92401
Phone: (909) 384-5355
Email: attorney(@sbcity.org
RE: Letter in Response to the Cannabis Retail Ranking and Selection Process
Pursuant to Chapter 5.10 of the San Bernardino Municipal Code
Dear Honorable Mayor and City Council Members:
My name is Lauren A. Mendelsohn. I am a Senior Associate attorney (SBN #311099) at the Law
Offices of Omar Figueroa, a renowned law firm focusing on California cannabis law with more
than two decades of experience in the field. I have extensive experience in providing legal
services to cannabis businesses in California's regulated cannabis industry, and I am thankful to
have achieved success in helping my clients obtain local approvals and CUP's in many local
jurisdictions across California. I represent SB Pharma Holdings, Inc., DBA The Row House,
which is one of the applicants (Application # CCB 18-0006) for a cannabis retail facility in the
City of San Bernardino (hereafter "City").
As this letter will demonstrate, the ranking and selection process was done in violation of the
procedures set forth in Chapter 5.10 of the San Bernardino Municipal Code (hereafter "SBMC")'
as well as other laws and regulations, and it was clear that the City Manager and City Council's
actions were grounded in unacceptable bias towards or against certain applicants based on
' Available at https://www.sbcity.org/civicax/filebank/blobd load. asx?blobid=26812.
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7770 Healdsburg Avenue, Sebastopol, CA 95472
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LAS' OFFICES r `F --
OMAR HGUEROA
donations and other alliances. In addition, the rankings on which the Council ultimately rested
their decision do not appear to be based on an objective process. There were also serious flaws
in the overall process that allowed applicants who do not comply with the City's cannabis
ordinance or General Plan, or who did not have an approved Zoning Verification Letter (which
was one of the application requirements), or who did not pay the required fees on time, to
proceed all the way through the process when they should have been eliminated after Phase 1.
Therefore, the results of the Special Meeting of the Mayor and City Council meeting held on
February 21, 2019 cannot stand.
The City should only consider applicants who met the minimum application criteria, who have an
approved Zoning Verification Letter, who submitted their materials and paid their fee on time,
and who are in compliance with the General Plan. Using that as a starting point, the City should
follow an objective and transparent process to evaluate eligible applicants, a process which
complies with the guidelines that the City adopted. To proceed otherwise would result in severe
injustice towards applicants who followed the rules, who worked hard to put together a strong
team and a strong application, and who are local residents.
PROBLEMS WITH THE EVALUATION AND RANKING PROCESS
The City Did Not Follow Its Own Application Procedure Guidelines.
The evaluation and ranking process did not follow the guidelines set forth in Section 5.10.090 of
the SBMC or the Application Procedure Guidelines that were adopted via Resolution 2018-102
("Application Procedure Guidelines" ).2 Some applicants did not pay the required application
fees, yet were allowed to proceed to the final stage of the process. This is a violation of Section
5.10.090(b) of the SBMC, which states: "At the time of filing, each applicant shall pay an
application fee established by Resolution of the Mayor and City Council, to cover all costs
incurred by the City in the application process." One applicant was even asked during the
Special Meeting held on February 21, 2019 if they were able to pay the application fees that
day, eight months after it was due.
Other applicants did not submit their application materials until after the date when they were
due. This is a violation of the Application Procedure Guidelines, which states: "The application
process to operate a Commercial Cannabis business (CCB) in the City of San Bernardino will
open on April 23, 2018 and will close at 4:OOPM on June 25, 2018." For example, CCB18-0048
was submitted on June 27, 2018 despite a due date of June 25, 2018, yet this applicant was still
2 Application Procedure Guidelines for a Commercial Cannabis Business (CCB), available at:
haps://www sbcity.org/civicax/filebankiblobdioad.aspx?blobid=25694.
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7770 Healdsburg Avenue, Sebastopol, CA 95472
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U;W OFFICES r:F
OMAR HGUGRQA
allowed to proceed to subsequent "Phases" of the process. This is unfair to my client and to the
other applicants who followed the City's rules and paid the fees when they were due.
Additionally, applicants who did not have an approved Zoning Verification Letter and who were
not compliant with the City's General Plan were allowed to proceed to the final stage of the
process, rather than being eliminated after Phase 1 as they should have been. The Zoning
Verification Letter Application itself states: "This form is to ensure the location of the proposed
Commercial Cannabis Business meets the City of San Bernardino MC § 5.10.025 relating to
zoning, sensitive use buffers and locational requirements."
Applications that are not compliant with the City's Municipal Code or General Plan, or that did
not meet other minimum criteria, should not even be considered for a permit. Those applicants
should have simply been rejected, and the remaining applications should have been ranked
using objective criteria in a transparent fashion. That would have been in accordance with
Section 5.10.090(d) of the SBMC, which states, in relevant part and with emphasis added:
"...In addition to any other justification provided, including a failure to comply with the
other requirements of this chapter, an application RISKS BEING REJECTED for any
of the following reasons:
(1) The application was received after the designated date and time;
(2) The application did not contain the required elements, exhibits, nor organized
in the required format; or
(3) The application was not considered fully responsive to the request for permit
application."
The Obiective Review Criteria Do Not Appear to Have Been Followed.
The scores given to applicants during Phase 3 do not reflect an unbiased and objective review
as required by the SBMC and the Application Procedure Guidelines. In particular, there is a
negative correlation between an applicant's score and whether their Owners/Principals are
residents of San Bernardino County. This correlation grew even more negative if the applicant's
Owners/Principals resided within the City of San Bernardino. This inverse relationship is rather
perplexing, considering the application having an entire section called "Local Enterprise" that
asked applicants to "state to the extent to which the CCB will be a locally managed enterprise
whose Owners/Principals reside within the City and/or within San Bernardino County. "I
3 Zoning Verification Letter (ZVL) application, available at
h s://www.sbcit .or /civicax/filebank/blobdioad.as x?blobid=25692.
4 Application Procedure Guidelines for a Commercial Cannabis Business (CCB), available at
https://www. sbcity.o[g/civicax/fiilebank/blobdload.asl2x?blobid=25694.
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7770 Healdsburg Avenue, Sebastopol, CA 95472
T: (707) 829-0215 1 F: (707) 861-9187
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LAW OFFICES OF
OMAP HGUGROA
For example, Pure Dispensaries, LLC received the highest "Local Enterprise" score in Phase 3
of all applicants (385.50 out of 400), despite their Owners/Principals being residents of neither
the City nor San Bernardino County. On the other hand, Cali Blue Skys Investments scored the
lowest on the "Local Enterprise" element in Phase 3 (314.25 out of 400) despite their
Owners/Operators being residents of both the City and County of San Bernardino.5
Looking to the retail applicants, none of the applications that were scored in the top five were
residents of the City of San Bernardino, and only one (Empire Connect, LLC) was a resident of
San Bernardino County. The top five ranked retail applications received "Local Enterprise"
scores of 356.25 (County resident), 358.50 (not a resident), 355.75 (not a resident), 357.00 (not
a resident), and 347.50 (not a resident) respectively. My client, SB Holdings, Inc. DBA The Row
House, received a score of 333.75 on the "Local Enterprise" element of Phase 3 despite having
Principals who live in the City of San Bernardino. This suggests a bias against local residents,
which is the opposite of what the evaluation criteria are attempting to achieve.
The Results on Phase 3 Scores Appear Engineered.
Typically, applications will be stronger in certain areas than others, and an average score
reflects the mean between these stronger and weaker areas. Yet that is not what happened
here. Curiously, the overall average scores assigned to my client, SB Pharma Holdings, Inc.
DBA The Row House, in Phase 3 mirrored the average scores for each individual section, which
were supposedly reached by a number of independent reviewers.
My client's scores in each category on Phase 3 came out to roughly 83%, plus or minus about
one percentage point, which is also what their average score for Phase 3 was reported as. It is
very unlikely that a ranking process using multiple independent reviewers (the City's Selection
Committee consisted of senior staff from Community Economic Development, Business
Registration, the Police Department, and the County Fire Department) would result in the same
effective score in each section across the board, unless a result -oriented approach was taken in
violation of the ordinance and due process requirements. Moreover, these anomalous scores
are not unique to my client.
Indeed, the scoring anomalies are pervasive. As one looks at the scores assigned to applicants
in Phase 3, one notices that the ranges are fairly consistent for each application. There are no
applicants who scored poorly in one area and very highly in another, which would be expected if
5 As listed in the Phase 3 scores published in the materials of the agenda for the February 21, 2019
Special Meeting of the Mayor and City Council, available at
htta://sanbemardinocitvca igm2 com/Citizens/FileOpen.aspx?Tvl2e=14&ID=2445&Inline=True.
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LA4 041CCS OF
OMAR rIGUGROA
a truly objective evaluation were being conducted on applicants with varying sophistication and
experience. Additionally, if one analyzes the actual materials that were submitted by the
applicants, one will notice that applicants who provided very similar information for a particular
section received differing scores on that section. This demonstrates that the Phase 3 scores
were not reached using an objective evaluation guided by the criteria contained in the
Application Procedure Guidelines.
The Evaluation Process Was Not Transparent.
Neither the City Council nor the Public received information about how the applicants' scores in
Phase 2 or Phase 3 were reached. This information was not made available as part of the
agenda packet for the Special Meeting on February 21, nor is it available online elsewhere. My
client has not even received an explanation of their score despite requesting this from the City.
submitted a Public Records Act (PRA) request to the City on February 25, 2019 to obtain
information about how applicants' scores were reached, but the City's response to my request
on March 4, 2019 was not fully responsive.
There also to have been serious flaws in the way that appeals of Phase 2 scores were handled.
There were ten (10) applicants who were Initially Disqualified after Phase 2 for receiving scores
below 80%. All ten of these appealed these scores, and all ten appeals were granted. On
appeal, all ten of them received passing scores and were allowed to proceed to Phase 3. This
included a number of applicants who were not compliant with the City's General Plan, who did
not have an approved Zoning Verification Letter, or who did not meet the minimum requirements
in some other way.
How exactly all ten of these applications which originally received failing Phase 2 scores could
miraculously receive passing scores on Phase 2 the second time around—in one case, an
alleged increase in the Phase 2 score of roughly 50 points—is unclear, unless there was some
manipulation of the scores occurring behind the scenes, in contravention of the SBMC in
addition to other laws.
II. PROBLEMS WITH THE SELECTION PROCESS
The Materials Presented During the Meeting on Thursda 2/21119 were Different from
those Posted on the City's Website in Violation of Chapter 5.10.370 of the San
Bernardino Municipal Code.
Specifically, Attachment #1 to the agenda for the Special Meeting of the Mayor and City Council
on February 21, 2019 ("Guidelines (Issued by City Manager per Resolution 2018-102))" is
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LAW 04ICCS O)
OMAP HGUEROA
different from the "Commercial Cannabis Business Permit Application Procedure Guidelines"
that are posted on the City's websites This is a violation of Chapter 5.10.370 of the SBMC,
which states in relevant part and with emphasis added:
a) in addition to any regulations adopted by the Mayor and City Council, the City
Manager or his/her designee is authorized to establish, subject to approval by the
Mayor and City Council, any additional rules, regulations and standards
governing the issuance, denial or renewal of commercial cannabis business
permits, the ongoing operation of commercial cannabis businesses and the City's
oversight, or concerning any other subject determined to be necessary to carry
out the purposes of this Chapter.
b) Regulations shall be published on the City's website.
c) Regulations promulgated by the City Manager or his/her designee shall
become effective upon date of publication. Commercial cannabis businesses
shall be required to comply with all state and local laws and regulations, including
but not limited to any rules, regulations or standards adopted by the City
Manager or his/her designee.
The version that is available on the City's website was revised on May 21, 2018, but the version
included in the application packet for the February 21, 2019 meeting—which was apparently the
version that was used to conduct the evaluations—was revised on January 31, 2019. It was not
made public until the February 21 meeting.
The Staff Report Included with the Materials from the Special Meetln-q on February 21-
2019 Contained Inaccuracies.
The Staff Report for the February 21 Special Meeting of the Mayor & City Council contained
inaccuracies about the number of appeals that had been granted. The Staff Report stated that
six appeals from applicants who originally were eliminated after Phase 2 had been granted,
however other sources indicate that all ten of the appeals that were filed regarding Phase 2
elimination were granted, and that all 10 were ultimately allowed to proceed through the
evaluation process. Information about the applicants' original scores during Phase 2 as well as
any additional scores after appeal is not available on the City's website anywhere, nor was this
information included in the agenda packet for the February 21 meeting.
6 Application Procedure Guidelines for a Commercial Cannabis Business (CCB), available at
https://www sbcity.orc/civicax/filebank/blobdload.aspx?blobid=25694.
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7770 Healdsburg Avenue, Sebastopol, CA 95472
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LA,J OFFICES OF
OMAR HGUEROA
City Council Members did not Appear to Make Informed Decisions at the Special Meeting
Held on February 21, 2019.
With regards to how the February 21 meeting unfolded, even members of City Council members
were clearly aware that things were being done in a "haphazard" fashion. Council members
expressed being "confused" by the process, overwhelmed by the roughly 7,500 pages of
materials they'd received only 48 hours prior, and not wanting to "go to jail." The fact that the
City Attorney had to continually remind the Council to base their decisions in policy
demonstrates how far off course the discussion had veered.
One explanation for why the Council may have appeared confused by what was occurring
during the Special Meeting on February 21, is that the Council Members were missing important
information that ought to have been provided to them in order for them to come to an informed
decision. Specifically, applicants' scores from Phase 2 were not included in the agenda packet
for the February 21, 2019 meeting and do not appear to be accessible to the public anywhere.
Thus, the City Council was unable to use applicant's Phase 2 scores as part of their
determination during the selection process. City staff should have provided more information
about Phase 2 (which supposedly consisted of an evaluation conducted by HdL) to the Council
Members and to the public. Additionally, Council Members would have benefitted from a more
detailed explanation about why each applicant received the score that they did on both Phase 2
and Phase 3, yet this information was not made available.
Council Members and City Staff Exhibited Favoritism Towards Certain Applicants During
the Special Meeting on February 21 2019.
A disinterested observer watching this meeting would quickly figure out that certain City Council
members had "favorites" on the list who they were essentially advocating on behalf of rather
than making unbiased decisions based on the city's ordinance. Statements such as "I want to
know who it impacts" before taking a vote demonstrated this.
In addition to favoritism being exhibited by the Council during the Special Meeting on February
21, this could also be seen by certain members of City Staff. When watching the video replay of
the meeting, one can clearly hear at one point someone whispering to ask how a certain
decision would impact particular applicant .7 Such result -oriented decision-making and improper
guiding of the process is not how a neutral and fair process functions.
7 Video recording of the February 21, 2019 Special Meeting of the Mayor and City Council is available at
htt ://sanbernardinocit ca.i m2.cu,iiik.,jLi/-cii,j»-�iiLview.ds x?Mode=Video&Meetin ID=2659&Format=A
enda.
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LAW COFFIM OF
OMAR HGUEROA
In addition, not a single Council Member nor any members of Staff disclosed any meetings with
cannabis permit applicants or conflicts of interest with regards to the cannabis business
selection process, despite the obvious appearance of bias during the February 21 meeting.
The City did not Honor its own Application Process by Purporting to Impermissibly and
Unfairly Allow "On -the -Spot" Changes.
Applicants who only applied for certain uses were asked on the spot at the Special Meeting of
the Mayor and City Council on February 21, 2019 what types of licenses they wanted, in
violation of the procedures set forth in Chapter 5.10 and the Application Procedure Guidelines
which call for an applicant to specify what types of activities they are applying for and to submit
materials related to that use at the time of application. This puts applicants who followed the
rules and who were not given a chance to request additional licenses on the spot at an unfair
disadvantage.
Additionally, as mentioned above, at least one Applicant who had not yet paid the required
application fee was asked on the spot during the February 21 meeting if they are able to pay the
fees then. This is in an unacceptable violation of Section 5.10.090 of the SBMC and is incredibly
unfair to my client and to other applicants who paid the fees when they were due over eight
months ago.
III. CONCLUSION
As the above arguments demonstrate, the results of the "rankings" and thus the list of top
qualifying applicants were tainted by bias and improper process. Because of the favoritism that
appears to have been demonstrated towards certain applicants and the lack of objective policy -
based decisions taken during the evaluation and selection process, applicants were not given a
fair chance at a permit. The City Manager, Mayor & City Council engaged in due process
violations by not following objective criteria laid out in the application procedure guidelines. As
such, the City Council's actions from the Special Meeting on February 21, 2019 cannot stand.
To resolve this problem that has arisen, the City should eliminate all applicants who have not
submitted a timely application along with the required fees, an approved Zoning Verification
Letter, or who are not compliant with the City's General Plan. After those noncompliant
applicants have been removed, the City must find a way to evaluate applicants using an
objective and transparent method that complies with the Application Procedure Guidelines. For
example, if there is supposed to be a preference for local residents, then this should be
reflected in the applicants who are ultimately chosen—it makes no sense to select zero retail
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LAW 041ccS OF
OMAR HGUEROA
operators whose Owners/Operators reside within the City of San Bernardino, which is what the
City Council voted to do on February 21. Additionally, the City must be cognizant of the fact that
applicants have already spent a significant amount of time and resources on this process, so an
equitable solution needs to be reached in a timely fashion.
My client is confident that, if its application were to be evaluated honestly and objectively based
on the City's ordinance and the adopted Application Procedure Guidelines, as well as on the
thorough materials that were provided, it would rank among the top retail applications and would
be selected for a permit. They are a highly qualified team of San Bernardino residents with
years of business experience and demonstrated compliance with local and state regulations. It
is only fair to my client, as well as to the other applicants and the residents of the City of San
Bernardino, that the selection process occur without any taint of impropriety.
Respectfully submitted,
s
Lauren A. Mendelsohn, Esq.
Attorney for SB Pharma Holdings, Inc. DBA The Row House
lauren@omarfigueroa.com
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ADMINISTRATIVE CITATION r
0610512018
Citation Number: V18-116877
PID: POSS4799
Delinquent License No.: U17-145351
DEBORAH MELVIN Total Due Now: $150.00
SIN GESITA FS7A FdRMA ENE'SPAIQCL. FAtI R.E►FLl_AMAAAL I96f� $58&7317
._....� .t....� ..f eL.s .ia►o of Chic
y roof of correcuun wru,u� w ra.�....... ....p—
CORRECTABLE VIOLATIONS can be dismissed b. showing p
c"dation with administrative processing fee and late fees• if past due license years exists state taw requires the departm
-citation
any amount paid toward delinquent licenses until it becomes current, if proof of correction is received after
to days, all penalties are due. enalties and administrative p,yocessing fees are due immediately.
For NON -CORRECTIBLE vi la roust all submitted and postmarked within 20 days oft s citation and must inc ude the tc
CITATSON - A written app
eal
uestions or do not letieve you owe this debt, please a°ntact us, witllin 20 days frorrl the issue date of this citation You
If you have any 4
may conCast a representative to answer questions and review object+ons Tues ay t roug rl ay 9:00 AM to 4:00 PM (dosed Holidays and
Weekends] at 951-358-7517 or email us at rabiescontrol@rivco.ora. Failure to pay the amount due outlined in this billing may result in
Vour account accumtilating additiortal penalties and be+ng turned over to c°Ilections. If you have made this payment prior to the date of this
Form Correctable
Number
A1397547
V1$-116877 Y
V18-11-877 Y
V78-'t168?7 Y
Deserlption of Violation
Date
issued
ASTRO BR BRINDLE M MASTIFF DOG
6/5118 113 6.08.020A MANDATORY DOG LICENS for A1387547
REGULAR DOG LICENSE FEE PLUS PENALTY
615118 ill 6.08.120 MANDATORY S/N for A1387647
6/5118 .11.16.08130 MANDATORY MCHIP for A7387547
615118 MANDATORY CITATION PROCESSING FEE
$ 25.00
penalty perjury '
Vuitness I declare under enact °funder the laws of the State of California that the foregoing Is true and correct.
issUing Officer's Signature: ,, , :¢ f )
Date: 6/412018
SJaCne Ur tlli=ri f�ru;I7vt.il, I.nVF+iit�Vr ixti
Cl'+ref uI V[:t[:rsrrary $r•,rvicr:slRat+sns Coniral
(Il pgrd rr furl criAY [rrvnf 8 8n�k] o! cancyl9q thls cryerk, nr ey order- nr rerei�l;
rn rxorlan w+Eh your Payment
Please retu
Location Amount
1541.0 GOLDEN STAR AVE $ 200.00
1541.0 GOLDEN SPAR AVE $ 200.0
15410 GOLDEN STAR AVE $ 200.00
VIS-116877 6_:c1p4/207818 c+++isuUrnuar
Qlj�
ELVIN i" "•Tp
MAIL T;
❑e
DEBORAH M }� ll�I I'• I�� � mal Services
e 6851 Van Buren glyd
,
Jurupa Valley CA 92509
DoNOTSENDCAS", WkiT€CITATtON 17 ON PAYMENT
MAKE CHECK OR MONEYFI3 PArALI ITO. COUNTY OF RIVERSIDE
SEE REVERSE SIDE: for explanation of violations and instructions.
1/29119, 9:06 AM
about:blank Page 1 of 1
Gmail - Here is the citation for my dog that the County of 1/29/19, 9:07 AM
Gmai!
Here is the citation for my dog that the County of
DREAM TEAM <dreamteamrescue@yahoo.com> Tue, Jan 29, 2019 at 9:06 AM
To: Alice Chow Dream Team Angels Rescue <alice888chow@gmail.com>
Here is the citation for my dog that the County of Riverside sent to the wrong address and then cited me for $750 for
nonpayment of a altered dog. They claim is was unaltered even though they had his paperwork in their file. I showed
they sent the citation to an outdated address and that he was altered and they didn't seem to care. I paid the fee,
showed them he was altered and then a couple weeks later I got another notice, right address but showing an altered
dog.
Sent from my Phone
https://mail.google.com/mail/u/O?ik=cf93d3ccc9&view=pt&search=... read-f%3A1624015224938538803&simpl=msg-f%3A1624015224938538803 Page 1 of 1