California’s ‘cannabis landlord,’ targeted in police raid, alleges San Bernardino ‘pay-for-play’ corruption

A Pacific Palisades woman who heads a company that was blocked last week from setting up legitimate commercial cannabis operations in San Bernardino sued the city on Monday, Feb. 25 alleging corrupt practices involving a “pay for play” scheme.

Washington LLC, headed by Calfornia’s self-proclaimed “cannabis landlord” Stephanie Smith, filed a lawsuit in San Bernardino Superior Court seeking to halt the licensing of 16 commercial cannabis businesses approved by the city on Feb. 21. Her company ranked 39th on a list of 44 applicants that applied for commercial cannabis licenses with the city.

A hearing on the requested injunction is scheduled for 8:30 a.m. Wednesday, Feb. 27, in San Bernardino Superior Court before Judge Janet M. Frangie.

“The effects of the ‘pay for play’ corruption led to the City issuing a large number of licenses that were illegal, not just because of the ‘pay for play,’ but also because the licenses violated state and city law,” the lawsuit alleges.

The fact that eight of the 16 businesses whose licenses were approved by the City Council were, according to Washington LLC., in violation of the Municipal Code or General Plan raises suspicion. Those companies are Organtix Orchards, AM-PM Mgmt. Inc., Orange Show Cultivators, Nibble This LLC (two separate locations), A Bud & Beyond, Blunt Brothers, and Accessible Options.

“The court may simply stay implementation of all of the licenses given the fact that over 50% of the issued licenses were illegal, thereby throwing the entire process into doubt,” according to the lawsuit.

Back-channel communications?

Smith alleges a series of back-channel communications involving City Manager Andrea Miller, commercial marijuana entrepreneurs and former Mayor Carey Davis’ re-election campaign, including his former campaign manager, Scott Beard.

Smith’s attorney, Ben Eilenberg, said Monday that Miller and Beard engaged in text messages with their “chosen marijuana operators” about meetings and donations in an effort to support Davis’ campaign.

Miller, according to the lawsuit, arranged a series of meetings between Davis’ former campaign affiliates and commercial marijuana applicants with the intent of receiving campaign donations both “on and off the books.”

Included in the lawsuit were two text chains of Mark Estermyer, owner of AM-PM MGMT. Inc., describing a meeting set up by Miller and Beard to discuss contributions to Davis’ campaign. Estermyer’s AM-PM MGMT., which does business as Cold Creek Organics, has a business model that Washington LLC. alleges is not complaint with city code.

On July 30, 2018, Estermyer sent a text to an operator applying for cannabis permits to discuss a meeting that day with Miller and Beard, Eilenberg said.

‘Strange bedfellows’

“We met with San Bernardino staff today, extremely successful … except for your issue and mine,” the text says. “We were able to get each softened. Mine is enough to for us to remain confident. I don’t know enough about yours to say it is enough also. This industry makes some people strange bedfellows, which is why I want you to know directly from me. Scott Beard was the person who facilitated this meeting. But it was Andrea Miller who requested me.”

In a second text, Estermyer seems to discuss making an “off the books” campaign donation to Davis, Eilenberg said. “AM-PM has given the association a total of $4,500,” says the text. “Plus additional contributions to help us that David doesn’t want counted. … $5,000 towards the mayors campaign.”

Eilenberg believes Estermyer made an error in the text, typing “David” instead of “Davis.”

Estermyer said Monday that the dollar figures discussed in the texts concerned two ballot measures, X and W, put before voters in November.

“I’m really sad these people feel they need to drag me into the equation,” Estermyer said in a telephone interview. “I really am. It bums me out. There’s a lot more to this than just a couple text messages. … (The money referenced in the texts) had nothing to do with the mayor’s campaign.”

Beard said Monday that Davis has never been a cannabis supporter or taken money from anybody in that industry.

Allegation ‘is laughable’

“Any allegation that any impropriety occurred, particularly regarding Mayor Davis or Andrea or any of us, is laughable,” Beard said by phone. “(Smith) is the one who’s been arrested by the Police Department, who’s operated illegal dispensaries in the city, the one who police found thousands of oxycontin and large sums of cash in her house.”

Beard confirmed he had facilitated meetings with members of the cannabis community, the city attorney and Miller “to try to resolve the differences they had with various propositions that had been passed, challenged and coming up for a vote in an effort to save the city some money.”

Miller could not be reached for comment Monday.

Arrested in raid at home

San Bernardino police arrested Smith, 44, about on Feb. 20 at her Pacific Palisades home after finding a large stash of pharmaceutical opiates, oxycodone and Norco, and about $200,000 in cash. A Feb. 6 raid at one of Smith’s buildings in San Bernardino, at 444 N. H St., preceded the raid at her home. During the Feb. 6 raid, police seized more than 2,600 pounds of marijuana in an alleged illegal cultivation operation.

Smith’s arrest culminated a more than 14-month investigation by San Bernardino police into her alleged illegal marijuana cultivation enterprises in San Bernardino.

Smith, a wealthy real estate developer, entrepreneur and mother of five, has denied being a “drug lord,” insisting she is merely a landlord who leases her properties to cultivators and has nothing to do with their marijuana-growing enterprises. She has, however, acknowledged being an advocate for the commercial sale of legalized marijuana, and has led efforts to place legalization measures on several city ballots. She is suing several cities, including Colton, over their cannabis policies.

In December 2017, San Bernardino police raided four buildings owned by Smith. In one of the raids, which occurred at The Sun’s former newspaper production plant at 4010 N. Georgia Blvd., police seized 4 1/2 tons of marijuana. They also raided Smith’s home, but she was not arrested or charged with any crime at the time.

Smith posted $30,000 bail and was released from custody at the Century Regional Detention Facility in Lynwood following her Feb. 22 arraignment at Airport Superior Court near LAX. She will next appear in court on March 4 for a settlement conference.

Staff writer Brian Whitehead contributed to this report.