How Blockbuster Grand Jury Report on SB's Pot Scandal Proves Need for County Ethics Reform

The new Grand Jury report chronicling the origin of Santa Barbara County’s contentious cannabis law documents for the historic record a disgraceful political process teeming with influence peddling, secrecy and sleaze.

With clarity, depth and painstaking detail, the must-read report provides a compelling case study of local governance gone awry, as it shines a bright light on the atmosphere of soft corruption in which the Board of Supervisors operated.

In the middle of the muck are Supervisors Das Williams and Steve Lavagnino.

Operating as an “Ad Hoc Committee,” which allowed them to skirt California’s open meeting law, the two turned the power and resources of county government to the singular task of crafting and implementing laws and regulations specifically designed to serve the direct economic and legal interests of the cannabis industry, the report demonstrates - at the expense of the broader community.

“The Board of Supervisors granted nearly unfettered access to cannabis growers and industry lobbyists that was undisclosed to the public during the creation of the cannabis ordinances,” the jury wrote.

Although much of the information in the document previously was reported in the media, the jury’s account is the most comprehensive study to date of the roots of an ongoing political conflict that has bitterly divided county residents. The report upholds and expands on the investigative journalism of Joe Mozingo in the L.A. Times, who first revealed last year some of the behind-the-scenes machinations by which the supervisors quietly transformed Santa Barbara into a cannabis capital of California.

The jurors, a panel of volunteer citizens selected by the Superior Court, conducted dozens of interviews, including with all five supervisors, examined thousands of pages of documents and unearthed previously undisclosed emails and communications between special interest advocates, elected officials and senior county staff members.

Their conscientious and plain-spoken effort raises consequential questions about the integrity of county government -- and challenges the supervisors to act to restore public trust in the probity of their actions.

In its conclusions and recommendations for change, the grand jury sets forth a pathway for doing so, echoing a critique first made by Laura Capps, president of the Santa Barbara school board, in her failed challenge to Williams’ 2020 re-election.

“The Santa Barbara County Board of Supervisors does not have a written Code of Ethics to formalize its ethical standards and guide its decision-making processes," the jury notes, amid its proposals for reforming policy and repairing the economic, public health and political damage inflicted by this sorry episode of local history,

With 90 days to respond to the grand jury’s findings and suggestions for action, the supervisors -- as a matter of political self-interest, if not regard for the public's desire for clean government - should move to enact these two recommendations:

• “That the Santa Barbara County Board of Supervisors develop standards that require…members to publicly disclose all access granted to lobbying individuals or groups, especially while a matter involving these individuals or groups is before the Board of Supervisors."

• “That the Santa Barbara County Board of Supervisors establish, staff and empower an independent Ethics Commission with oversight over the Board and its staff members.”

You can read the grand jury report in full here. Six other takeaways from it:

What makes the jury so grand? The California Constitution, via Article I, Section 23, provides for grand juries in each of the state’s 58 counties:

“One or more grand juries shall be drawn and summoned at least once a year …”

Although the words “grand jury” may call to mind dramatic movie scenes of furrowed-brow citizens meeting in secret about criminal matters presented by an intense District Attorney, they also have a second function, which is civil, not criminal.

As stated in Section 925 of the state Penal Code, juries: “shall investigate and report on the operations, accounts, and records of the officers, departments, or functions of the county.”

In Santa Barbara County the 17 members of the 2019-20 grand jury, identified here

were selected by the Superior Court from a group of citizens who answered the call for volunteers, resulting in a group that includes “attorneys and CPAs, former law enforcement, business owners, government officials, and educators,” according to the report.

“I’m not allowed to tell you,” who specifically worked on or wrote the cannabis report, one juror whispered to us, noting that members sign “a secrecy promise.”

In the news business, it’s an open secret that civil grand jury reports often are given short shrift, especially when they focus, as in the past, on issues like vehicle towing in Santa Maria or the affairs of the Las Positas Tennis Facility.

This year, however, the Santa Barbara County jurors debunked the conventional media wisdom.

In a series of 10 documents issued over the past two months, the jury tackled some of the most urgent, vexing and intractable problems in the county and its cities, from the tangled affairs of Santa Barbara’s Community Development Department and the city’s struggle with housing production to countywide homelessness and juvenile gang problems.

Amid simmering community anger, a pile of private lawsuits and a letter of complaint sent to the U.S. Attorney by a group of neighbors scandalized by the impact of the ordinance, the jury’s work on the continuing cannabis controversy is exemplary.

Their blunt and hard-hitting summary leaves little doubt about what they learned:

"The action taken by the Santa Barbara County Board of Supervisors to certify the development of a robust cannabis industry as the primary objective of the cannabis ordinances has altered the quality of life in Santa Barbara County, perhaps forever.

The fulfillment of that objective dictated the actions taken by the Board from the excessive allowance of licenses and acreage, creation of an unverified affidavit system, ignoring widespread odor complaints, not acknowledging the conflict between cannabis cultivation and traditional agriculture, to rejecting the environmentally superior alternatives of limited cannabis development.

Instead of a balanced approach carefully evaluating how the cannabis industry would be compatible, both as to amount of acreage and location, the Board simply opened the floodgates. These ordinances must be amended."

Pow.

The Pottery Barn principle. As ex-President George W. Bush prepared to invade Iraq in 2003, then-Secretary of State Colin Powell famously advised him, “If you break it, you own it.”

As a political matter, that formulation has become known as the “Pottery Barn rule” -and deems that elected leaders bear personal and sustained responsibility for adverse, if unintended, consequences of rash, reckless, foolish or failed policies.

Shout out to Santa Barbara County's cannabis ordinance.

The grand jury at one point cites the “hubris” of the elected officials who produced the cannabis regulations; although prohibited from naming names, much of their critique points to the actions of what it refers to as “the Ad Hoc.”

The Ad Hoc committee members, dubbed “the Doobie Brothers” by one wit in the local press corps, were:

• Williams, who has banged the drum for marijuana legalization while taking campaign money from cannabis interests since his city council days just after the turn of the century and;

• Lavagnino, a North County Republican-turned-independent who’s also taken campaign money from the industry while making unrestrained claims that pot will prove a fiscal panacea for county government; for graybeard political reporters, these avowals recall nothing so much as long-vanished and cynical 1980s campaign promises by boosters of the California Lottery that it would bankroll public education (spoiler alert: it doesn’t).

Repeatedly in their report, grand jurors emphasize that the turmoil over cannabis flowed directly from the Ad Hoc’s original sin: The primary goal of Das and Steve, aided and abetted by departed pot czar Dennis Bozanich, was to use the machinery of government broadly to implant a wholly new industry into Santa Barbara’s economy, with scarce care paid to protecting the health and welfare of existing businesses, neighbors or school kids.

Jurors note that the EIR for the Doobies' adventurist pot policy lists 12 objectives, of which the first is:

“Develop a robust and economically viable legal cannabis industry to ensure production and availability of high quality cannabis products to help meet local demands, and, as a public benefit, improve the County’s tax base.”

This primary objective, to jump start the creation of a “robust” marijuana market on behalf of cannabis growers, “became the guiding principle” of the ordinance, the report says, and most other objectives in some way also aimed to benefit pot growers.

Far down the list were items like “Minimize the risks associated with criminal activity, degradation of visual resources and neighborhood character” (#8) and "Limit potential impacts on children" (#10).

The jury reports:

“The many actions that were then taken along the way in the creation and passage of the cannabis ordinances reflect this (first) objective including the allowance of an excessive amount of acreage and the excessive grants of business licenses.”

Lobbyists run wild. Because they did not represent a majority of the Board of Supervisors, the two-man committee operated free of the pesky inconvenience of the Ralph M. Brown Act, which requires public notice and guarantees public access for most such policy deliberations.

While ordinary folks were kept in the dark, however, advocates and lobbyists for the industry had “unfettered access” to Williams and Lavagnino, the report documents.

While not named by the grand jury, these special interest influencers, according to reporting by the L.A. Times, the Independent and Newsmakers, included leading local political consultant Mollie Culver (who later briefly worked for Supervisor Gregg Hart, who consistently votes on behalf of the industry); Erin Weber and Jared Ficker of the prominent, Sacramento-based lobbying outfit California Strategies; and Graham Farrar, the highest-profile industry figure in Santa Barbara, and a personal friend of Williams.

(Mozingo reported in the L.A. Times a series of embarrassing revelations about Das’s chummy communications with this crowd, including his arrangement of social events and outings with them. In one instance, Das obediently answered a Farrar email urging a pro-grower fix to draft regulations:

“'On it,” he wrote to Farrar, the president of Carp Growers, 'We will cost split it if I get my way.'

'Thanks Das,' Farrar replied").

Piling up fact after fact after fact, the grand jury demonstrates how the special interest influence worked in practice:

"Documents obtained by the Jury, that had not been previously disclosed to the public, show voluminous emails from cannabis lobbyists and cannabis growers to Board members….it was unnerving to the Jury to see both the tone and timing of these emails.

The tone of these emails appeared at times as if to direct specific actions to the Board members and gave the perception of an attempt to command instead of recommend. Understanding that no such authority exists with the lobbyists, the Jury felt that limits on such direct conversations should have been established by the Board members receiving these emails.

The timing of these emails was also concerning to the Jury. The documents reviewed show many being sent the day before a Board meeting, with some confirming the discussions had that day at a meeting with a Board member."

A brief sample of excerpts about specific contacts:

• "Evidence obtained in the Jury’s investigation showed cannabis industry representatives had two meetings, one on January 30, 2017 and one on February 9, 2017, with a Board member prior to the matter of cannabis first being added to the Board agenda on February 14, 2017. "

• "Further documents reviewed by the Jury show a Board member meeting with cannabis industry representatives throughout 2017 including on October 16, 2017 on the topic of non-conforming uses that was to be discussed by the Board on October 17, 2017. Another member of the Board met with different cannabis lobbyists on October 11, 2017 to discuss the same topic."

• "Other examples of meetings just prior to a Board meeting include a Board member having two meetings with different cannabis lobbyists on November 13, 2017, the day before a Board meeting on November 14, 2017… Those two meetings repeated with the same Board member on December 13, 2017 for the Board hearing on December 14, 2017…"

• "The Jury also found two emails sent from a cannabis lobbyist to a Board member the morning of a Board of Supervisors meeting. On March 20, 2018, the most extreme example was an email sent by a Board member to a lobbyist, during a Board meeting, asking the lobbyist if they agreed with a P&D staff recommendation."

“Those meetings create the appearance of an imbalance of access and undue influence,” the jury reports, with understatement.

“This kind of direct access far outweighs the access of others which was typically through emails complaining of odor and other issues, or the three-minute public comment at a Board meeting, limiting the opportunity for exchange with the Board members."

For whatever reason, the jury didn’t say that both Lavagnino and, especially Williams, also raked in thousands of dollars in campaign contributions from members of the industry with whose advocates they were in regular, direct contact.

The cannabis industry pitched more than $60,000 into Das’s tough re-election campaign against Capps – a figure that may grow later this summer, when he files his finance report from the final weeks of that race.

Nor do they mention that Lavagnino’s taxpayer-financed administrative assistant formed and operated an independent expenditure campaign committee -- on his own time, of course --that benefitted Das by attacking Capps throughout the campaign.

Rewarding bad behavior. On Feb. 14, 2017, the supervisors delivered a valentine to pot growers, when they memorably granted “legal non-conforming status” that grandfathered in to the cannabis law anyone who signed a paper claiming they had been growing medical marijuana as of Jan. 19, 2016.

“This status created a myriad of problems that continue to the present.,” the jury noted, yet another exceptional understatement.

These “non-conforming” growers were not required to provide any proof of owning or leasing the property where they wanted to operate under county jurisdiction and the recently passed statewide legalization initiative -- nor did they have to produce any evidence that they, in fact, had been cultivating pot at all.

“The Board’s disregard for potential abuse is incomprehensible,” the grand jury report says. “By requiring only a signature, many of the same people previously involved in illegal activities were given an unverifiable opportunity to legitimatize their cannabis operations."

As a practical matter, this loophole resulted in rapid and easy expansion of the industry in Santa Barbara County. From the report:

“A major problem that developed with the legal non-conforming use status was the illegal expansion of the use. The expansion of acreage, while enjoying this status, was improper and unpermitted…

Specifically, out of the 270 acres of cannabis that currently exist within the County, approximately 199 acres, 74 percent, consist of legal non- conforming cannabis cultivation…and the remaining approximately 71 acres, 26 percent, consist of cannabis cultivation that is subject to the current County zoning and licensing requirements.“

That score again: 199-to-71.

From the report:

“The purpose of a law, any law, is to regulate human behavior. Laws should punish bad behavior and reward good behavior. The affidavit system and the cannabis ordinances do exactly the opposite. “

So there’s that.

The revenue argument. Throughout the controversy over pot, Williams and Lavagnino have argued that the disruption visited upon the county’s economy and land use planning process is well worth it because the crop generates crucial new revenue.

In fact, county cannabis revenue this year totals $10.6 million – 1 percent of the overall $1.2 billion budget – and at least one-third of that amount will be spent on enforcing the botched law.

Nevertheless, both the Doobie Brothers risked serious injury by strenuously patting themselves on the back at the recent supervisors meeting when the budget was adopted; they also felt the need to take umbrage in public against community critics, whose lives and livelihoods have been turned upside down by the county-backed free-for-all installation of a new industry, as both delivered self-pitying little speeches on the subject:

“I’ve asked myself, ‘Is it worth taking the abuse for supporting the cannabis industry?’” Lavagnino said on Tuesday. “There’s a lot of negative press and loss of political support. But when I look at the budget this year, I think it’s worth it. I thank our lucky stars it was in place this year...“

And in an interview, Williams said: “I do think that all the political abuse I’ve taken in the last couple of years is shown to be worth it, when we’re going to be able to help keep people safe and employed during what is becoming the worst economic downturn in our lifetime.”

Cue the world’s smallest violins.

The grand jury report demonstrates the plain fact that when they were confronted with the crucial question of how to tax cannabis, the supervisors…wait for it…approved the system most favored by, and most favorable to, pot growers, a gross receipts tax,

Key excerpt:

The Jury learned that Santa Barbara County is one of a few counties within California that exclusively uses the Gross Receipts method for cannabis cultivation.

The Jury asked those interviewed as to why the County did not follow the path that was more reliable and easier to administer and that many other counties in California were using.

The answer the Jury received was that the Gross Receipts method had the potential to be much more lucrative than the Square Footage method.

To date, the belief that using the Gross Receipts method would result in more taxes has not proven to be true. While the County initially predicted cannabis tax revenues as high as $25 million, in 2018-19 the actual revenue was only $6.8 million.

Monterey County, which until this year only allowed indoor grows and uses the Square Footage method, had 2018-19 cannabis tax revenues of $15.4 million.

This difference in revenue collected is more alarming when compared to the number of acres of permitted cultivation in each county.

Santa Barbara County has 217 permitted acres compared to Monterey’s 62.

The crucial political question, as always: Cui Bono?

What the Doobie Brothers say. As noted above, the supervisors have 90 days from the release of the grand jury report one week ago to respond to its findings and recommendations,

Newsmakers reached out to Lavagnino and Williams for an interim response.

Cory Bantalin, the Lavagnino aide who set up and ran the independent expenditure campaign committee on behalf of Das’s re-election, referred us to Steve’s comment in the L.A. Times.

A lifetime conservative, Lavagnino rested those remarks on the liberal theme of identity politics, dismissing the jury as a bunch of out-of-touch old white guys:

“Lavagnino suggested…that the jury was biased against marijuana legalization. ‘The demographics of the grand jury are not reflective of the county as a whole,’ he said. ‘It is not at all surprising to me that a group of predominantly white senior citizens is uncomfortable accepting that cannabis is now mainstream. We will review their recommendations and answer them as required.’”

For his part, Williams told the Times the jury pursued only "one side of the story" (the public interest side, maybe?).

In response to Newsmakers, Das punted.

“We will respond to each point and in detail, what we agree with, what we disagree with, and what we partially disagree with, in a formal response," he told us.

An intensely self-regarding and self-mythologizing career politician, Das now stands at risk of having his lifetime legacy as an elected official consumed and defined by his starring role in Santa Barbara County’s ongoing and squalid cannabis scandal.

Here's hoping he takes a good, hard look at what his behavior has wrought, and repents by embracing the grand jury’s proposal to establish a watchdog Ethics Commission to keep a much-needed eye on what’s going on at the county, on behalf of the public.

JR

Images; Signpost for ethics (bollingershipyards.com); (County of Santa Barbara); Colin Powell and George Bush (abcnews.com); Bag o' money (bagorganizerimages.blogspot.com); Santa Barbara cannabis field (Independent); Risk-Reward (seekingalpha.com); Lavagnino and Williams (Paul Wellman/Santa Barbara Independent).