Long Beach Offers Collective Punishment

Except for the oversized green cross painted on the wall and the acrylic sign with the olive-colored marijuana seed inside the letter O, Avalon Wellness Collective looks exactly like all the other razor-wire-topped, one-story buildings that line the west side of the 710 freeway. Six months ago, the 8,000-square-foot, charcoal-gray building, located in an industrial neighborhood of north-central Long Beach, was just an empty warehouse; now, a state-of-the-art, one-stop cannabis cultivation-and-distribution center operates inside, built to exacting city specifications.

The front door didn't open until last summer, when it was carved into the front of the building. A burly guard sits on a stool. Behind him, another security door leads to what turns out to be a “man-trap”: once the first door closes, visitors are locked inside a chamber until they're buzzed through. Beyond that, in the actual dispensary area, jars of organic medicine previously tested for pesticides, mold and E. coli are neatly arranged inside a glass-topped display case. A flat-screen television stretches across one wall, and watching everything from a ceiling corner is a tilt-pan, zoom-lens security camera.

Nearly half the sprawling structure is divided between a vegetation area, a hydroponics set-up, and a large worktable at which several seated employees trim bags of recently harvested product. It's like a scene out of Detroit at the height of its automotive might, except rolling off the assembly line here is marijuana. In one corner, there's an Americans With Disabilities Act-compliant bathroom, as well as a fire exit that leads to an alley. A locked side door embedded in an 8-inch-thick wall leads to Avalon's marijuana-cultivation area. In the hallway a few feet to the right of this door is the grow room, where 90 plants flower beneath sodium heat lamps. If the carbon monoxide levels in this room exceed 2,000 parts per million, horns blare and blue strobe lights turn on as intake and exhaust fans cycle fresh air into the room. From the ceiling of a separate curing room hang a few dozens plants cloned from strains with names such as Avalon White Chunk, Diesel Alien and Tar Dog.

Everything within the walls of this building materialized in less than 90 days last summer, thanks to Trojan Builders' Chris Cantella, whose regular work is a bit more rarified; a Newport Beach mansion he constructed won a seven-page spread in the August 2010 edition of Better Homes and Gardens. But the developer is proud of this dispensary, not least because he completed it just in time to qualify for a crucial certificate of occupancy from the city of Long Beach that makes it currently legal. [5]

“We had every city inspector here,” he says. “It was a long, tedious process, but we stuck in there and jumped through every hoop. I'm only here because the city of Long Beach opened the front door and said, 'Come on down.'”

But the city's commitment to medical marijuana wasn't as solid as Avalon Wellness Collective [6] had assumed. In the fall of 2011, just as Avalon Wellness Collective opened its doors, Long Beach began considering a ban on medical marijuana despite having legalized collectives a year earlier. City attorney Robert Shannon led the charge, citing an ongoing federal crackdown on storefront dispensaries in California that has seen the Obama administration launch unexpected raids and property seizures against growers and landlords. Shannon also cited a lawsuit filed by Ryan Pack and Anthony Gayle, two patients who had obtained cannabis from two clubs that failed to win in a controversial Nov. 20, 2010, lottery run by city bureaucrats, which picked several dozen locations (including Avalon Wellness Center) for permits to open dispensaries; those that didn't win were raided and shut down. According to the plaintiffs, the city has no right to regulate a substance that is illegal under federal law.

So far, the council has voted twice to delay its vote, but if it bans storefront dispensaries, it will hardly be the most bizarre turn of events in Long Beach's surreal war on weed, one in which the council members who favor medical marijuana voted against legalizing it, and those opposed to legalization voted yes, and where the city rakes in millions in pot-related fees and fines, simultaneously permitting and prosecuting various cannabis clubs. Perhaps the least surprising detail is that the FBI is reportedly investigating allegations of official corruption in Long Beach.

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If anyone personifies the transition from good to bad vibes that has befallen Long Beach's ill-fated foray into the medical-marijuana business, it's John Morris. The silver-haired ex-rugby player in his early 60s has a vaguely English accent; his tendency to end sentences with words such as “babe” and “love” betrays his Liverpudlian roots. After emigrating, Morris settled in Long Beach in 1972; seven years later, he opened the famed Legends Sports Bar on Second Street in Belmont Shore. In 1988, he pioneered the revival of Pine Street by opening Mum's, an upscale steakhouse and jazz bar, and later Smooth's Sports Grille, which closed in 2010, owing the city $147,000 in unpaid loans.

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For several years, Morris served as the president of Downtown Long Beach Associates, often clashing with the city over redevelopment, but also charming much of city hall—as well as the newsroom of the Long Beach Press Telegram and other local publications. If he was one of the most powerful businessmen in Long Beach, he was also one of the most outspoken, especially against the city's centerpiece redevelopment project of the 1990s, the Pike at Rainbow Harbor.

In 2008, amidst the overall economic downturn that began that year, Morris became eager to explore medical marijuana. He'd recently lost a friend to prostate cancer, and he'd seen how well cannabis had treated the pain. In a recent interview at McKenna's On the Bay, where Morris now works as a manager, he recalled being struck by the thought that he was the perfect guy to implement the city's plan to allow dispensaries to operate in the city as a way to welcome much-needed tax revenue.

His pitch to City Hall: work with someone you know, rather than open the door to strangers from out of town who might turn out to be shady characters. “How are we going to make this truly work in Long Beach so it's not gangbangers doing it?” Morris figured. “Let's bring the community into this thing so everyone knows who we are.”

Since marijuana collectives aren't allowed to make a profit in California, Morris says, he planned to open at least four different storefronts throughout the city, each affiliated with a nearby charity, including Long Beach Memorial Foundation; the city's skate-park program, run by ex-councilman Mike Donelon; and Long Beach Gay and Lesbian Center, whose director, Ron Sylvester, recalls talking to Morris and being excited about the concept.

“I brought it to our board of directors and got back to John and told him that we'd love to be a beneficiary,” Sylvester says. “I kept an eye on what was happening legislatively, and, of course, we're disappointed that it hasn't come to fruition.”

When he met with city attorney Shannon about the project, Morris brought his lobbyist, Matt Knabe, whose father, Don Knabe, sits on the Los Angeles County Board of Supervisors. Shannon informed Morris that state law prohibited him from opening multiple stores. “The whole concept was odd to me because state law is very clear that you can't make a profit,” Shannon says.

Morris decided that Shannon had no right to tell him what to do. “As we left that meeting, I said, 'Fuck this,'” Morris recalls. “I've got plenty of friends in town who are believers in this stuff, so I went out and talked to 10 or 12 of my buddies.”

He formed an investment group called SJK—an acronym using his own first initial, plus those belonging to two of his friends and fellow investors, Stu Ledsam and Kurt Schneider. Then Morris set about finding properties throughout the city where SJK could grow and distribute medical marijuana via six supposedly separate collectives.

Because the city required at least three individuals to be on the permit application paperwork for each collective, Morris gathered 18 people and convinced them to lend their names to the various collectives. He hired a lawyer, Paul Violas, to draw up the articles of corporation and assemble the complex application materials: dozens of pages of personal disclosure forms, rules, regulations and checklists, each requiring the initials of the collective's trio of managing members.

To create a nonprofit called the Fourth Street Collective at 1069 Wardlow St., Morris reached out to Christine Donelon, wife of the former city councilman who ran the skate-park charity Morris hoped to fund. Another was tax accountant Osvaldo Lainez, who handled returns for both Morris and Dee Andrews, a Long Beach councilman. Lainez is also the president of the nonprofit Chicar, which has won tens of thousands of dollars in Port of Long Beach donations, ostensibly for helping to organize the city's annual Martin Luther King Jr. Day parade, which is steered by Andrews.

The six collectives Morris wanted to open hardly represented a monopoly of the clubs that filed applications for permits in early 2010, however. As the city attorney's office realized how many storefronts hoped to open, panic spread. Deputy City Attorney Michael Mais hit upon a plan: hold a lottery to randomly select locations that could then continue the permitting process. According to Mais, the city had successfully used a lottery to allocate flight spots at the tiny Long Beach Airport.

“We wanted to limit the number of dispensaries,” Mais recalls. “We had two choices. We could have a lottery, which I thought was very fair, or we could go with whoever turned their application in first, which I don't think anyone could say was fair.”

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As the early summer 2010 filing deadline loomed for collectives that wished to get into the lottery, Morris and Violas summoned the SJK group together for a meeting at Smooth's. Unfortunately, not everyone could make the meeting or otherwise be found in time. So with their permission, Morris signed their names himself.

So did his employee, Josh Howard, a onetime marijuana-collective owner who worked for Morris. On the day the applications were due, Morris called Howard. “I need you to start signing signatures,” Morris told him. “Half of these people are out of town or I can't get ahold of them—one guy's out of the country.”

Morris and Howard drove to City Hall, scribbling whatever signatures and initials they could find. They parked outside, and Morris went upstairs with a stack of papers while Howard continued to sign names. The Weekly obtained all the applications from the city via a California Public Records Act request, and Howard pointed out which signatures he'd forged. The illegible wavy lines were easy for him to identify; he pointed out several items that he and Morris forgot to initial.

Although Morris readily admits he was involved in no less than six different collectives, because his name wasn't listed as a managing member of any of them, it didn't violate the city's ordinance, according to Mais. “To a certain extent, we rely on the honesty of the people we are dealing with,” he explains. “As long as their name isn't listed as a management member, we have no way of knowing. You have to assume they are following the rules.”

On Sept. 20, 2010, the city of Long Beach held a lottery to determine which of the several dozen marijuana collectives that had paid the roughly $15,000 upfront application fee would be eligible to receive a permit allowing them to operate in the city. It was a fiasco. The city had spent several thousand dollars on a machine designed to randomly choose Ping-Pong balls stenciled with a combination of numbers and letters, each pertaining to a different collective, but the balls were too big, so officials had to toss them into a recycling bin and hand-select them.

Not surprisingly, the carnival-type atmosphere led to immediate claims that the lottery was rigged, recalls Mais, who takes responsibility for the process. “The people who won the lottery thought it was fair, and the people who lost it thought it was unfair,” he says. “Other than the fact that the lottery machine failed to work, the lottery was as straight up as any lottery that was ever done. We bent over backward to take any sort of unfairness out of it. We spent a ton of money. It was unfortunate it turned out the way it did because it was embarrassing.”

Morris, who didn't attend the event, recalls receiving text messages each time one of his collectives won the lottery; five of the six locations he'd lined up were selected. “Everybody fucking thinks we fixed that thing,” he jokes. “If Shannon had his way, he'd have made sure those balls of ours would never come to the top. . . . The vast majority of management people at City Hall, they don't like me, and I don't like them.”

As soon as the city held the lottery, however, it revised its marijuana ordinance. The law already required cannabis clubs to be farther than 1,500 feet from a high school and 1,000 feet from any kindergarten, elementary, middle or junior-high school or other dispensary. To these, the city added that no club could be within 1,000 feet of a park or beach. Because Long Beach is on the ocean and full of parks, the list of eligible storefronts shrank considerably.

Thanks to the new buffer zones, numerous clubs that had won the lottery were now ineligible for a city permit after all, including one operated by Morris. Meanwhile, the city kept adding new construction prerequisites—fire alarms, security systems and carbon monoxide monitoring systems—to further whittle the field. Thanks to what amounted to a bait-and-switch maneuver, the city had to set up a refund-application process to collectives that had won the lottery but were subsequently zoned out of contention.

Ultimately, of the five locations tied to Morris that won the lottery, just two ever opened their doors; of those, only one continues to operate. Morris and his investors had to back out of the business because they ran out of money. “We never made a fucking dollar,” he says. “My SJK guys, of the $500,000 they outlaid, I don't think they'll get any of that back.”

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Morris eventually fired Howard and a woman named Nichole West, who says she drew up a business plan for SJK and never received a dime in return. Both Howard [3] and West, who has left Long Beach [4], claim Morris owes them thousands of dollars. After Howard complained to one of SJK's investors, a famous soccer player who seemed sympathetic, one of the group's lawyers sent him a letter, which the Weekly obtained, threatening to sue him and referring to his unspecified allegations as “untrue” and “grossly slanderous.”

But if Morris and other collective operators who managed to win the lottery were upset at the city, so were those whose Ping-Pong balls weren't chosen, or who refused to pay, or could not afford the $15,000 fee to play the game. Larry Parks, who owned the 1 A.M. collective, [2] first became suspicious about the city's program weeks earlier, when he paid a $2,000 consulting fee to Morris' attorney, Violas.

“I wanted to get his thoughts about the lottery process and what he thought my chances were,” Parks recalls. “He wanted me to hire him for $2,000 a month and told me his clients don't get bothered by the city. He called it 'good lawyering' and said he'd need $5,000 here and $5,000 there to spread around.”

Violas claimed to be “good friends” with Erik Sund, Long Beach's business-relations manager and director of the city's medical-marijuana program. “Mr. Violas told me that if I paid him money, he would be able to guarantee acceptance of my patient-cooperative group's application for a Long Beach city permit,” Parks later stated in a sworn deposition. “When I asked him how he could do this, he told me . . . my group might have to make monetary contributions to city projects or to city officials.”

Parks declined to take Violas on as a lawyer. Sund did not respond to an interview request. In an interview at his office in downtown Long Beach, Violas stated that while he maintains “cordial” relationships with Sund and other city officials, he has never made any such guarantees: “I categorically deny that I've ever promised any client that payment of money to a city official will result in favorable treatment.”

Mike Genera [1] refused to pay the fee to enter the lottery; soon after, the city began sending code-enforcement officers to his collective, threatening his landlord, and issuing him up to $50,000 in fines over a period of several months. The police also showed up and filed misdemeanor charges—violating the city's marijuana ordinance—against his security guard and manager. “They used every kind of tactic that you can imagine,” Genara says. “It was just so overwhelming.”

Dallas Alexander, who operates the Dank City Collective, also paid only a token fee of $500 to the city, instead of the $15,000. “I was summarily rejected,” he says. Not long thereafter, the police raided his shop while he was on his way to work. “They broke down my door with no warrant,” he says. “They basically robbed me. They took whatever they could in money. I saw Erik Sund walk out with a bag of my merchandise. They arrested three of my people who were working, but they were out in a couple of hours.”

Until she voluntarily closed the dispensary late last year, Katherine Aldrich operated 562 Collective in the north Long Beach neighborhood of Bixby Knolls. She also refused to pay the city's permit fee and didn't participate in the lottery. On Feb. 14, 2011, the police raided her collective while she was taking her daughter to the orthodontist. Security footage filmed during the raid shows plainclothes officers accompanied by Sund standing in her lobby.

No arrests were made, but Aldrich received a fine. The cops returned again three months later, again without a warrant. When her employees refused to open the safe, police arrested them but left empty-handed. Sund was present for that raid, too.

“He's a business-license approver,” Aldrich complains. “Why he's out there participating in these raids, I have no idea.”

City attorney Shannon insisted that the $15,000 in fees demanded by Long Beach is justifiable, given the city's dire economic situation and the cost of regulating the dispensaries that his office envisioned. “We wanted to limit the number of dispensaries, and we wanted to recover our costs,” he says. However, Shannon acknowledges, the fee “inadvertently” made it more likely that the “more profit-oriented collectives” would win the lottery. “That was never intended, of course, but that's a fair statement,” he says. “It was an unintended consequence.”

Matt Pappas, the lawyer who represents Pack and Gayle in their lawsuit against the city, now represents Aldrich, Parks and other collective operators whom the city fined, raided or both for violating its medical-marijuana ordinance.

“I don't know what's happening at the city, but there's something wrong,” Pappas says. “When people say they can engineer things and you won't get raided since you're paying money that gets spread about, it's awfully suspect. Think about it: The city is taking money from some collectives and not issuing them citations and going out and raiding the ones that aren't paying the money.”

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Whatever its basis in reality, the whiff of corruption hasn't gone unnoticed by the federal government. Sources involved in Long Beach's medical-marijuana community told the Weekly that FBI agents have interviewed them, although for the most part they refused to provide specifics. “I can't tell you anything about that,” said one source.

“They did visit me,” said another. “Their questions were about public corruption and not the legality of medical marijuana. The statement I gave was that I wasn't aware of any malfeasance and hadn't engaged in any.”

One obvious argument against the concept of deliberate corruption is that collectives that did win the lottery and that haven't been subjected to heavy fines by the city still have no guarantee they won't be shut down. This elite group of collectives, which includes Avalon Wellness Collective, numbers roughly a dozen and has formed a group called Long Beach Collective Association (LBCA). The group's lawyers include both Violas and Rick Brizendine, whose name turned up in a search-warrant affidavit filed by the Orange County Sheriff's Department when it raided Belmont Shore Natural Care collective on Nov. 8, 2011. According to sheriff's officials, the department raided the collective after finding ties between Belmont Shore Natural Care and several Orange County collectives run by a silent investor who, they assert, was using Brizendine to launder his money. Brizendine returned an initial telephone call seeking his comment for this story, but he has subsequently failed to answer his phone. In an interview with the Long Beach Post, he denied any wrongdoing.

Carl Kemp, a registered lobbyist at City Hall, also represents LBCA. He says his clients are frustrated with the fact the city keeps changing its rules. “We have done a lot of work to make the ordinance work well for everyone,” Kemp says. “Mr. Shannon has a predisposition against the idea of medical marijuana, and I respect that. But unfortunately, I don't think any moral attitude should force people who have a legitimate need to go back into the dark alley to get their medicine.”

Members of LBCA recently held a meeting with the collectives that are suing the city, trying to find a way they can join together in pursuit of a common goal. Valerie Crist, the director of Avalon Wellness Center, is one person who's in favor of such an alliance. A recently divorced Realtor who left the business during the housing bubble and has since invested her life savings in the collective, she says she would have lost everything if it weren't for Cantella, who performed the $500,000 city-required construction at half the cost.

“There are more bad people than good people in this business, and that has got to change,” Crist says. “The good people are being run off by the crackdown. My employees don't want to go to jail—ever. We want to follow the rules. There are people who refuse to play this game with the city, and I respect them for it—people who didn't pay the fee and have been raided, hardworking people with the right intentions. Unfortunately, the city has done a good job of dividing us.”

 

This article appeared in print as “Collective Punishment: How Long Beach's botched marijuana lottery screwed its winners and losers alike.”

*This article was altered on Feb. 6, 2012: [1] Mike Genera's name was misspelled; [2] a description of Larry Parks' legal standing was altered; [3] and [4] descriptors were changed, as Josh Howard's and Nichole West's positions have changed. 

*This article was altered again on Nov. 24, 2012: [5] A sentence was deleted by request.

*This article was altered again on Nov. 26, 2012: [6] The name of the collective was inserted by request.