Pubdate: Wed, 02 Sep 2015
Source: East Bay Express (CA)
Copyright: 2015 East Bay Express
Author: Steven Tavares


The city's long strange trip toward its first medical cannabis 
dispensary may be finally reaching its climax.

For years, San Leandro's city leaders wanted absolutely no part of 
the medical cannabis industry.

Medical cannabis patients could always go to Oakland, officials often 
said. But then two years ago, two opponents of medical pot on the San 
Leandro City Council switched sides.

But not completely. The council decided in late 2013 that it would 
permit only one dispensary in the city. And the resulting competition 
for that single permit has attracted a number of strong and 
controversial applicants, including the country's largest dispensary, 
one that was recently tied to a federal corruption case in Oakland, 
and an untested local bidder that has close connections to San 
Leandro's political and business class.

Initially, fifteen applicants sought the permit.

Then after three review phases, city staffers, with help from a 
consultant, whittled the list to six prospective bids. But the city 
has been in no hurry. "We've been very careful and cautious," said 
San Leandro Assistant City Manager Eric Engelbart.

The vetting process was also hampered earlier this year, Engelbart 
said, when the California Department of Justice took five months to 
complete background checks on the initial set of applicants. And now, 
just as the city is nearing a conclusion of its search for its first 
dispensary operator, a pair of high-profile news reports in recent 
weeks focusing on two of the applicants is generating apprehension.

Last month, Dan Rush, a well known and now former representative for 
the United Food and Commercial Workers union, was indicted on 
corruption charges following an FBI investigation. Rush is alleged to 
have accepted a $600,000 bribe from Martin Kaufman, who is connected 
to the Oakland medical pot dispensary, BLUM Oakland; Kaufman was 
working with FBI agents to target Rush. The operators of BLUM are 
also bidding for San Leandro's permit under the name of the San 
Leandro Community Collective.

Yet despite the negative press coverage, BLUM's application may not 
be impacted by the indictment. According to Engelbart, the FBI 
contacted the city shortly after news of Rush's indictment broke, 
wanting to talk about BLUM Oakland operator Kaufman's involvement in 
the case. "They told us every element associated with Mr. Kaufman was 
done under FBI supervision," Engelbart said. According to Engelbart, 
the FBI also said that Kaufman had no culpability in Rush's 
indictment, and that the legal case shouldn't impact the city's 
decision regarding BLUM Oakland's bid for the lone medical cannabis permit.

Several past and present officials of San Leandro who have been 
involved in the city's recent history of denial of medical cannabis 
say Rush's advocacy for a dispensary in San Leandro was pivotal in 
finally getting it approved three years later. "Dan Rush is one of 
the main reasons a dispensary in San Leandro was approved in the 
first place," said Diana Souza, former San Leandro councilmember who 
was termed out of office last year and is an unpaid advisor for BLUM 
Oakland's application in San Leandro. Rush was often a fixture at San 
Leandro Council meetings during the years-long debate over 
dispensaries. Following one community meeting on the issue in 
February 2013, Rush harangued San Leandro Councilmember Benny Lee, 
who, like Souza, had been a consistent opponent of dispensaries. 
Several times during public comment, Rush urged the council to 
approve dispensaries based on its medical benefits and potential for 
union membership.

Then, two weeks ago, Oakland's Harborside Health Center, another 
applicant for the San Leandro dispensary permit, also made headlines 
when a federal appellate court ruled that the City of Oakland had no 
legal standing in its attempt to block federal prosecutors from 
shuttering Harborside through a forfeiture action.

Oakland opposed the shutdown of Harborside, saying it would lose more 
than $1 million a year in tax revenue generated by the dispensary. 
While the court decision did not directly implicate Harborside in any 
illegal activities, the ruling further highlighted the disconnect 
between state and federal law regarding cannabis, along with the 
potential for a future federal raid of a dispensary in San Leandro 
and a similar forfeiture action there.

In fact, in 2012, federal raids on dispensaries in Oakland led the 
San Leandro City Council to issue moratoriums for prospective 
applications for dispensaries.

Ironically, the turning point for dispensaries in San Leandro came in 
2013 when some community members urged then-Mayor Stephen Cassidy and 
then-councilmember, now mayor, Pauline Cutter, to visit Harborside's 
operations in Oakland. Both Cassidy and Cutter had been medical pot 
opponents. "It was very clear to me the council believed Harborside 
was organized crime," said Gregg Daly, one of the group who lobbied 
Cassidy. Daly, a retired police officer who repeatedly urged the 
council to allow a dispensary in San Leandro, is also a patient who 
uses medical cannabis to alleviate pain he suffered after being hit 
by a car eight years ago. "I told the mayor and council to visit 
Harborside for themselves. It's better run than the Rite Aid on the corner."

After the visit, Cassidy pushed for one dispensary in San Leandro. 
And the fierce competition for that permit has fueled a substantial 
amount of back-biting among the applicants, including letters to the 
council that resemble opposition research in political campaigns. 
"There has been so much controversy over this permit," said Souza, 
"just crazy stuff with all these accusations going around."

Much of the politicization of the permitting process, however, has 
come from within San Leandro and not from outsiders.

For decades, the Davis Street Family Resource Center has aided the 
underprivileged in San Leandro and surrounding cities with food, 
healthcare, and various social services.

The highly respected nonprofit has long been financially supported, 
in part, by grants from the city. In turn, it is also heavily 
connected to the city's political establishment. Three years ago, 
founder Rose Padilla Johnson suggested to the Davis Street Board of 
Directors that an avenue for sustaining its work might come from 
entering the medical cannabis business.

Last January, Gordon Galvan, one of San Leandro's most influential 
political insiders and current president of the Davis Street Board of 
Directors, presented Johnson with a proposal that would later lead to 
an application for San Leandro's dispensary permit.

The group, named the Davis Street Wellness Center, includes medical 
cannabis novices Johnson and Galvan, along with industry stalwarts, 
John Oram the co-founder of CW Analytical, a cannabis testing and 
certification laboratory, and Michael Nolin, who serves as the 
day-to-day operator of the Green Door dispensary in San Francisco and 
BLUM Oakland. In addition to Harborside, BLUM, and the Davis Street 
Wellness Center, other finalists for the permit are Oakland's 
Magnolia Wellness Center, San Jose-based Purple Lotus Patient Center, 
and an applicant calling itself the Morning Sun Cooperative.

But it's been the Davis Street Wellness Center that has employed 
full-court political pressure to gain support from various San 
Leandro leaders and power brokers, led by Galvan's lobbying, which 
has received scorn from one rival applicant.

During one of four community meetings organized by Harborside, its 
founder Steve DeAngelo, acknowledged Galvan's advocacy without using 
his name. "We're community-oriented. That's how we've always been," 
said DeAngelo. "Some other applicants are trying to use a lobbyist." 
When asked later, DeAngelo confirmed that he was referring to Galvan. 
"I find it distasteful. We would almost rather lose than play that 
game," he said. "We're not trying to make a quick buck. This is the 
best possible proposal for San Leandro."

In an interview, Galvan exuded confidence. "We have a compelling 
proposal," he said. "I'm honored people are afraid we might get this 
permit. The fact is these things are very lucrative.

We know that."

Galvan said the addition of revenue from medical cannabis sales might 
allow Davis Street to wean itself from city subsidies. "We don't want 
to go hat-in-hand to the state and city all the time," said Galvan. 
Davis Street Wellness Center believes it can return $250,000 in 
community benefits back to the city through various nonprofits. 
Similarly, Harborside says it will pledge 5 percent of its annual 
revenues for the San Leandro dispensary, or about $350,000, for local 
health-related nonprofits.

The push by Galvan to convince San Leandro officials to select Davis 
Street has been aggressive. In early August, a community event 
touting the Davis Street proposal was programmed to occur at the same 
time as Harborside's previously scheduled discussion across town. The 
Davis Street event was also heavily supported by members of the San 
Leandro Chamber of Commerce, which had opposed dispensaries in the 
past, but which also counts Galvan as a member of its board of directors.

In fact, the Davis Street bid appears to be leaving nothing to 
chance. For instance, Alameda County Supervisor Wilma Chan sent a 
letter on July 7 to the city on county letterhead in support of the 
Davis Street Wellness Center. In it, Chan called Johnson and Galvan 
"a force to be reckoned with and a force for good works in San 
Leandro." A few weeks earlier, Chan's 2016 state Senate campaign 
reported that it had received thousands of dollars in contributions 
from interests associated with the Davis Street Wellness Center's 
cause just before Chan wrote her letter.

Galvan Properties, LLC donated $1,000 to Chan's campaign on June 29, 
according to finance reports. Bloom Innovations, which is the 
scientific and technical arm of the consortium involved in the Davis 
Street bid, added $1,000 on June 29, along with $225 from Johnson. In 
addition, Galvan's consulting firm, Galvan & Associates, pitched in 
another $1,000 on March 20. The San Leandro Chamber of Commerce also 
contributed $1,000 in late June to Chan's campaign.

That Galvan arouses suspicion among some in San Leandro is not 
surprising. Few have longer ties to the establishment than him - 
going back to his days as a San Leandro councilmember ending in 2001. 
"There's no 'the fix is in' and 'Gordon is getting paid'," said 
Galvan. "If we lose, I go to the people from Harborside and say 'How 
can we help?' and I would hope they'll do the same if it's us."
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MAP posted-by: Jay Bergstrom