Wednesday, October 26, 2011

The Delta, the DA, and the DOJ: how marijuana got a small California town in trouble

Isleton, California is a nonmetropolitan community of 804 people in the picturesque Sacramento River Delta. It was once called "the Little Paris of the Delta" and was famous for its Crawdad Festival until it was canceled in 2009. Today, Isleton's claim to fame is its attempt to raise funds through the cultivation of medical marijuana.

In July of 2010, Delta Allied Growers (DAG), a nonprofit led by Michael Brubeck, approached the city of Isleton and proposed the creation of a medical marijuana farm on city property. More information about this proposal and story is here. DAG agreed to construct the greenhouses and to pay the city the higher of $25,000 or 3% of revenue each month in lieu of paying taxes. No sales were to occur at the property; rather DAG planned to ship the mature marijuana to dispensaries in Southern California. In November of 2010, the Isleton City Council approved a development agreement with DAG. Both parties believed the agreement complied with California law.

The Sacramento County District Attorney (DA), however, disagreed. Isleton is the smallest city in Sacramento County. A letter addressed to the city arrived in February of 2011 from Cindy Besemer, Chief Deputy District Attorney. The letter expressed the DA's concerns with the legality of the project. According to the DA, Proposition 215 does not authorize large-scale commercial cultivation of marijuana. Calls came later from Besemer with the threat of criminal prosecution for the city manager, Bob Pope, the city attorney, David Larsen, the chief of police, Rick Sullivan, and city council members. The DA never filed charges.

Instead, what followed was a civil grand jury investigation. The grand jury found that due to inadequate background checks on DAG, there were "improper financial interest[s]" in the project. The grand jury also found that the state laws were confusing and conflicted with federal laws. The district attorney issued a report to complement the grand jury's findings on September 22, 2011. The report detailed the DAG agreement's many legal problems. These problems included the agreement's violations of conflict of interest laws and other state and federal laws. The DA's report also chastised city officials for the incorrect conclusion that the project was exempt from the California Environmental Quality Act and for improperly explaining the agreement to the Isleton City Council.

In the midst of the grand jury investigation, in May of 2011, United States Attorney Benjamin Wagner sent a letter to Isleton warning that the project violated federal law. Attorney General Eric Holder stated in 2009 that he would not pursue raids of medical marijuana dispensaries that were legal under state law. Many towns, however, have received similar letters to the one Benjamin Wagner sent to Isleton and raids have continued.

Why did Isleton risk all of this legal trouble? The answer is simple: money. The DAG project was going to double Isleton's revenue and employ residents. Isleton's revenue stood to rise from roughly $150,000 a year to at least $300,000 or as much as $600,000 a year as described in a newscast here.

Isleton is a struggling community. The proposed site of the marijuana farm was a failed housing development that went under with the economy in 2008. As explained in a Los Angeles Times article here, Isleton has a history of political and financial trouble. As recently as 2009, Isleton was $950,000 in debt. The city has seen numerous grand jury investigations, city managers, city council members, and mayors (eight mayors served the city in the period from 2004-2009). Many officials have tried to save the city in one way or another, but all continue to fail. As of June 2011, Isleton residents were passing around a petition to unincorporate the city.

Isleton's story is not one of private growers on private land causing problems like in Humboldt County or Lake County, as discussed in Legal Ruralism has discussed here and here. Nor is it a story about the Mexican cartels growing marijuana in rural areas, as discussed here and here. This is a story of a small, struggling town trying to make things better for its residents. If one simply walks down dilapidated Main Street in Isleton, one will understand why the city decided to take this risk.

If this plan had worked, it other small towns likely would have followed suit. While nearby Rio Vista decided to outlaw medical marijuana dispensaries, the ordinance is in place only for a year. If things had gone differently, Rio Vista may have looked to marijuana to solve its economic woes.

When industries leave and the economy crumbles, small towns will try to do whatever they can to avoid spiraling into bankruptcy. The lesson other small communities can learn from Isleton: do not use marijuana to save your town.


CET said...

I'm surprised to read that Isleton took such a huge risk. It seems unwise for any city to encourage and allow medical marijuana farming on city property, regardless of the potential income it could generate. It's an area of law where there continues to be much confusion and the city knew this.

I have to wonder if the outcome would have been different if the DA had filed charges. The grand jury investigation probably brought the city's "farm" into the public eye more so than DA charges would have. Perhaps the grand jury investigation is what prompted the US Attorney to send the warning letter.

Anonymous said...

I'm surprised the DA didn't file charges, because the Grand Jury couldn't find a single regulatory violation from DAG. They were in complete compliance with state law and regulations, therefore prosecution was impotent.

I'm glad we all read the Grand Jury Report and saw that the Sacramento DA could not identify a single law or regulation in a CA Superior Court that was in violation by DAG. Thank you for wasting over a million dollars of Sac County money for this issue.