In the lawsuit filed last May by the Monterey County District Attorney’s office against cannabis entrepreneur Paul King and 13 cannabis companies he either founded or has his hands in, the phrase “failure to” appears upwards of 100 times.
To name a few, there’s: failure to obtain a commercial cannabis permit, failure to seek a modification to a cannabis permit, failure to make a good faith effort to resolve problems and failure to maintain all required state licenses.
King, whose business entities include Cannafornia Holdings Inc., California New Wave I-VIII and Fuji Farms LLC, came to Monterey County in 2018 from Sonoma, where the cannabis rules were even more onerous and the amount of cannabis you could grow under a single license was capped at 10,000 square feet.
“It’s a big part of the reason we chose to be here,” King says. In 2018, “things were just starting out here and we were fortunate to get a good landlord familiar with the county, they had a person helping with licensing… and we tried to stay on top of all the information the county was giving us and to do everything compliantly.
“Along the way,” King says, “things went sideways.”
According to the lawsuit, filed under the state’s unfair competition laws, things went sideways quickly.
The county Resource Management Agency, tasked with issuing cannabis licenses and doing compliance checks once businesses are running, issued a permit to Fuji Farms for 2,500 feet of canopy cultivation in August 2018; during a compliance check in September that year, RMA measured just over 75,000 square feet of canopy, and determined the plants were grown prior to Fuji receiving permits. California New Wave, meanwhile, took over a cultivation site from another company at 26800 Encinal Road and grew crops in four greenhouses during the summer of 2018, but didn’t obtain a temporary license until that November. Other allegations in the suit include transporting or selling cannabis in Monterey County under a license issued by Sonoma County, illegally delivering cannabis and consuming cannabis at the sites of commercial cannabis operations; and growing 40,000 square feet of cannabis at a facility permitted to grow 20,000 square feet.
Any fines obtained would flow back to the District Attorney’s office to fund investigations and prosecutions of consumer violations. And in the King case, the fines and penalties the DA is seeking add up to over $1 million.
“It’s a seven-digit settlement figure we could never afford,” King says. “But it seems they want to settle and we want to settle, so we’re going through the process of supplying them information and answering their questions.”
On Jan. 12, a judge ordered both sides to hold a settlement conference; the case isn’t scheduled to come back to court until 2022.
Deputy District Attorney Greg Peterson, who heads the office’s cannabis enforcement group, declined to speak about the case in particular, but says their mandate is to reign in unfair business practices.
“We’re not going after someone to try to make their lives difficult,” Peterson says. “We’re trying to make it as fair and equitable as possible in the cannabis industry, and in cannabis, it usually means someone is unlicensed and growing without a right to do so.”