Mayoral Graft Pushes SB City Council To Institute Cannabis Permitting Regulations

By Mark Gutglueck
Mayor John Valdivia’s graft-ridden administration of San Bernardino’s municipal government has resulted in further structural changes in the way business is being conducted at City Hall. As a consequence of Valdivia’s ploy to enrich himself by offering his services as a consultant to individuals and companies seeking to obtain permits to operate marijuana/cannabis-related businesses under the city’s now-liberalized policy regarding that once-banned substance, the city council this week voted to require that all city officials who have contact with or receive remuneration or campaign contributions from a commercial cannabis license applicant make specific disclosure of that contact or exchange of money prior to any official action with regard to the granting of those permits.
Ironically, the two members of the city council who have been most heavily critical of the manner in which Valdivia has conducted himself – Fourth Ward Councilman Fred Shorett and Seventh Ward Councilman Jim Mulvihill – were the lone members of the panel who opposed the reform measure. Valdivia’s five one-time allies on the council – First Ward Councilman Ted Sanchez, Second Ward Councilwoman Sandra Ibarra, Third Ward Councilman Juan Figueroa, Fifth Ward Councilman Henry Nickel and Sixth Ward Councilwoman Bessine Richard – uniformly supported the ordinance. This is quite possibly because the manner in which they associated themselves closely with Valdivia and supported him with their votes on the council during his first year as mayor, in the aftermath of revelations of how he has in large measure successfully sought to personally profit by exploiting his mayoral power and position, is threatening to tar their own reputations. Valdivia, who from 2012 until 2018 was the city’s Third Ward councilman, in 2018 successfully vied for mayor against then-incumbent Carey Davis. Also elected that year were political newcomers Sanchez and Ibarra, both of whom were assisted in their successful electioneering efforts to greater and lesser extents by Valdivia or elements of his political machine. Prior to his election as mayor, Valdivia had established an extremely close alliance with Richard and a reliable affinity with Nickel on the vast majority of issues that came before the council. Thus, upon Valdivia’s installation as mayor in December 2018, he enjoyed control over the city’s highest functioning decision-making body, which was demonstrated by a move he made the day he, Ibarra and Sanchez were sworn into office, to fire then-City Manager Andrea Travis-Miller, with whom Valdivia had differences. That maneuver was supported by Sanchez and Ibarra from the outset. Over the ensuing months Richard joined with them, giving Valdivia in April 2019 the needed three votes on the six-sevenths strength council to put Travis-Miller on administrative leave.
The following month, in a special election to fill the vacancy on the council brought about as a consequence of Valdivia’s resignation as Third Ward councilman to accede to the mayor’s post, Figueroa, who was heavily supported by Valdivia in his campaign effort, was elected. This gave Valdivia four solid votes on the seven-member panel – those of Richard, Figueroa, Ibarra and Sanchez – as well as the general support of Nickel, at which point Valdivia found himself at the pinnacle of his apex power. Unchecked by any effective opposition, Valdivia was in a position to make commitments to virtually any individuals, parties, companies, or entities interested in doing business with or in the city that he could deliver the necessary votes on the council to get those individuals’ projects in the city, their contracts with the city or their permit applications approved. Having established a consulting business – AAdvantage Comm LLC – Valdivia used that entity to engage with those business entities and businessmen and businesswomen who had a dog in the hunt at City Hall. As the mayor in San Bernardino under normal circumstances is not empowered to vote with the rest of the council but rather has the authority to veto 4-to-3 and 3-to-2 outcomes and cast a vote to break a tie, Valdivia was able to, he calculated, avoid involvement in a criminal conflict of interest by manipulating his council allies to provide the approvals that those who had retained him as a consultant needed to get their projects underway, their service or good-provision contracts with the city in place or the licensing or permits they sought.
So confident was Valdivia that he could orchestrate things from his perch as mayor, he routinely absented himself from any issues relating to the permitting and licensing of marijuana/cannabis-related businesses seeking to set up shop in the city. San Bernardino’s municipal leaders for years had resisted the societal evolution that has come to accept marijuana as both a therapeutic drug and one which can be used for recreational purposes. In 2016, however, a group of San Bernardino residents qualified for the municipal ballot Measure O, calling for allowing the retail sale of marijuana and its derivatives and byproducts, both for medical and recreational purposes. The citywide vote on Measure O coincided with the statewide initiative Proposition 64, the Adult Use of Marijuana Act, calling for the legalization of marijuana use for its intoxicative effect. Both passed. In the aftermath of Measure O’s passage, city officials, long philosophically opposed to having marijuana openly available in the city, dragged their feet for more than a year in actuating it.
Ultimately, as the Davis administration was drawing to a close, the city and city council undertook to formulate an ordinance that was based upon Measure O and the refinements of city marijuana policy that the city claimed were the byproduct of litigation it was met with in the aftermath of Measure O’s passage. In February 2018, the San Bernardino City Council passed an ordinance of its own creation, intended to supersede Measure O, allowing up to 17 cannabis-based commercial businesses within the city to function on limited duration permits that were to be renewed or discontinued annually, dependent upon whether their owners and operators complied with state and local law. The ordinance set a ratio of one cannabis-oriented business per 12,500 residents, which translates into a maximum of 17 marijuana concerns. The city thereafter began to accept applications for the licenses, but throughout the remainder of Davis’s term in office, the progression toward having licensed and permitted cannabis-based concerns functioning in the city bogged down in bureaucratic red tape.
While earlier in his political career, Valdivia had postured as a conservative, mouthing along with the majority of the city council as it was then composed anti-marijuana platitudes, upon preparing for his 2018 mayoral campaign he turned on a dime when he recognized that the marijuaniification of California had begun in earnest and that Measure O’s passage together with his position leading the city could provide him with an opportunity to cash in in a big way. Using the imperfect permitting/licensing process that had been put in place under Davis, Valdivia even before he was sworn in as mayor was aggressively reaching out to the applicants for city licenses, letting them know that he could assist them in achieving approval for their business models for a fee. Valdivia did not openly reveal to those in the city – either staff or the council – exactly what he was doing. Those who had the best window on his activity were those in the cannabis industry. When he would absent himself from the council dais as cannabis licensing issues came before the city council, he offered no explanation. Word, however, about what was happening began to emanate around the community. And while Valdivia delivered on many of his commitments to those who had retained him, in other cases he did not. Indeed, it appears that though he knew there was to be an upward limitation on the number of cannabis/marijuana-related businesses in the city altogether as well as limitations on the number of the differing types of these businesses – which included retail establishments, cultivation operations, product and by-product derivation and manufacturing businesses, packagers, deliverers, and research operations as well as so-called microbusinesses, which are a combination of at least three of the former – he made representations to far more than 17 different permit applicants that he could get them the entitlements to operate they were seeking. What has now become clear is that in his interaction with at least some of those who had retained him, he made claims that simply were not true. When some of those who had been promised a permit did not get one, they began to openly talk about the deals Valdivia had cut, quid pro quos in which he had said he would ensure that those who paid him would obtain permits.
A case in point is the experience of Victor Munoz, who on May 5 of this year made a sworn declaration relating to his interaction with Valdivia in his efforts to obtain permitting/licensing for a marijuana based business while Valdivia was yet a councilman and after he became mayor.
“I was introduced to Mayor John Valdivia by a mutual friend around 2017 for the purpose of obtaining a marijuana retail license within the City of San Bernardino,” Munoz’s declaration states. “It was explained to me by Valdivia that in order to get my license, the system was set up like a lottery point system and I had to pay for extra points to better my chances. Valdivia guaranteed me a license as long as I did what he told me to do and I donated to his campaign and to his personal needs. Based on Valdivia’s representation, I leased a large 16-acre commercial lot for the purpose of the retail marijuana license. Thereafter, I met up with Valdivia a few times for coffee or lunch to discuss the license and business plans. Valdivia always had ways of indirectly collecting funds so he would not incriminate himself.”
According to Munoz, on the day of the deadline for permit applications to be filed with the city, “Valdivia called me on my mobile phone and told me he needed by help and support and needed me to deposit money into his campaign fund. Based on the request by Valdivia, I wired $2,500 to Valdivia’s campaign fund through his website. Nevertheless, I ultimately lost my bid for the city license and found out that most of the licenses went to Valdivia’s family and friends.”
Shortly thereafter, Munoz confronted Valdivia about what had occurred, only to be rebuked with a vulgar insult belittling his masculinity.
“Valdivia then proceeded to tell me we were all a bunch of ‘whining bitches’ because we did not wait our turn for licenses,” Munoz’s declaration continues. Munoz said he told the mayor that he had done everything that had been asked of him, but that “he never kept his promise. Instead, Valdivia gave licenses to people that were not even zoned for retail sales of marijuana. Valdivia then asked me for more money to get my license, and at that point he brought in and introduced me to Council Member Juan Figueroa. Valdivia said everything will go through Figueroa, and that was the only way I was going to get my license. Valdivia then asked me for more money and funding in the presence of Juan Figueroa if I wanted to get my license. I got angry and told Valdivia and Figueroa I was not giving them any more money. Valdivia told me I was ‘cut off’ and ‘done,’ and that he was not helping me with anything anymore.”
Valdivia’s efforts to profit by means of his elected position and his willingness to impose himself as an invisible hand guiding the city’s approval processes were by no means limited to shaking down cannabis project applicants, though because of the sheer numbers of those competing for those permits, the cannabis industry appears to have been the most lucrative source of Valdivia’s extracurricular activities while he has served in the capacity of an elected official.
Valdivia’s former legislative field representative, Don Smith, has stated in a sworn affidavit that he was present in 2018 when Valdivia was handed an envelope full of cash by Danny Alcarez, who holds one of the franchises for tow service with the City of San Bernardino. Smith characterized the money provided to Valdivia as a bribe made in exchange for Valdivia maintaining the status quo with regard to the city’s towing franchises.
Mirna Cisneros, who worked in the mayor’s office as Valdivia’s citizens relations specialist, has publicly related incidences of Valdivia accepting gratuities, tantamount to bribes, from individuals and business owners, and that he told her he routinely did not report the reception of those, as is required of elected officials by state law. Cisneros further related that Valdivia took public agency reimbursements for travel and other activities he was engaged in, such as breakfast, lunch and dinner meetings at which he was making an effort to raise political funds or take care of personal business.
It is of note that in 2015, while Valdivia was yet a councilman and during the bidding process for the city’s trash franchise, corporate officials with one of the competitors, Athens Services, reported Valdivia solicited a $10,000 donation to his campaign fund. When Athens declined, Valdivia opposed awarding the contract to Athens.
San Bernardino’s transition from a jurisdiction in which marijuana and its multiple byproducts were absolutely prohibited to one in which a multitude of entrepreneurs were competing for permits and licensing to engage in the highly lucrative provision of those substances created a situation rife with the potential for graft. Similar manifestations occurred elsewhere in San Bernardino County, such as in Adelanto and Hesperia, where a pattern of the applicants for cannabis/marijuana permits providing the elected decision-makers in those communities with gratuities, gifts and bribes had developed.
In recent months, the degree to which Valdivia is on the take became more apparent in the aftermath of five separate claims lodged against him and the city by five of the former city staff members assigned to his mayoral office – Smith, Cisneros, Valdivia’s executive assistant Karen Cervantes, Valdivia’s field representative Jackie Aboud and Matt Brown, Valdivia’s chief of staff.
Valdivia’s hold on the city council had reached its apex around June of 2019. Thereafter came defections from his ruling coalition. The first member of the council to break with Valdivia was Ibarra. Over the next several months, as both Sanchez and Nickel chaffed at the mayor’s dictatorial approach and his sense of arrogant entitlement in assuming that the balance of the council was in line with his agenda in clearing the way for those who were endowing his political and personal coffers with capital to move forward with their entrepreneurial, business and contractual proposals, they too found themselves at increasing odds with the mayor. The claims filed by Cisneros, Cervantes, Aboud, Smith and Brown, as well as the marshaling of evidence to back those claims, caused further deterioration in the relationship between Valdivia and his three former political associates.
With the surfacing of information which brought the integrity of the city’s governmental processes into question, the council, in some measure led by Councilman Sanchez, has cast about for some way to reassure the public that things remain on the up and up in San Bernardino.
Accordingly, at the council’s direction, city staff this week provided the council with what was entitled “integrity standards” pertaining to the city’s decision-making processes relating to the granting of marijuana/cannabis-related business licenses. One of those provisions was that “All applicants listed on an application for a commercial cannabis business permit or any persons representing or lobbying on their behalf shall comply with the integrity standards adopted by separate resolution of the city council. Failure to abide by the integrity standards may result in disqualification from a commercial cannabis business (CCB) permit review process or revocation if it is later determined that the applicant or any person associated with the application or any third party lobbying on their behalf has violated the standards.” A second provision was that “Prior to voting on the approval of an application of any kind related to a commercial cannabis business (CCB) permit, all members of the city council shall disclose, in public, immediately before the vote, whether they have had any communications directly or through an intermediary with the commercial cannabis business applicant or a representative of or a lobbyist for a CCB applicant.”
These reforms, Sanchez insisted, would demonstrate that the city is committed to transparency in the deliberative process and simultaneously ensure that there is no favoritism involved in evaluating whether the individual applicants are qualified for a permit, subjecting all applicants to a fair process.
“We have had pay-to-play for too long,” Sanchez said, offering his perspective that money was tainting the political process. He noted that in eight of the last ten municipal elections, the candidate who “has raised the most money has won the election. [That] means special interest money runs the politics in this city.”
Ultimately, the integrity standards were endorsed by Ibarra, Figueroa, Nickel and Richard in addition to Sanchez. Voting against their adoption were councilmen Shorett and Mulvihill, who consistently have been critical of Valdivia, including suggesting that he has sold his votes while he was a councilman and his influence over the city council while he has been mayor to the highest bidder.
A number of city residents, including Shorett’s and Mulvihill’s supporters, expressed surprise at their unwillingness to embrace the reforms, particularly given the consideration that they have been the city officials most critical of the way in which Valdivia has evinced a willingness to make the city’s permitting processes conditional upon the generosity applicants show toward the city’s elected leadership, Valdivia in particular.
“It is the bad apple that spoils the barrel,” Shorett said, acknowledging that Valdivia had played fast and loose with the rules, but he asserted that the mayor taking bribes was not reason to hamstring other officials who do not engage in violations of the public trust with rules that crowded the way they function.
“I understand perfectly that if someone gives me money, that is fine,” Shorett said, “but I’m not going to support them just because they give me money. If what they are proposing is good for the community and it has merit, then I will support it. If the council wants to have a rule that when a project comes before us that we have to disclose whether the applicant has given us money, then let’s do that. But this is only about the cannabis industry. It doesn’t apply to the building industry or tire stores or restaurants. This is not about anything else but the cannabis industry. If we are about to vote on putting in a new development at the corner of 40th Street and Sierra Way, I have no problem disclosing if I have gotten money from that particular developer, and if it is a good project I will support it and if it does nothing for the community, I will vote against it. What you should do is go through the process and get approval based upon the merit of what you propose. If staff provides a recommendation in the applicant’s favor and he has done everything he is supposed to do according to the rules and I think the project adds to the community, it doesn’t matter if the proponent has given me ten cents or $10,000, I will vote to approve the project. If it is not in my judgment good for the community, I will vote against it. I am against the idea that somebody can’t talk to me.”
Shorett said, “I voted against this integrity standard because I don’t think I should have to estimate about whether in the future who might give me money and who might not give me money. I don’t think I should have to say to someone, ‘You might give me money so I can’t talk to you’ or ‘You gave me money in the past, so I can’t talk to you.’ That is what I am against. I am against people not being able to talk. This has come up because [Mayor] Valdivia had a cannabis project consulting company. At least that was what it seemed to be when he wasn’t participating in the council’s discussions about cannabis operations in the city. And then one day he stood up and said he had no conflicts anymore. But there were all sorts of people who said he made promises to the cannabis project applicants and got money from them. I understand that it is against the law if someone says ‘I’ll give you a thousand dollars if you vote for my project,’ and then I vote for that project. But that is already against the law. It would be foolishness for someone to do that, because I am just one of seven votes. I think it is a really bad idea to put all of these restrictions on us because of that one bad apple.”
Shorett added, “I don’t think it fair that we single out one industry. We don’t do that to someone who will open a 7-11 or a store that is going to sell liquor or what have you. To do that, the applicant must go through a CUP [conditional use permit] process. That is the American way. People have a right to talk to their representatives.”
The council’s action on Wednesday gave the ordinance what is called a “first reading” and initial approval. After it is given a second and final reading and presumably a second vote of approval, it will go into effect 30 days later.
“Right now there is not a law that we can’t talk to cannabis applicants,” Shorett said. “Right now there is not a law that we can’t talk to any project applicants. I want to be able to talk to all business applicants in the city. I want to be able to know about the projects I am going to vote on. That’s why there is a city council, so we can make decisions that are informed and are based on our judgment of what is good for the city and what isn’t. I want to be able to talk to business applicants in the city. That said, there is soon to be a law that we can’t talk to cannabis applicants, and I didn’t vote to support that being the law. But if that is the law, I will abide by it.”
Shorett asked, “Why is Ted [Sanchez] bringing transparency forward at this time?” He then answered his own question. “Because the public won’t elect qualified people,” he said. “I understand why Theodore is going after Valdivia at this point, because after he [Sanchez] went along with him [Valdivia] for so long, he [Sanchez] sees now that he [Valdivia] is dishonest. I am not against transparency. I fill out 460s every six months, like every other elected official. You can go look at them.”
Form 460s are the State of California’s documents that elected officials are required to fill out and file to show from whom they are receiving political donations.
“I can’t be bought and I can’t be bossed,” Shorett said. “I am not against transparency. I am not against disclosure. I’m not against being up front and honest. If something comes up where I have a conflict, or I have an interest in what we are voting on, I will recuse myself. If you have a project, you should be able to call me any time you want and give me money, but there is not enough money on this earth to buy my vote. If you have a decent project, I will support it. If not, I am not going to support it. I want to do what is best for the community. I represent the people and I want the businessmen who are looking to do business here to be able to communicate with me and I want to be trusted by the public that I am not engaging in pay-to-play or graft or bribes We should not be making laws to take care of a few bad apples. What we need is the people of this city to wake up and vote those bad apples out of office. If someone is doing a bad job, or if that person is dishonest, or that person is corrupt, then he should be tossed out of office. But if someone has been elected, we have to, and everybody else has to, live by that. I wish he [Valdivia] wasn’t in office. I wish he wasn’t the mayor, I really do. But as a city council, we can’t change that. We shouldn’t be passing an ordinance because the voters of the city didn’t get engaged. The public got what it voted for. The people of this city don’t necessarily deserve someone like Valdivia, but they let this situation come about where he is mayor. A majority voted him into office. The public needs to get engaged. There has not been a letter to the editor in the [San Bernardino] Sun that I can recall about Valdivia. There have been some editorials that show the news reporters and their editors know what is going on, but the public is not going against him [Valdivia]. There are some residents who have called the city council and asked, ‘Why don’t you censure him?’ A censure means nothing. It is saying, ‘We are really disappointed in your behavior and you shouldn’t have done those things you are doing.’ A censure has no teeth in it. As a council, we have no jurisdiction over Valdivia. Censuring him would be meaningless. It would be window dressing.”

Leave a Reply