By Mark Gutglueck
As Fontana is moving to become the sixth San Bernardino County city to legalize the sale of marijuana, concerns have been raised relating to the Postmus Cartel muscling in on the commercial cannabis franchises that are to soon materialize in the county’s second largest municipality.
Multiple anomalies in the processes to license and permit cannabis/marijuana-related commercial operations in the city of 208,393 were given exhibition during the hearing that preceded Tuesday night’s vote to end Fontana’s prohibition on the sale of the drug. At issue in some of those anomalies are known contacts between Bill Postmus and the city’s mayor and one of its council members that took place prior to the July 12 meeting at which the council approved a set of rules relating to such businesses. One of those rules prevents applicants for such business operations from having contact with members of the council.
Moreover, the regulations that pertain to the applicants to be granted the city’s licenses and permits were drafted with exclusions that appear to have been tailored to avoid disqualifying Postmus, a convicted criminal and drug user, whose criminal history and involvement with controlled substances would otherwise have precluded him from being involved in such an operation in Fontana.
Given Postmus’s convictions on multiple political corruption charges including bribery and recent reports that a political money laundering operation he has set up is being used to deliver monetary payments to elected officials throughout San Bernardino County to influence their votes relating to the business ventures of clients for whom Postmus is doing consulting work, suspicions have been raised to the effect that Fontana Mayor Acquanetta Warren and the ruling council majority she controls, which vehemently opposed marijuana legalization in the city they govern in the past, have been paid by Postmus’s cartel to end their city’s cannabis ban and confer on the marijuana profiteers Postmus represents an airtight monopoly.Of note is that in their original configurations as staunch Republican politicians, Postmus and Warren were adamantly opposed to both the legalization and the availability of marijuana.
Postmus was elected in 2000 to the position of First District San Bernardino County Supervisor. Two years later, Warren was appointed to the vacant position on the Fontana City Council created when then-Councilman Mark Nuami was elected mayor. In 2004 Postmus was reelected supervisor and also gained appointment by his supervisorial colleagues to the position of chairman of the board of supervisors, making him the second youngest county supervisorial board chairman in San Bernardino County history. Simultaneously, he acceded to the position of chairman of the San Bernardino County Republican Central Committee. In 2004, Warren ran for city council in her own right, emerging victorious in that race.
Postmus and Warren, who were both vociferous members of the GOP, at that time paralleled one another in their political advancement. In 2006, Postmus, in what is yet the most expensive political campaign in county history, was elected San Bernardino County assessor, the county’s highest ranking taxing authority.
As rock-ribbed Republicans, Postmus and Warren hewed to the Republican side of the divide over marijuana, which in 1996 had been approved for medical use by California’s voters with the passage of Proposition 215, the Compassionate Use of Marijuana Act. As far as Postmus and Warren were concerned, that liberalization was wrongheaded and should have been rescinded, since giving it the status of medicine merely provided a way for those who wanted to obtain it for its intoxicative effect a means for doing just that. Throughout his time on the board of supervisors, Postmus was at the forefront of those holding the line against cannabis legalization. Legalized availability of marijuana would never happen in San Bernardino County as long as he was in office, Postmus vowed, because the use of the drug was “immoral.” Marijuana was anathema to the rule of order and a civilized and peaceable society, and decent people simply did not use it or tolerate its use by others, Republicans maintained. When anyone suggested that marijuana dispensaries be permitted to operate in either of their jurisdictions, Postmus and Warren dismissed the suggestions, as to either the county or Fontana, respectively, and they derisively characterized those who made such suggestions as indolent potheads who either bordered on or had crossed the line into being degenerate drug addicts and/or criminals.
In 2008, Warren ran successfully for reelection to the city council. In 2010, she ran, again successfully, for Fontana mayor.
By that point, Postmus’s once-promising political career had imploded. In 2009, he was shown, despite his rhetorical denunciations of liberals and the drug culture, to be hopelessly addicted to methamphetamine. That revelation and exposure of how he had used his status as county assessor to fill 13 of 15 of the assessor’s office’s top-paying positions with his boyfriends and political associates who had absolutely no experience, expertise, knowledge or ability with regard to assessing property or assets for tax purposes, led to a criminal investigation followed by his resignation from office. Thereafter came criminal charges relating to malfeasance in his role as assessor. In 2010, he was criminally charged with regard to actions he had taken while he was serving in the role of county supervisor. In 2011, Postmus entered guilty pleas on 14 felony political corruption counts, including soliciting a bribe, receiving a bribe in his official capacity, four counts of embezzlement by a public official, conflict of interest by a public official, conspiracy, two counts of grand theft, fraud and perjury.
His guilty plea to conflict of interest by a public official resulted in his being banned for life from holding elective office in California. In 2013, desperate to get back into the political game but faced with the reality that he could never again serve in a publicly elected capacity, Postmus sojourned to Cheyenne, Wyoming, where he set up a business, Mountain States Consulting Group LLC. He then registered Mountain States Consulting Group as a Wyoming domestic limited liability company with the Wyoming Secretary of State’s corporate division.
Having been involved in bribetaking and other forms of graft and corruption, Postmus was acutely conscious of the potential pitfalls in such activity and precisely how it was that he had been caught. Through his time in office, his arrests and ensuing prosecution and conviction, Postmus gained an implicit and explicit understanding of how the political and justice systems work and mesh, as well as both the reach and limitations of the prosecutorial arm of the government in making politicians adhere to the law. He had attained a flawless feel for the circular pay-to-play element of control and governance where politicians take in money from those with an interest in the governmental decision-making process, use that money to get into office or stay in office and vote to approve the development projects or the contracts or the franchises of those who have donated that money.
With Mountain States Consulting Group, Postmus created a political money laundering operation, a device by which politicians can engage in pay-to-play trade-offs without getting caught and being stigmatized with criminal convictions as he had been. Mountain States Consulting Group takes money originating with individuals or companies with a stake in governmental decisions, launders that money through his company and then provides that cash, either as political donations or payments in some other form to the politicians making those decisions. Postmus employs Mountain States Consulting Group and several other entities and political action committees he has direct or indirect control over, such as the Inland Empire Political Action Committee, the Conservatives for A Republican Majority Political Action Committee and the Citizens Against Wasteful Spending Political Action Committee, as cutouts, insulating the recipients of the money – the politicians – from those who are providing the money. When Postmus properly executes on this mission, it protects the politicians from the perception that their votes are being purchased, which has political benefits, while serving to lessen to a considerable extent the possibility that the politicians he is funneling money to will be subject to law enforcement action for engaging in what in the final analysis are quid pro quos, out-and-out bribes or kickbacks. Postmus also utilizes Mountain States Consulting Group to employ politicians or those considered to be up-and-coming in politics with phantom assignments, providing them with revenue without actually having to work, freeing them up to engage in campaigning or other electioneering activity to advance their political prospects, standing or careers.
Using such entities at his disposal to launder political donations to elected officeholders and by sponsoring fundraisers for current officeholders, Postmus has created and continues to create the opportunity for individuals to provide money to politicians in a way that the individuals or companies from whom or from which the money originated could not and cannot be traced.
By the time Postmus reentered the political world in 2013, the overall societal attitude toward marijuana, at least in California, had changed. In 2016, when Proposition 64 – the Adult Use of Marijuana Act – was placed before the voters and ultimately passed to make the use of marijuana for recreational purposes in California legal, those already changing attitudes took a quantum leap. Virtually overnight, money – substantial money – could be made on the sale of the substance, not on the black market but out in the open, legally. Postmus, who had once railed against marijuana as “immoral,” now saw its commercialization and the efforts by his potential clients to obtain permits and licensing from local governments as a means for him to make money. Indeed, his longtime business partner and political associate, John “Dino” DeFazio, sought and then obtained a permit from the City of Needles to establish a marijuana cultivation facility. Postmus was now in the business of profiting off of marijuana himself. He gravitated, almost immediately, toward assisting would-be marijuana entrepreneurs in their application for commercial cannabis licenses. With his talent and skill at paying off politicians to obtain operating permits, he soon transitioned to convincing politicians and government officials to grant marijuana-related and cannabis-related commercial permits to his clients.
While most cities in San Bernardino County and the county government itself did not take the passage of Proposition 64 in 2016 as a cue to permit marijuana-related activity in their jurisdictions, five cities – Needles, Adelanto, San Bernardino, Hesperia and Barstow – did. Soon, Postmus was a player in four of those locations: Needles, Adelanto, San Bernardino and Hesperia. The businesses he represented have become known among at least some as the Postmus Cartel. By filtering money in the form of campaign donations to the elected officials in those cities, Postmus has arranged for those entities to get licenses to operate. Simultaneously, he has been part of a campaign to suppress the competitors of those who have gotten those licenses. He and his contacts, including politicians he has supported over the years, have pushed to have various city code enforcement divisions and law enforcement agencies such as the San Bernardino County Sheriff’s Department engage in operations against those competitors. The San Bernardino County Sheriff’s Department, for example, has through its celebrated “Operation Hammer Strike” seized more than 167,782.9 pounds – more than 83 tons – of marijuana since January 2021, worth approximately $944.78 million. As the supply of available marijuana has diminished, the cost of the marijuana that is legally available for sale at the various licensed and permitted dispensaries and commercial marijuana outlets in Needles, Adelanto, San Bernardino, Hesperia and Barstow has increased. This jump in revenue has provided the members of the Postmus Cartel with more capital that is used to pay off more politicians, who accordingly agree to allow more members of the Postmus Cartel to set up shop in their jurisdictions.
Following the passage of Proposition 64 in 2016, Mayor Warren and her ruling coalition on the city council were adamant: Fontana was not going to jump on the marijuana legalization bandwagon. One of the provisions of Proposition 64 was that local jurisdictions retained autonomy over questions of marijuana availability and commercial licensing, and she vowed that Fontana was not going to traffic in the human misery that marijuana represented. Selling marijuana in Fontana and growing it for commercial purposes was to remain illegal.
Last year, Bill Postmus set his sights on Fontana. He began lobbying Warren. He held a fundraiser for Councilman Cothran. A few months ago, Fontana officials signaled that maybe marijuana use isn’t all that bad of a thing after all. Warren was soon pointing out that when Proposition 64 passed, it had been approved by a higher margin in Fontana than everywhere else in the county.
Tuesday, Assistant City Manager Phil Burum previewed just how it is that marijuana permits are to be obtained in Fontana.
During the public hearing on the matter, Burum acknowledged that the city had temporized nearly six years after the legalization vote. He indicated that the city is to restrict both the type of marijuana related operations and the number. The city will continue to ban, Burum said, cultivation, manufacturing, testing labs or combined operations. The city will however, permit business that engage in the sale of the final product out of brick-and-mortar locations or by delivering it to customers.
“Retail sales with associated delivery services is the best fit to satisfy the desire of the voters of the City of Fontana,” Burum said. He did not explain how city officials knew that the city’s residents were in favor of retail operations but were opposed to the other type of marijuana and cannabis-related ventures.
Curiously, after Warren and her council colleagues had stridently asserted for more than five years that marijuana would not be made available commercially in the city, Burum said city leaders had at last come to the conclusion that cannabis liberalization entailed “community benefits in the form of income to the city generated by legally authorized cannabis retailers.” Those benefits would include, Burum predicted “additional police officers… social services… [and] general community benefits,” which he said would extend to funding “park maintenance and upgrades” and city “operational expenses.”
Ironically, given that for so long Fontana officials had vowed not to allow marijuana legal entry into the city because of the threat the drug represents against youth, Burum said sales of the once-outlawed weed would generate tax revenue that would pay for “drug counseling [and] youth programs.”
The city would simply enact, Burum said, a “zone change to remove the current prohibition against cannabis sales.”
A giveaway that the city was looking to benefit a select group of entrepreneurs consisted of the limited number of licenses/permits Burum said the city is prepared to issue. While Burum readily conceded that “industry experts” told city officials that the appropriate number of cannabis-related business was “one per 20,000 population,” or, in the case of 208,393-population Fontana, ten, Burum said that “staff made a decision to not recommend that many.”
Rather, Burum, said, the city will permit just three such businesses to locate in Fontana. One of those will be allowed to operate north of Baseline Avenue, another between Baseline and Valley Boulevard and another south of Valley Boulevard.
Instantly, many saw that as a move by Warren to ensure that the businesses represented by Postmus would not need to compete against rivals who might cut into their revenues.
Burum sought to suggest that no political influence over the selection process would take place by emphasizing that those allowed to operate in the city would not only need to get a permit and license to operate from the city but would need to obtain a state license as well. Burum further indicated that the selection process would be run more or less by the city manager or his designee, who would evaluate the integrity of the individuals seeking the permits, their ability to perform and the propriety of the operations they were seeking to have licensed. The mayor and city council would not directly participate in the selection process of the eventual licensees, other than to ratify it once the city manager’s selection of the three operators was made, Burum said. Burum indicated that once an application for a permit/license was made, the applicants would be prohibited from contacting members of the city council.
Burum’s assurance in that regard was problematic, however. It is well known that Postmus has been in contact with both Warren and Cothran up to this point. Indeed, during the course of the meeting Tuesday night, Cothran acknowledged that he has had contact from individuals expressing an interest in securing a permit to run cannabis operations in Fontana.
Another strong indication the city is clearing the way to give one or two or even three of the members of the Postmus cartel one, two or all three of the Fontana commercial cannabis permits was the language relating to restrictions on who could obtain the licenses.
Applicants for, and those qualifying as “responsible persons” involved with companies seeking a marijuana-related business license in Fontana are to provide, under penalty of perjury, “a detailed description of the owner’s criminal convictions,” a city document states, before noting that “Conviction within the past 10 years of a responsible person, including a plea of guilty or no contest …shall be grounds for revocation of a commercial cannabis permit issued by the city.” Those with any significant involvement with the companies seeking the operating permits, Burum said, would need to make such disclosures, and that would include all of those with anything more than “a one percent interest” in the businesses, he said.
Close scrutiny of both the reporting requirements and disqualifying criteria, nevertheless, demonstrates that loopholes for Postmus have been built into the safeguards Burum cited.
First, even though Postmus’s criminal convictions for both serious criminality and drug use would seem to render him or any company or companies he is affiliated with as disqualified to compete for a Fontana commercial marijuana franchise, his convictions were entered more than 11 years ago, such that he does not fall under the restrictions. Additionally, his status as a lobbyist for those applicants rather than an owner could be used as grounds for not considering his criminal history when evaluating the applications of his clients.
Those seeking a permit must submit with the application a non-refundable $25,000 filing fee. Burum said forcing an applicant to put up that kind of money would ensure that those competing for the permits were serious and willing to meet the criteria the city was specifying. Others, however, suggested that the prohibitive nature of that application fee favored companies such as those affiliated with Postmus or members of his cartel, which have established existing franchises and considerable cash flow based upon the favorable relations they have cultivated with politicians through donations and kickbacks provided to them.
Burum defended the application and vetting procedure the city was using, calling it a “completely disconnected non-favorable process.”
Burum suggested that another element of the application process which involved having the applicants sign an agreement to indemnify the city if a competitor challenges the awarding of the permit to that applicant provided the city with a layer of financial protection. Others, however, saw that as further evidence that the city was forming an alliance with the Postmus Cartel, which by this point has grown to a point of advantage that it can afford to sign such an indemnification agreement given the revenues that are pouring into the companies Postmus represents.