New cannabis licensing lawsuit against Fresno – GV Wire


New lawsuit claims City of Fresno’s rating system for retail cannabis applicants was flawed and unfair. The plaintiffs ask a judge to put an end to the system.

Pietro De Santis and Kerry Burrough were among 113 candidates who hoped to get rich in the ‘green rush’. But, they said, due to the vague nature of the way the nominations were scored, they may have lost millions of dollars.

“Once we got the score breakdown, our scores were clearly wrong. “ – Kerry Burrough, cannabis license applicant

“We just want the score to be redone. We want it to be a fair score and to give us the opportunity to be re-scored or to appeal our (current) score, ”said Burrough.

The lawsuit, filed in Fresno County Superior Court last month, alleges the city’s process was not transparent and was not carried out in accordance with laws passed by Fresno City Council.

“By deciding to reject the applicants’ requests, the City violated not one, but several tenants of the due constitutional procedure”, alleges the lawsuit.

The lawsuit calls on a judge to prevent the city from issuing more commercial cannabis licenses and to invalidate the 21 licenses issued. He is also asking the judge to reinstate the motions filed by separate groups led by De Santis and Burroughs.

The case is Pietro De Santis v City of Fresno. The city had not been served Monday of the trial. No judicial date has been set.

City Manager: Coherent system

Cannabis licensing is the responsibility of Fresno City Manager Thomas Esqueda.

“We applied the system in accordance with our understanding of the intent of the order. So this is where I need to understand what these fairness comments are and how does that relate to how the order was written? Said Esqueda, who hadn’t seen the trial.

“If we’ve done what we’re supposed to do and people say the prescription is wrong, well, let’s fix it. “

City council members Nelson Esparza, Esmeralda Soria and Tyler Maxwell declined to comment on the lawsuit.

The applicants applied for four permits

Pietro De Santis, a Fresno real estate broker, has requested the opening of three cannabis stores. In his claims, De Santis estimated the net income per year to be five to $ 5 million for each location.

De Santis, a Fresno real estate broker, has requested the opening of three cannabis stores. In his claims, De Santis estimated the net income per year to be five to $ 5 million for each location.

Two – one store-branded Atrium and one under The Green Door brand – were located at the intersections of Blackstone and Gettsyburg avenues. Despite their proximity to each other, the stores were located in separate quarters from the city council. Licenses are limited to three per district. Since retail cannabis stores must be 800 feet apart, only one of these locations was eligible for approval.

A third request from De Santis was for another Atrium at 1133 E. Olive Ave.

Burrough and his business partners have asked to open Towertopia in the former Chicken Pie Shop at 861 E. Olive Ave. They have so far invested more than $ 1 million to purchase the old restaurant and the adjacent parking lot, Burrough said.

Burroughs owns KB Ventures, which owns the 500 Club Casino in Clovis.

Towertopia estimated to be in the dark in year one and net income of $ 4.2 million in year five.

Former MLB pitcher Matt Garza also called the city’s cannabis licensing rating system “unfair.” (GV wire file)

Alleged vague rating system

The lawsuit alleges that the city manager failed to follow the direction of the city council for an objective scoring system. He called the process “arbitrary” and claimed that it deprived the candidates of their due process rights by not revealing the details of the scores.

“If we’ve done what we’re supposed to do and people say the prescription is wrong, well, let’s fix it. “ – City of Fresno Director Thomas Esqueda

“The city manager, instead, drew up a tangled list of criteria that were not objective and did not provide a scoring system (or quantitative equivalent) linked to the criteria set out by the city council,” alleges the lawsuit. “Petitioners and the public will have to guess how CCB permit applications are assessed, which opens the door to arbitrariness, bribery and bribery.”

More than 110 candidates applied for one of the 21 permits. Originally, the plan called for 14 permits, but city council has added seven more.

Retail cannabis applicants went through four phases of scrutiny to secure one of the coveted licenses.

Phase II was an application review, with a perfect score totaling 1,600 points. The lawsuit says how the candidates earned points was not clearly explained.

Initially, only those who scored 80% or more in Phase II would advance to Phase III, the interview series. A change made in May 2021 allowed the “best candidates” to be interviewed. Five in each municipal district (six in District 4) attended the interviews. Neither De Santis nor Burroughs received any interviews.

Atrium Fresno South, on Olive Avenue, was last among the District 1 contestants with a score of 59%. Towertopia ranked eighth in the same arrondissement (72%).

De Santis’ applications on the Blackstone / Gettysburg corridor finished 10th out of 11 applicants in District 4 (59%); and eighth in 10 (59%) in District 7.

“Based on the information provided during the CCB permit application process: it has been determined that your application will NOT proceed to the next phase of the application review process at this time and is considered denied,” said the city to De Santis in a June 25 press release. letter.

Towertopia: Scoring errors

Burrough found out how Towertopia scored in Phase II through a Public Records Act request. The city eventually published the specific rating on its website.

Towertopia received a zero in several areas, including where customers can file a complaint. But Burrough discovered errors in other criteria which were given a score of zero.

“Once we got the score breakdown, our scores were obviously wrong,” Burrough said.

Burrough said his request received a zero for the location of the fire extinguishers. A review of the rating by GV Wire confirmed this. The app shows a map of the location of the fire extinguishers.

These mistakes cost him moving on to the next round, Burrough said.

“Even if we got a score of 50% on those for whom they said no information was provided, we would still have made the top five and moved on to phase III (maintenance round)”, Burrough said. “I’m fine not getting a permit if I messed up the maintenance process. It is very good. Not even going through this process is what really hurt us. “

A look at Towertopia’s request for fire extinguishers and the city’s rating for this criterion.

Appeal hearing on October 27

Only members of city council, the mayor or “approved applicants” are allowed to appeal the 21 preliminary retail licenses.

Council members challenged five of the preliminary licenses. The board is due to hear these appeals at a meeting on October 27.

“It will be interesting. They didn’t give too much information on how this meeting will go. We will definitely be there, ”Burrough said. “We will have this support from city members and other business owners in the area. “

GV Wire is aware of at least one other potential litigant. George Boyadjian has filed a claim for damages with the city. He applied for a social equity permit but was disqualified for contacting city council – a violation of the cannabis application process.

This complaint is pending.

Read the court file

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