Nevada City’s pot business discussion sparks controversy over possible conflict of interest | TheUnion.com

Nevada City’s pot business discussion sparks controversy over possible conflict of interest

A Nevada City Planning Commissioner's decision to participate in marijuana-related discussions despite what he called a possible "appearance of conflict" sparked controversy inside City Hall Thursday when he abstained from voting on one medical marijuana business but voted in favor of another.

Commissioner Jason Rainey, who serves as president of the board of directors for Growing Community — an organization which applied for Nevada City's first medical marijuana dispensary license but wasn't chosen from a pool of three candidates — said before Thursday's vote he wouldn't recuse himself from marijuana-related decisions, despite his involvement locally in the industry.

But when Planning Commissioners on Thursday voted 3-0 in favor of awarding the Searls Group a license to operate a medical marijuana edibles, beverages and oil manufacturing business, Rainey abstained from the vote.

Later, he joined the other commissioners in voting 4-0 in favor of awarding Floracy, another medical marijuana manufacturing business, an operating permit.

The Searls Group and Floracy are the first to apply for medical marijuana business licenses in Nevada City other than dispensaries.

LEGAL ADVICE

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Rainey said at Thursday's Planning Commission meeting that he sought counsel from the California Fair Political Practices Commission about whether he could legally vote on cannabis-related proposals.

In a formal advice letter dated Jan. 17 that Rainey shared with The Union, the Fair Political Practices Commission advised him that participating in decisions "related to Growing Community" would not be a legal conflict of interest because he has not received any financial compensation for his position with that organization.

The Fair Political Practices Commission confirmed the advice Rainey shared.

Appointed to the Planning Commission in July by Council Member Reinette Senum, Rainey said he was asked to join Growing Community's board of directors shortly thereafter. The organization — a not-for-profit mutual benefit corporation which proposed giving all of its proceeds to local nonprofits — sought his presence on the board, he said, in part because of his experience as the former executive director of the South Yuba River Citizens League, an organization which helped establish Growing Community.

In his correspondence with the Fair Political Practices Commission, Rainey noted that he'd met with Nevada City's attorney, Hal Degraw, in August for advice on whether he could legally take on both positions. According to Rainey's notes in that correspondence, Degraw advised him that it would be "no problem" for him to join Growing Community's board, but he should recuse himself when the Planning Commission reviews cannabis-related items.

In an email to city staff he shared with The Union, Rainey said he'd followed Degraw's advice and declared his recusal from any forthcoming cannabis-related items.

"This was a decision I made based in part on the legal advice I had received from the city attorney, and from my own generally cautious sentiment to err on the side of no 'appearance' of conflict of interest," he said in that email.

But after his January correspondence with the Fair Political Practices Commission, Rainey changed his mind about recusing himself.

"While I'm still on a learning curve, and will not be surprised if I find myself making some mistakes along the way, I take my obligations and responsibilities to the city through my role as a planning commissioner very seriously," he said in the email to city staff. "And while it may be 'safer' to offer up a recusal when the line is gray, I recognize that failure to participate and carry out the charge of a commissioner also has impacts and downsides, including pushing burdens onto others and reducing the 'representation' at the table for difficult decisions."

THE FIRST APPLICATIONs

During Thursday's review of the Searls Group, Rainey posed questions about how the Planning Commission — which is charged with issuing licenses to medical cannabis businesses other than dispensaries — would make decisions about approving or denying applications for those types of businesses.

Echoing concerns from some members of the public, Rainey questioned whether it was appropriate to allow more medical marijuana businesses in the Seven Hills Business District. Elevation 2477', a medical marijuana dispensary approved by the City Council in November is set to operate in that area at the same address as the Searls Group, 569 Searls Avenue.

Daniel Batchelor, CEO of Elevation and co-founder of an investment group that owns the 569 Searls Avenue property, said the location has a total of four suites. The investment company hopes to rent some of the units to medical marijuana businesses and facilitate the city's first "cannabis campus," he said.

Commissioner Dan Thiem told Rainey it wasn't the Planning Commission's job to decide where marijuana businesses should be located months after the city passed an ordinance which lays out regulations for those types of businesses, including which types of parcels they can operate on.

Rainey said he didn't want to "get ahead" of the City Council — which, he said, is currently discussing the issue of concentration, primarily related to marijuana dispensaries. He asked to hold the vote for a later date, but the other commissioners didn't accept his request. Ultimately, he opted to abstain from voting on the Searls Group's proposal.

But he then voted in favor of Floracy's application, saying he'd already brought his concern to light and had a better understanding of how the Planning Commission was going to proceed in reviewing applications. Floracy is set to operate at 75 Bost Avenue, also in the Seven Hills Business District.

EXCESSIVE CONCENTRATION?

When selecting Nevada City's first marijuana dispensary operator, City Council members noted that all three candidates who applied for the city's sole license were qualified. Council members voted 3-2 in favor of Elevation 2477' based on that applicant's high ranking, determined by a selection committee.

Mayor Duane Strawser and Council Member Reinette Senum, who voted for Growing Community, ranked lowest by the selection committee, both expressed regret over the way the decision was made, saying the city didn't follow the selection process it adopted.

Council members in December decided to consider changing the city's marijuana laws to allow all three dispensary applicants to operate — a discussion they will continue during a meeting Wednesday night.

Rainey told City Council members during public comment he supported the idea of issuing permits to all three dispensaries.

In an interview, Rainey said his support of allowing additional dispensaries — which he said was related to his role as Growing Community's board president and not as a Planning Commissioner — wasn't in conflict with his concern about excessive concentration because Growing Community's proposed location is in a far corner of the city, at 440 Lower Grass Valley Road.

"The location of Growing Community wouldn't be clustered," he said. "It's in the farthest reaches of the city and not within the Seven Hills Business District.

FOLLOWING THE ORDINANCE?

In an interview, Thiem told The Union he thought Rainey brought up a useful discussion, but the question he raised was for the City Council to answer, not the Planning Commission.

"The discussion was useful, but it wasn't our purview to be making those policy decisions at that time," Thiem said.

Nevada City's medical cannabis businesses ordinance, adopted by the City Council in June after a months-long review process involving public workshops and hearings, allows the city to issue business permits — which require annual renewal — to qualified applicants on parcels zoned for light industrial use. Marijuana businesses are not permitted to operate within 600 feet of a school.

Rainey's concern about marijuana business density wasn't directly relevant to the Searls Group's application, Thiem said.

"He had a valid point about concentration, I just didn't feel like, being the very first one or two applications, that concentration really was the issue," he said. "Could it be in the future? Possibly. But I'd be more concerned, personally, if that was the case with dispensaries than I would with these other businesses, which I feel are fairly low-impact."

But Senum said she was glad Rainey posed the question.

"Of course it's his job," she said about her appointed commissioner. "The Planning Commission can absolutely say, 'Hey we need to discuss this.'"

Senum also backed Rainey's concern.

"I personally do not want to see any kind of clustering or high concentration anywhere," she said. "I want this to be as discreet and away from the mainstream pedestrian and car traffic as possible."

To contact Staff Writer Matthew Pera, email mpera@theunion.com or call 530-477-4231.