Runner-Up Protests City Pot Pick

SGSB, Inc. Says Retail Selection 'Manifestly Unfair'

Assistant City Attorney Tava Ostrenger (left) with administrator Matt Fore
Paul Wellman

In what may be the opening salvo of a full-on legal challenge, owners of Arizona-based cannabis company SGSB Inc. are seeking to appeal the results of the City of Santa Barbara’s competition last month to approve three storefront retail permits. Although SGSB came in a very close second place in the scoring, it was disqualified because its proposed location at 913 State Street fell within 1,000 feet of the top-scoring dispensary, Coastal, located on the 1000 block of Chapala Street.

In a letter to City Hall, SGSB’s Yoram Heller termed his company’s disqualification “manifestly unfair,” and asked Mayor Cathy Murillo and the City Council to reconsider. Heller argues that his proposed dispensary is 1,024 “walking” feet from Coastal, and that his application was not given due credit for local investors, pointing out that the owner of Holdren’s steak house was on board, as were owners of Santa Barbara Shellfish Company, Casa Blanca, FisHouse, Boathouse, and Santa Barbara Brewing Company.

The stakes involved in landing a retail permit are obvious and immense. It costs as much as $1 million for applicants to submit complete packets. Heller complained none of the three victors were on downtown State Street, thwarting the city’s obvious need for retail rejuvenation. And he hinted that other applicants cheated, according to his letter. “There is also the potential that one or more of the current successful applicants included false, misleading, and/or fraudulent information.” Because of his disqualification, Heller argued, less-qualified operators will be allowed to benefit.

Heller’s July 18 letter was rebuffed by Assistant City Attorney Tava Ostrenger, who wrote on July 30, “The City appreciates your participation and effort in the permitting process,” but stated the decision “is final and not administratively appealable.” The council could theoretically intervene, but to date, the mayor and council have been carefully inoculated from playing any role in the process by which three operators were culled from a field of 12 applicants. Barring council intervention, Heller’s only other recourse would be litigation.

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