News Commentary: 4/20 Alert: Getting My Nose Out of Joint

Two Years After Legalization and Still No Dispensaries

Coastal Dispensary at 1019 Chapala Street is under construction. | Credit: Paul Wellman

Who says city bureaucrats have no sense of humor? Or maybe it was just a coincidence that City Hall extended its deadline for cannabis dispensary applications a year ago so that it fell on April 20, also known as 4/20.

Get it, 4/20? International cannabis day?

Turns out, it wasn’t very funny back then, at least not for the parties involved. And it hasn’t gotten any funnier in the intervening 365 days. In fact, it’s turned into a big nasty mess of a lawsuit over how City Hall selected the top three applicants, awarding them a franchise agreement worth many millions of bucks a year. That lawsuit promises only to get messier as witnesses are deposed. In the meantime — two years after recreational cannabis was legalized by state voters — Santa Barbara remains a city without a legal recreational dispensary. Two of the three finalists have recently been awarded building permits — even the one targeted by the litigation — meaning city residents might have a storefront or two from which to purchase legalized, recreational, adult-use weed products by the end of summer. Even without, there’s no shortage. The City of S.B. has two medicinal storefronts up and running and a million gray market delivery services.

The lawsuit in question involves allegations that the owners and operators of Coastal Dispensary LLC, slated for 1019 Chapala Street, lied on their applications to City Hall and derived from this deceit an unfair competitive advantage over an Arizona-based rival, SGSB, which would eventually be deep-sixed from the final cannabis playoffs. SGSB, which had proposed opening a dispensary at 913 State Street, is complaining that City Hall either failed to detect this falsehood or did not care for reasons that can only be guessed at.

Malante Hayworth

Words such as “lies, deception and fraud” are charged with high impact moral connotations. Such words are good for converting the already converted. But the uncontested fact here is that the Coastal Boys — real-estate flippers Julian Michalowski and Malante Hayworth — submitted notarized statements claiming on March 28, 2018, that they owned outright the Chapala Street property where the dispensary to be was to be located. In point of fact, they did not own it. They were still in escrow. It had not yet closed escrow. Did I say their declaration — made upon pain of perjury — was witnessed by a notary public? In fact, the deal closed escrow on April 16, 2018.

All this nitpicking about dates goes to a point. Only because City Hall extended the deadline for application by one month — to 4/20 — could Julian and Malante said to be compliant with the application requirements of either owning or controlling a property. In that intervening month, City Hall re-evaluated the applications. The Coastal application came out on top, whereas SGSB had been number one before. According to the city rules, no two dispensaries could be within 1,000 feet from each other. Guess what, Coastal and SGSB were. Because Coastal had the higher score — by eight points out of maximum possible of 1,000 — SGSB was DQ’d.

Julian Michalowski

I can’t say for certain whether Julian and Malante were “lying.” That would suggest I can divine intent. What I do know is that they were “red tagged” two times this spring for unauthorized construction work and forced to stop. They were allegedly red-tagged on at least five other residential properties they own under the rubric of West Bluff Capital. One Upper East property was red tagged, the red tag taken down, and then they got red-tagged again. A couple of neighbors took the matter to the City Council last November. One of their partners, an older man named Neil Botts, showed up to take the fall for them. Literally. When pleading mea culpa to the City Council, Botts fainted. Twice.

All this would suggest City Hall is not too picky about with whom it goes into the cannabis business. Having read the flowery language of the Coastal Boys’ application, I can see why. The store, we were told, will be “upscale, hip, inviting, fun, and comfortable.” What’s not to like? “Old surf culture” fused with touches of “new school technology.” If that wasn’t enough, we were promised an aesthetic that was “cool, classy and authentic.”

And then they totally blew it.

“Coastal is the store that Dad wants to go to while Mom is happy to tag along.”

Are you kidding me? “Happy to tag along?”

Mayor Cathy Murillo

Is the City of Santa Barbara — with a female mayor, a female police chief, a female Public Works director, a female Parks director — really going to reward this kind of old school, retro sexism with a multi-million-dollar franchise?

The answer is yes.

It should be noted that Coastal has a tradition of skating a little close to the edge. Way back when, Michalowski was charged with felony assault for fracturing the nose of a guy at a free concert at UCSB. When Michalowski and crew reportedly butted ahead in line, the victim reportedly had something to say about it. Michalowski and crew reportedly had something to say back. Apparently, they said it with their fists. His nose got broke. Michalowski was charged. The jury reduced the charge from felony to misdemeanor. The evidence was not clear who threw the punch that broke the nose.

According to the city’s application rules, cannabis operations cannot be located close to schools and day care centers. At the time of the application, the proposed Coastal Dispensary was located right next to a ballet school. The ballet school has since relocated. Board members from that school, it should also be noted, wrote a letter praising Coastal for going the extra mile in helping get them relocated. Coastal reportedly offered to spend up to $50,000 making the transition as painless as possible. What might be of concern was the date of their letter: May 31. That’s a month after the second deadline. That could easily have been a simple typo. Calls to the signatories have not been answered, so I’ll just have to wonder.

Not to pile on, but another proposed Coastal operation — a manufacturing site on Reddick Avenue — happens to violate the city’s buffer requirement, too. It’s too close to a day care center. Coastal is attempting to relocate the day-care operation, but thus far without success. Coastal has also proposed opening a dispensary in Goleta as well. But it’s too close to the Goleta Community Center to be considered. (The Goleta City Council, it should be noted, just voted to reduce the total number of dispensary sites that can be located within city limits from 15 to 6. How the 15 number was ever arrived remains a great mystery, right up there where Jimmy Hoffa’s body is buried.) I know Coastal has an application in Lompoc, too. I can state with almost complete certainty that it’s not too close to anything in Lompoc, the City Council there having imposed the most relaxed buffer requirements anywhere in the county, if not the state.)

I don’t pretend to know how the lawsuit filed by SBSG against Coastal and City Hall will play out. Nor do I necessarily subscribe to conspiracy theories that City Hall rigged the deck because the powers that be did not want a downtown dispensary on State Street. I just know there’s a few too many close calls for my taste.

As for myself, I don’t much care for pot. I’m way too paranoid as it is. But if I did like the stuff, I wouldn’t be caught dead shopping in any place where “Mom will be happy to tag along.”


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