City Of Sacramento Might Add Another Office To Oversee Marijuana Dispensaries

The discovery that two men had cornered a large part of the legal cannabis market in Sacramento has the city scurrying to make sure it knows who is doing what.

The city of Sacramento is entertaining the thought of adding oversight of the cannabis industry by hiring someone outside the Office of Cannabis Management to essentially help manage cannabis.

City Auditor Jorge Oseguera told the City Council recently that an independent auditor in his office would help prevent the type of monopoly uncovered recently by the Sacramento Bee.

"Placing such a position within our office would also allow my office to develop additional expertise within the cannabis industry and continuously evaluate the activities of our city and the operators to identify opportunities to strengthen controls, reduce risk and improve our business practices," Oseguera said.  

Mayor Darrell Steinberg voiced support for the idea. 

“We need more than retrospective audits," Steinberg said at the November 19 meeting "We need an ongoing check so that we can make sure that as concentration and over-concentration is happening in real time, that we can respond to it in real time.”

The mayor has suggested increasing the number of permits from 30 to 35 to help increase diversity in the industry. It’s an idea supported by graduates of the Cannabis Opportunity and Reinvestment and Equity (CORE) program. The initiative was proposed as a way to assist residents in low-income neighborhoods or who themselves or their families had been arrested for a cannabis-related crime between 1980 and 2011 in starting cannabis businesses.

“At this moment, privileged individuals are reaping the benefits,” said Mindy Galloway, a CORE graduate and owner of Khemia Manufacturing. “One of our hurdles is limited opportunities for licenses.”

Oseguera’s office is also undertaking a second audit of the industry.

"In performing a second review, our audit would seek to evaluate the current permit renewal process," he said. "In doing so, we would obtain a list of all managing members and owners of the 30 dispensaries. We would determine how much consolidation has occurred between the dispensary owner groups."

Oseguera’s office found eight shortcomings in the way the city monitors cannabis businesses in 2017, and the city has been responding. In that time, however, nine dispensaries had come under the control of Ukrainian Garib Karapetyan and Ukrainian-born U.S. citizen Andrey Kukushkin. Kukushkin has been indicted, along with three others for campaign finance violations.

According to his attorney, Karapetyan has no involvement with Kukushin’s alleged crimes, and the state of California and city have renewed Karapetyan’s dispensary licenses.

This story has been updated.​