LOS ANGELES – Opening an additional front in his office’s enforcement efforts against allegedly illegal cannabis businesses and the property owners that harbor them, City Attorney Mike Feuer today announced that his office is seeking an injunction against a South Los Angeles commercial cannabis business for allegedly operating illegally and selling cannabis allegedly found to contain a dangerous pesticide banned for use on cannabis in California. Feuer’s office is also naming in the suit a commercial real estate broker and two of its salespeople for allegedly aiding and abetting illegal activity.
"Illegal cannabis businesses can pose serious threats to the public’s health and safety," said Feuer. "Customers patronize illegal shops at their peril, and undermine businesses who play by the rules—and whose product is tested to protect buyers' health."
"The actions taken today against this illegal cannabis business should serve as a warning to property owners, would be cannabis business operators, and anyone facilitating these illegal business practices that you will be targeted and that justice will be served," said Councilmember Curren Price, in whose district the cannabis business is located. "I want to thank our City Attorney for his leadership and continued partnership on this important matter that disproportionately affects South Los Angeles."
This is the first civil enforcement action in California of which the Office is aware to allege cannabis sold by an unpermitted location contains pesticide. It complements criminal enforcement by the City Attorney’s Marijuana Enforcement Unit and the LAPD. Since May, 2018, the City Attorney’s Office has filed 217 cases involving 172 total locations and 2 delivery services (not tied to a physical location), with 840 defendants. The City Attorney’s Office has received verification of closure of 113 locations.
The civil lawsuit names Kush Club 20, an illegal commercial cannabis business located at 5527 S. Central Avenue in South Los Angeles. The lawsuit alleges the business operates without a license and advertises an extensive menu of products using coded language to promote cheap cannabis typically found in unlicensed stores.
The lawsuit also names the property owner, 5527 S. Central LLC, and Michael Lerner, its Chief Executive Officer. It also names D/AQ Corporation, known as Daum Commercial Real Estate, Benjamin R. Spinner, an Associate Vice President at D/AQ Corporation, and James Vu, a Vice President of D/AQ Corporation, for allegedly leasing the property to Amy Sahadi Diaz in a transaction designed to aid and abet the allegedly illegal commercial cannabis activity taking place at the property by misrepresenting the actual nature of the business on the lease.
The City Attorney’s Office initiated testing done on cannabis products for sale at Kush Club 20 and found the presence of paclobutrazol, a plant growth regulator pesticide. While banned on cannabis and not registered for use on other food crops in California, the chemical is used extensively in golf turf management in order to increase density and color in the grass. Use of the chemical is also typical as a tool of unethical and illegal cannabis growers and sellers as a way to manipulate their marijuana product.
The lawsuit also seeks an injunction prohibiting further illegal commercial cannabis activity at the location, and immediate closure and eviction of the business operators from the location. The lawsuit is also seeking penalties up to $20,000 for each day the offense is occurring, as well as costs and attorney’s fees associated with the investigation.
Unlicensed cannabis businesses likely do not follow public health and safety requirements, including:
Quality control related to cannabis products: The City's Rules and Regulations Ordinance requires Licensees to follow State testing requirements, which require testing for pesticides, microbiological impurities, cannabinoid measurements, and other factors.
Under State and City law, test results must be provided to the State and made available to the City upon request.
Inspections: Pre-License Inspections are required before the issuance of a license by the City’s Department of Cannabis Regulation.
Deputy City Attorney Suzanne V. Spillane is handling the litigation.
Effective January 2018, all businesses conducting commercial cannabis activity in the City of Los Angeles are required to be licensed by both the State of California and the City of Los Angeles. The new regulations follow the passage in recent years of state laws allowing recreational cannabis use and cannabis sales in the State of California. Under newly adopted city guidelines, commercial cannabis activity is prohibited in certain designated zones and within 700 feet of sensitive sites including schools.
Feuer will continue to work closely with the LAPD and the Los Angeles Department of Cannabis Regulation to identify and prosecute locations believed to be operating without a license.
Additional information on cannabis regulations, including how to get licensed and submitting a complaint about unlicensed commercial cannabis activity can be found at the City of Los Angeles Department of Cannabis Regulation.