27th Floor
350 South Grand Avenue
Los Angeles, CA 90071-3487
Nicole S. Phillis
213-633-8657 tel
4901-1626-9855v.3 0119025-000003
February 27, 2025
David G. Lim, Esq.
City Attorney, City of Fairfield
Richards Watson Gershon
One Sansome Street, Suite 2850
San Francisco, CA 94104
[email protected]
Hon. Mayor Catherine Moy
Hon. Vice Mayor Pam Bertani
Hon. Councilmember K. Patrice Williams
Hon. Councilmember Scott Tonnesen
Hon. Councilmember Doug Carr
Hon. Councilmember Doriss Panduro
Hon. Councilmember Manveer Sandhu
City of Fairfield
1000 Webster Street
Fairfield, CA 94533
Re: Continued Public Hearing re Proposed Resolution 2024-280, Rescission of Preliminary Approval to Authentic Fairfield, LLC Dear Honorable City Attorney Lim and Honorable City Councilmembers:
As you know, I represent Authentic Fairfield, LLC (“Authentic”) in connection with the continued public hearing on potential revocation of Authentic’s preliminary approval for a commercial cannabis retail permit within the City of Fairfield. I write to urge you to reject Resolution 2024-280, which would revoke Authentic’s preliminary approval without a valid basis in fact or law. To address any concerns the Council may have regarding the timeliness of Authentic’s opening, I suggest instead that the City consider entering into a written agreement with Authentic to ensure the timely and compliant opening of its retail operations by December 1, 2025.
I. COUNCIL SHOULD REJECT THE RESOLUTION TO RESCIND
AUTHENTIC’S PRELIMINARY APPROVAL
First and foremost, the proposed resolution should be rejected because there is no violation of local or state law on which to base the revocation, as is required to revoke
Proposed Resolution re Authentic
February 27, 2025
preliminary approval under newly amended Section11(b) of Chapter 10E.1 Specifically, Section 11(b) provides:
The City Council may revoke a preliminary approval or a commercial cannabis business permit for a violation of any State or local law, including, but not limited to, this Chapter; a violation of any condition or term of the commercial cannabis business permit; and/or a violation of any condition or term made a part of any other permit or entitlement granted to the commercial cannabis business or its owner…
While the City points to Authentic’s alleged violation of Fairfield Municipal Code 10E.15 in their November 14, 2024 letter as the reason for considering revocation of its preliminary permit, Authentic has not violated these rules on ownership changes. FMC 10E.15 states: “A commercial cannabis business permit is nontransferable to any other person except in accordance with this section.” It also further provides: “If the transfer involves a substantial change in ownership, the City Council shall hold a public hearing and approve or deny the transfer pursuant to the procedures for approval of a new permit application. A ‘substantial change in ownership’ shall mean any change in the permittee’s business structure or ownership of the business entity that results in a change of more than 51% of the original ownership.”
Here, there has been no change in ownership, let alone a “substantial one.” Authentic does not have any new owners, or owners beyond the ones listed in its original application. There also has not been any substantial change in ownership that necessitates a public hearing in front of City Council. Authentic’s 2020 cannabis application listed the following as owners and their ownership:
1. Brian Mitchell – 30%
2. Albert Mitchell – 30%
3. James Kim – 11.5%
4. Tony Huang – 27%
5. Jon Avidor – 1.5%
1 Authentic also objects to the retroactive application of the recently amended Section 11(b) of Chapter 10E, which reflects change in law as to the conditions under which preliminary approval may be rescinded. This change in law occurred after preliminary approval was awarded to Authentic in 2021 and therefore should not be retroactively applied to rescind preliminary approval now or otherwise alter the original conditions of preliminary approval. The amendments to Section 11(b) were recently undertaken between August and October 2024 and appear to have been prompted at the behest of other current commercial cannabis permit holders for an anti-competitive purpose—to protect their market share in Fairfield’s commercial cannabis market and to stymie lawful competition from Authentic.
Proposed Resolution re Authentic
February 27, 2025
On February 10, 2022, one of the original owners, Albert Mitchell, passed away and his 30% equity was returned to the company. In May 2022, Jon Avidor’s employment with the company was terminated and returned his equity to the company. The remaining owners of Authentic had their equity increased proportionately by the equity returned to Authentic by Albert Mitchell’s death and Jon Avidor’s termination of employment, such that the resulting ownership became:
1. Brian Mitchell - 40%
2. James Kim - 20%
3. Tony Huang - 20%
As these facts show, no new owner has been added to Authentic. There has also not been a “substantial change” in equity ownership.
Nor is there any other basis to find Authentic’s non-compliance with applicable state or local law. The City appears to have relied on outdated screenshots from the DCC’s website, which erroneously lists Greg Fink and Susan Hoy as owners. This information is incorrect.
Neither of these individuals are owners of Authentic and Authentic has requested that DCC correct this information on their website.
The City’s recent efforts to pursue revocation of Authentic’s preliminary approval on the basis that Authentic has somehow violated a state or local law regarding disclosure of its ownership (after an owner died and another owner left Authentic’s employment) are concerning because the same level of scrutiny has not been applied to other current operators.
Proposed Resolution re Authentic
February 27, 2025
For example, The Showcase is currently operating out of compliance with California Corporations Code, having not filed its “Statement of Information” with the Secretary of State, despite the fact that it was due on October 31, 2024. (Cal. Corp. Code, § 1502, subd. (a) [requiring that every corporation file annual statement of information].)
Moreover, The Showcase does not have any registered agent for service of process, as it is separately required under Corporations Code section 1502(b) (requiring corporation to designate “agent of the corporation for the purpose of service of process, a natural person residing in this state or a corporation that has complied with Section 1505 and whose capacity to act as an agent has not terminated…”).
Proposed Resolution re Authentic
February 27, 2025
Similarly, email correspondence obtained through a pending public records act requests indicates that J.J.V.I. Enterprises, Inc. (the “Bright Spot”) acknowledged its own non-compliance with certain local laws as recently as August 2024, stating: “we need a renewal of our license and…we are out of compliance.” At that point, The Bright Spot’s license had expired in June 2024 and The Bright Spot had ostensibly operated without a licensed for at least two months:
Despite these deficiencies, the City has continued to work with both The Showcase and The Bright Spot to cure these violations and allow them to continue operating within the City.
Authentic should be afforded the same opportunity and due process.
II. AUTHENTIC HAS VESTED RIGHTS IN ITS PRELIMINARY APPROVAL,
HAVING EXPENDED SUBSTANTIAL RESOURCES TO DEVELOP ITS PROPERTY
AND DUE PROCESS PRECLUDES REVOCATION ON THESE FACTS
It is blackletter California law that “[a] permit may not be revoked arbitrarily ‘without cause.’” (Trans-Oceanic Oil Corp. v. City of Santa Barbara (1948) 85 Cal.App.2d 776, 795.) “In revoking a permit lawfully granted, due process requires that it act only upon notice to the permittee, upon a hearing, and upon evidence substantially supporting a finding of revocation.” (Id.) “If a permittee has acquired a vested property right under a permit, the permit cannot be revoked.” (Id. at p. 784 [citing 9 American Jurisprudence § 8, p. 204].) To that end, a permit or license
may not arbitrarily be revoked by municipal authorities, particularly where, on the faith of it, the owner has incurred material expense. Such a permit has been declared to be more than a mere license revocable at the will of the licensor. When, in reliance thereon, work upon the building is actually commenced and liabilities are incurred for work and material, the owner acquires a vested property right to the protection of which he is entitled.’
Proposed Resolution re Authentic
February 27, 2025
(Id.) When a permittee has acquired such a vested right it may be revoked only if the permittee fails to comply with reasonable terms or conditions expressed in the permit granted or if there is a compelling public necessity. (O’Hagen v. Board of Zoning Adjustment (1971) 19 Cal.App.3d 151, 158 [internal citations omitted].)
Here, Authentic has satisfied each and every requirement of the terms and conditions of its preliminary approval as originally granted. Indeed, in reliance on the grant of preliminary approval, Authentic has invested over $1,100,000 to develop its property at 2470 Martin Road, Fairfield, CA in reliance upon the City’s grant of preliminary approval. As a result, it has acquired a vested right in its preliminary approval, to which it is entitled to fundamental due process and which cannot be revoked absent a violation of the applicable terms and conditions or without a public necessity.
Nor is there any basis to find a “compelling public necessity” for revocation. To the contrary, allowing Authentic to keep its preliminary approval will only increase safe adult and medicinal access to cannabis in Fairfield and promote healthy competition on affordable prices and offerings. Indeed, for a City of Fairfield’s size (120,000), industry leading experts have recommended a market saturation of one retail operation for every 10,000 citizens. Revoking Authentic’s preliminary approval would further reduce the number of licensed retailers to only three within the City, putting market saturation at nearly 4 times less than what is recommended for healthy competition and safe access within the industry. This serves only to benefit the three current operators, who will protect their disproportionately large market share without real competition, and the illicit market, which continues to threaten safe, lawful access throughout the state, at the cost of both significant tax revenue (at least $800,000 per annum) for the City of Fairfield and at least 45well-paying jobs for the Fairfield community.
III. AUTHENTIC IS COMMITTED TO OPENING BY DECEMBER 1, 2025 AND
WILLING TO ENTER INTO AGREEMENTS REQUIRING IT TO DO SO
Authentic understands City Council’s concerns about making sure permittees open promptly, which is important to generating tax revenue and providing good jobs within the City.
As a demonstration of Authentic’s good faith, Authentic reiterates that is committed to opening the store in the next 6-9 months and is willing to commit to a hard deadline, in writing with the City. Authentic is also willing to demonstrate its commitment to the Fairfield community with enhanced community benefits and engagement. In fact, Authentic Fairfield has already been involved in the Fairfield community.
Since 2021, Authentic Fairfield has been an active partner to several local community organizations including Fairfield Community Services Foundation, Change and New Beginnings Solano, the Food Bank of Contra Costa and Solano County, Solano Napa Firefighters Foundation and the Nelda Mundy Elementary School. To date, Authentic has contributed over $80,000 and provided numerous volunteers to support these organizations to make a local impact here in Fairfield. Early this month, Authentic organized a Winter Wear Drive in partnership with
Proposed Resolution re Authentic
February 27, 2025
the Fairfield Community Services Foundation and organized a beautification and clean up event with the Suisun City Beautification Community Committee. Authentic is committed to continuing this track record of local community engagement and community benefits.
Because increased access to safe, affordable cannabis will only be improved by Authentic’s operation in this City, which will also substantially increase tax revenue and create good, union jobs, Authentic respectfully requests that the resolution be rejected.
Sincerely,
Davis Wright Tremaine LLP
Nicole S. Phillis
cc: Tak Sato
Stephanie Uy
Cyrus Pai
EXHIBIT A
EXHIBIT B
EXHIBIT C
1 Beavers, Esther
From: David G. Lim <[email protected]>
Sent: Monday, March 3, 2025 9:28 AM
To: Beavers, Esther; Rees, Karen; Ballard, Kelly
Cc: Gassaway, David; Zellers, David
Subject: FW: Authentic Fairfield Submission
Attachments: 2025-02-27_Authentic Fairfield Letter re Public Hearing w Exhibits.pdf Importance: High
Follow Up Flag: Follow up
Flag Status: Flagged
Hi Esther and Karen,
Please see aƩached an email and accompanying PDF from AuthenƟc related to Item #P.1 for the March 4, 2025 meeƟng of the City Council. If possible, can you please add a link to the online agenda and add this email and document as aƩachement #4 to Item P.1.
If you cannot add it to the online agenda, please print a copy of the email below and aƩachment and place a copy in the lobby on the 4th floor and in the lobby of the City Council Chambers.
I will forward a copy of this to the City Council now and will print copies for them on the dias.
Thanks!
David G. Lim (He/Him/His)
Fairfield City Attorney
RICHARDS WATSON GERSHON
One Sansome Street, Suite 2850
San Francisco, California 94104
T: 415.421.8484
E: [email protected]
W: rwglaw.com
From: Phillis, Nicole <[email protected]>
Sent: Thursday, February 27, 2025 4:39 PM
To: David G. Lim <[email protected]>; Zellers, David <[email protected]> Cc: Kalinowski, Caesar <[email protected]>
Subject: Authentic Fairfield Submission
Dear Mr. Lim and Mr. Zellers,
2 Please find attached Authentic Fairfield’s (“Authentic”) submission in response to the continued public hearing on the resolution to rescind Authentic’s preliminary approval.
We look forward to the opportunity to make our case to City Council on March 4.
If there is anything you have questions about in the interim, please do not hesitate to reach out.
Sincerely,
Nicole
Nicole Phillis
Partner | Davis Wright Tremaine LLP
P 213.633.8657 C 323.401.0474 E [email protected] A 350 South Grand Avenue, 27th Floor, Los Angeles, CA 90071 DWT.COM
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