27th Floor
350 South Grand Avenue
Los Angeles, CA 90071-3487
Nicole S. Phillis
213-633-8657 tel
4907-1714-1821v.2 0119025-000003
May 5, 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 re
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 rescission of Authentic’s preliminary approval for a commercial cannabis retail permit within the City of Fairfield. I write in response to the letters dated May 1, 2025 and April 10, 2025 from Lawrence J. Conlan, Esq. on behalf of Authentic’s competitor, Responsible & Compliant Retail Fairfield, LLC (“Embarc Fairfield”).
Embarc Fairfield’s letters contain several misstatements of the law and the facts.
Because Authentic has complied with all of its obligations under the Fairfield Municipal Code (“FMC”), Authentic respectfully requests that the Council reject the proposed resolution rescinding Authentic’s preliminary approval.
Proposed Resolution re Authentic
May 5, 2025
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A. Sections 14(b), 15(b) and 15(c) of the Fairfield Municipal Code Apply only to “Permittees,” and Not “Preliminary Approval Holders”—and Cannot Be Applied Retroactively to Create Ex Post Facto Liability for 2022 Conduct.
The proposed resolution should be rejected because it aims to revoke Authentic’s preliminary approval for a commercial cannabis permit under newly amended Chapter 10E, Section 11(b) of the FMC1 and Exhibit A to Fairfield Resolution 2021-143 based on alleged violations of the FMC that do not apply to Authentic (as a preliminary approval holder)—and certainly did not apply to preliminary approval holders prior to the initiation of these proceedings and the amendments to the FMC (which occurred in October 2024).
Embarc Fairfield does not appear to understand Authentic’s retroactivity and ex post facto arguments argument. Due process, equal protection, and the general bar on ex post facto laws bars the government from punishing an act “previously committed, which was innocent when done, which makes more burdensome the punishment….after its commission….” (People v. Delgado (2006) 140 Cal.App.4th 1157, 1164 [finding that imposition of statute to conduct enacted after offense was committed violated ex post facto clause]; see also United States Constitution, Art. I § 10 Cl. [“No State shall…pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts…”]; Cal. Const. Const. art. I, §§ 7, 9 [requiring due process clauses and prohibiting bills of attainder, ex post facto laws, and law impairing obligation of contracts2].) Nor is it true, as Embarc Fairfield contends, that the bar on ex post facto penalties is strictly limited to criminal proceedings; these principles similarly apply in the civil context under a due process analysis. As the California Court of Appeal acknowledged in Roman Catholic Bishop v. Superior Court (2005) 128 Cal.App.4th 1155, “the fact that a statute is labeled as civil is not dispositive.” (Roman Cath. Bishop of Oakland v. Superior Ct. (2005) 128 Cal. App. 4th 1155, 1162; see also Chase Securities Corp. v. Donaldson (1945) 325 U.S. 304, 312, n. 8, 315–316 [explaining that extension of even an expired civil limitations period can unconstitutionally infringe upon a “vested right” under ex post facto principles].) “If we conclude that the statute as applied retroactively was intended to punish, then our inquiry is over and we will find an ex post facto violation. [Citation.]” (Roman Catholic Bishop of Oakland, supra, 128 Cal.App.4th at p. 1169.)
Whether characterized as a retroactivity, ex post facto, or due process issue, the facts here are simple: the City is attempting to punish Authentic by revoking a preliminary approval based on conduct that was lawful at the time it occurred, citing a change in law that occurred nearly two years later, which would only apply to Authentic (as the final remaining preliminary approval holder). To revoke Authentic’s preliminary approval under such circumstances is improper, inequitable, and unlawful.
Embarc’s own chart confirms that the so-called ownership changes at issue allegedly occurred in between September 2020 and April 2024—before Fairfield had ever even
1 These amendments were passed pursuant to Fairfield Ordinance No. 2024-08, §§ 5, 6 in October 2024. 2 Any effort to revoke Authentic’s preliminary approval would also violate California’s general prohibition on impairment of contracts, which apply to Authentic’s preliminary approval resolution with the City of Fairfield.
Proposed Resolution re Authentic
May 5, 2025
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considered changing its municipal code to apply to preliminary approval holders . Moreover, to this day, each of the purported provisions limiting changes in ownership still only apply to permittees—not preliminary approval holders—and Authentic lacked any notice to the contrary.
Because Authentic had no way of knowing at the time the alleged ownership changes 3 took place that those restrictions could apply to preliminary approval holders, the City cannot now manufacture a basis to revoke Authentic’s preliminary approval based on laws that did not even exist or apply to Authentic at the time those acts were allegedly committed.
Nor was there any violation of law, nor a cover up in November 2024. Contrary to Embarc’s claims, Authentic did not “secretly” try to correct the DCC website—it promptly reached out to the Department of Cannabis Control (“DCC”) to correct its records after the City brought the alleged discrepancy to Authentic’s attention to correct the discrepancy. The City’s discovery of the alleged ownership discrepancy in Authentic’s 2020 application does not constitute a “change in ownership” based on a death and resignation that occurred roughly two years prior (in 2022). Moreover, as of February 2025, the DCC corrected the mistaken information—without taking any adverse action against Authentic —further confirming that even the DCC does not believe there is any violation of state or local law.4 If the DCC does not see any basis to take adverse action against Authentic—of which the City of Fairfield had been aware since the passing of Albert Mitchell in 2022, per Mayor Moy’s comments at the March 14, 2025 meeting—the City should similarly decline to take any adverse action here.
Embarc Fairfield offers no other meaningful response to Authentic’s due process, retroactivity, and ex post facto challenge, set forth in more detail in Authentic’s March 31, 2025 letter (Exhibit A). To the contrary, the chart set forth on pages 3 to 6 of Embarc’s May 1 submission and 2 to 7 of Embarc Fairfield’s April 10 submission confirms that each of the alleged “ownership changes” alleged by Embarc Fairfield occurred prior to the City’s amendment of the FMC in October 2024, further underscore the ex post facto nature of the action the City is considering here.
As set forth in more detail in Exhibit A at pages 1–11, any act to rescind Authentic’s preliminary approval based on alleged violations of FMC 10E.14(b), 15(a) and 15(b) would violate Authentic’s due process rights on multiple independent fronts.
3 As noted in Authentic’s prior submissions, Authentic disputes whether the acts challenged constitute “ownership changes” at all.
4 Embarc Fairfield again wildly overstates the percentages of ownership interests in play here. Dr. Albert Mitchell (30%) and Jon Avidor (1.5%) only disclosed holding a total of 31.5% of the ownership interests in Authentic’s original application. The change to their ownership comes nowhere close to equalling “88.5%” of the interests, as Embarc Fairfield claims in its correspondence.
Proposed Resolution re Authentic
May 5, 2025
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First, Sections 14(b), 15(a), and 15(b) by their own terms only apply to “Permittees”— not a preliminary approval holder like Authentic—and those sections were never amended to include Preliminary Approval holders, whether in October 2024 or any time thereafter.
Second, those provisions cannot be applied retroactively and ex post facto to create liability for 2022 conduct, which long pre-dated the October 2024 amendments to Section 10E.11.
Third, and as explained in more detail below, the City cannot amend its laws for the purpose of pre-judging a quasi-judicial proceeding against a single operator based on alleged violations that occurred prior to the change in law.
Lastly, Embarc Fairfield attempts to disparage Authentic and its owners by claiming that the alleged ownership change violations are not “curable.” Embarc Fairfield’s claims are belied by Embarc Fairfield’s own letter and the so-called “evidence” attached thereto. As an initial matter, the DCC record update confirms these deficiencies can (and were) cured as of February 2025, which was the date the DCC updated its records to reflect Authentic’s current ownership.
Mr. Mitchell was never convicted of any of the crimes Embarc Fairfield accuses him of (nor does Embarc Fairfield offer any evidence of conviction). Likewise, Embarc Fairfield offers no evidence that Tony Huang ever had a license revoked in any other jurisdiction (as required for disqualification under FMC 10E.7)—a claim that is, in fact, disproven by Embarc Fairfield’s own evidence and its total inability to identify which “license” Mr. Huang allegedly had revoked at all. (Cf. 5/1/25 Ltr. at 6–7 [failing to identify any license that was revoked from Mr. Huang or Authentic].) To the contrary, Mr. Huang continues to multiple licenses in a number of California jurisdictions, to this day. Neither Authentic nor Mr. Huang have violated any of this City’s laws, nor has Mr. Huang ever had a cannabis license revoked—so Embarc Fairfield’s claims that Authentic is somehow prohibited from holding a license are untrue.
Authentic objects to Embarc Fairfield’s continued sandbagging and attempts to deprive it of due process (and the Council’s Brown Act obligations) by attempting to introduce new accusations on May 1, 2025—just 5 days before the hearing. The City has not provided Authentic with any notice that it intends to rely upon 10E.7 as a basis to rescind Authentic’s preliminary approval (see Resolution No. 2025-37)—nor has it cited any legal evidence to support any required finding to do so. Similarly 10E.9 has no application here because that provision governs initial applications and the jurisdiction of the City Manager; it does not vest in the City Council any authority to revoke preliminary approvals once issued.
Enough is enough.
Embarc Fairfield has had six months to attack Authentic’s preliminary approval. After six months of shifting arguments, they have failed to come up with a single good faith legal basis upon which to rescind Authentic’s preliminary approval. Because the City lacks any basis in law or fact on which to rescind Authentic’s preliminary approval, the resolution should be rejected.
Proposed Resolution re Authentic
May 5, 2025
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B. Even If Authentic Had Committed a Violation (It Has Not), the City Should Exercise Its Discretion and Decide Not to Revoke Authentic’s Preliminary Approval.
Contrary to the claims made in the May 1, 2025 and April 10, 2025 letters from Embarc Fairfield, the City Council is not required to automatically revoke Authentic’s preliminary approval, even if it had violated some state or local law (which it has not). Rather, revocation is discretionary, as FMC 10E.11(b) provides:
(b) 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. (Ord. No. 2020-07, § 1; Ord. No. 2024-08, §§ 5, 6.
(FMC 10E.11, subd. (b) [emphasis added].) The use of the word “may” reflects permissive authority, not mandatory (e.g., “shall”). (Cf., Judith P. v. Superior Court (2002) 102 Cal.App.4th 535, 551 [the word “’shall,’ when used in a statute, is ordinarily construed as mandatory or directory, as opposed to permissive, particularly when, as here, the Legislature has used both the terms “shall” and “may” in the same statute.”].) Thus, even if the City finds a violation of state or local law (of which there is no evidence, let alone a legal determination here, here), the City still need not revoke preliminary approval or a commercial cannabis business permit under the plain language of FMC 10E.11.
Despite this, Embarc Fairfield blatantly misstates the law to claim that “Authentic’s preliminary awarded permit must be revoked.” (4/10/25 Conlan Ltr. at 7.) But as noted above, the FMC merely authorizes—but does not require—the City Council to revoke preliminary approval based on proven violations of state or local law.
And Embarc Fairfield knows this is not the law.
How do we know Embarc Fairfield knows this? Because this City Council has already exercised such discretion not to revoke Embarc Fairfield’s permit after Embarc Fairfield was cited for advertising cannabis on a billboard roughly 600 feet from a school for children with special needs.
Specifically, on April 10, 2025 Embarc Fairfield was issued a Notice of Violation of Business & Professions Code § 26152 (a state law) by the City of Fairfield, which provides that a licensee shall not: “(g) Advertise or market cannabis or cannabis products on an advertising
Proposed Resolution re Authentic
May 5, 2025
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sign within 1,000 feet of a daycare center, school providing instruction in kindergarten or any of grades 1 to 12, inclusive, playground, or youth center.”
Here, Embarc Fairfield erected a massive billboard on an interstate freeway next to—and within roughly 600 feet of—the Spectrum Center Schools and Programs, Solano Campus (“Spectrum School”), a special school for children who have highly individualized needs.
Proposed Resolution re Authentic
May 5, 2025
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Review of local maps confirms the extremely close location of Embarc Fairfield’s billboard to the Spectrum School:
Following the City’s issuance of the Notice of Violation, Embarc Fairfield removed the billboard—conceding that it had, in fact, violated state law (Business & Professions Code § 26152). Despite this, the City has declined to take any further action to revoke Embarc Fairfield’s license, further underscoring the City Council’s discretion not to revoke licenses and preliminary approvals—even where violations were found and admitted.
Just as the City declined to take any further action against Embarc Fairfield’s license for its violation of state law, it should similarly afford Authentic the opportunity to retain its preliminary approval. The alleged violations against Authentic—essentially changes in ownership following the death and resignation of certain members—have not resulted in any harm, nor even an issuance of a Notice of Violation.
And while it is true that the City has discretion in how it enforces the FMC laws regarding revocation of cannabis permits, that does not mean that the City can selectively enforce those laws in quasi-judicial proceedings to single out one operator at the behest of its competition. Such pre-judgment crosses the line from the legitimate exercise of discretion to a
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May 5, 2025
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deprivation of due process and prejudgment of quasi-judicial proceedings. (Save Civita Because Sudberry Won't v. City of San Diego (2021) 72 Cal.App.5th 957, 983 [““When functioning in such an adjudicatory capacity, the city council must be ‘neutral and unbiased.’”]; Petrovich Dev.
Co., LLC v. City of Sacramento (2020) 48 Cal.App.5th 963, 973 [“A decisionmaker must be unbiased (meaning that the decisionmaker has no conflict of interest, has not prejudged the specific facts of the case, and is free of prejudice against or in favor of any party).”].)
Authentic refers the City Council to its March 31, 2025 submission (Exhibit A) at pages 10–11, which outline Authentic’s concerns regarding the City’s prejudgment of these proceedings and the attempted influence of at least one Councilmember who subsequently recused himself from these proceedings.
C. Authentic’s Store Will Double Fairfield’s Current Cannabis Tax Revenue, Provide 50+ Union Jobs, and Dramatically Increase Safe and Reliable Cannabis Access.
Setting aside the private interests of Authentic’s competitors, the Council should reject the resolution because it is not in the best interests of the Fairfield community.
If allowed to open, Authentic expects that its store will generate between $800,000 and $1,000,000 in taxes to the City. Moreover, Authentic’s opening will create at least 50 well- paying, union jobs. Indeed, Authentic’s corporate parent—STIIIZY—was recently recognized as the Napa-Solano Central Labor Council’s Labor Employer of 2025, further underscoring Authentic’s commitment to labor, workers, and being an excellent local partner. STIIIZY is a trusted partner in every city in which it operates—and it appears that the primary opposition to Authentic’s opening derives almost entirely from its local competitors.
The comments of Embarc Fairfield’s Government Relations Manager, Josh Lewis, at the City Council’s October 1, 2024 hearing on the very FMC amendments the City now seeks to impose against Authentic confirm the anti-competitive motives of at least some of the other Fairfield licensees:
“I’m here tonight to express our gratitude for the steps Council is taking to strengthen the local cannabis market and urge the Council to continue forward with only three cannabis retail locations.”
“The Fairfield free cannabis market has proven that three, not four, is the right number of cannabis dispensaries for this market. Providing the right level of access for consumers, competition between operators, and sufficient customer base to ensure long term viability.”
“It is clear that three operators is the right number for this City, and adding a fourth will not increase tax revenue; it will only take from existing operators.”
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May 5, 2025
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“Fairfield already has three responsible and compliant operators who are committed to this Community. Again, we thank Council for these positive steps and positively encourage you to move forward in confidence with your three selected cannabis retail locations in order to protect the City’s cannabis business program and ensure that Fairfield’s market remains stable and competitive.”
“Moving forward with three operators will best serve this community and the health of the market.”
Embarc Fairfield offers no explanation for how reducing competition in a stable cannabis market would benefit anyone other than Embarc Fairfield and the other two operators. Nor could it, as such a proposition defies basic economic theory.
“Basic economic theory demonstrates that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation.”5 In contrast, when market power becomes too concentrated “dominant firms can use their market power to charge higher prices, offer decreased quality, and block potential competitors from entering the market—meaning entrepreneurs and small businesses cannot participate on a level playing field and new ideas cannot become new goods and services.”6 That is precisely what Embarc Fairfield wants here—to limit competition, protect its market share, and further concentrate the Fairfield retail market.
Fairfield is a sizeable city of 120,000, situated conveniently between Sacramento and San Francisco in Solano County. Studies have found that cities of the size and geographic desirability of Fairfield could withstand up to one license per 10,000 people before becoming oversaturated.7 Other California communities of comparable or smaller size, such as Ventura, El Monte, and Inglewood have authorized licenses for significantly more dispensaries per capita and still have vital cannabis markets. That is because competition is good for the cannabis industry, good for cities, and good for consumers. To the extent that Responsible and Compliant Fairfield, LLC claims competition is the largest issue in the cannabis industry, that is untrue.
Multiple tiers of taxation and high regulatory costs—such as those caused by the multiplication of proceedings here—are far more harmful to the industry than healthy competition.
Ventura, which has a population of approximately 109,000, has licensed six (6) commercial cannabis retail permits. El Monte, which has a population of approximately of roughly 104,000, similarly capped its number of available licenses at six (6). Inglewood, a city
5 H. Boushey; H. Knudsen, The Importance of Competition for the American Economy (July 9, 2021), Biden Whitehouse Archives, available at: https://bidenwhitehouse.archives.gov/cea/written-materials/2021/07/09/the- importance-of-competition-for-the-american-economy.
6 Id.
7 HdL Fiscal Revenue Analysis of the Commercial Cannabis Industry (Prepared for the County of Los Angeles), June 8, 2022 ; HdL Fiscal Revenue Analysis of the Commercial Cannabis Industry (Prepared for the County of San Diego), April 27, 2022.
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May 5, 2025
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of roughly 103,000, licensed four (4) retailers. For a city of Fairfield’s size, maintaining its cap at four licenses (as originally awarded) will promote healthy competition, avoid anti-competitive behavior and market concentration, and promote more safe access to product within the Fairfield community.
Simply put, the significant benefits to the City from Authentic’s opening—an anticipated $800,000–$1,000,000 in tax revenue and approximately 50 well-paying union jobs— significantly outweigh any detriment, which would inure almost exclusively to Authentic’s competitors. But again, stifling competition is neither in the interest of consumers, nor the City—and is not a legitimate reason to revoke a preliminary approval that Authentic has already devoted nearly $1,000,000 to developing.
D. Embarc Fairfield’s Legal Threats Are Frivolous—And Authentic Will Vigorously Defend and Indemnify This City’s Upholding of Its Preliminary Approval.
In a final effort to threaten this Council into revoking Authentic’s preliminary approval, Embarc Fairfield claims that it may sue the City under Code of Civil Procedure §1094.5 “as an abuse of direction, bias, and a denial of its due process.” (5/1/25 Ltr.) Embarc Fairfield’s legal threats are frivolous and would subject Embarc Fairfield itself to legal exposure. (Code Civ.
Proc., §§ 128.5, 128.7.)
Embarc Fairfield offers no explanation of how this Council’s refusal to revoke a preliminary approval from Authentic Fairfield on these facts could constitute an “abuse of discretion, bias, and denial of [Embarc’s] due process.” Indeed, it is Embarc Fairfield who appears to be using this legal process to unduly burden its competition and drive it out of a highly lucrative market to protect Embarc Fairfield’s market share.
Moreover, Embarc Fairfield has no legal right to compel the City to exercise its discretion according to Embarc Fairfield’s preferences. Indeed, traditional mandamus must sound in the violation of a ministerial duty, which Embarc Fairfield admits that this discretionary duty is not. And while administrative mandamus may challenge discretionary decisions, the standard for doing so is exceptionally high. Embarc Fairfield must show the City “‘has failed to proceed’ in the manner required by law, [or] the [agency's] order or decision is not supported by the findings, or the findings are not supported by the evidence.” (Akella v. Regents of Univ. of Cal. (2021) 61 Cal.App.5th 801, 813–814, as modified on denial of reh’g (Mar. 26, 2021) [reversing issuance of administrative mandamus writ challenging discretionary standard based on deference owed to agency and substantial evidence].) There is simply no way Embarc Fairfield could make this showing—nor does Embarc Fairfield offer any evidence of its ability to do so in either its April or May letters.
Nor will Embarc Fairfield be able to demonstrate that no rational factfinder would exercise its discretion not to revoke Authentic’s preliminary approval—particularly after Embarc Fairfield itself just benefited from a similar exercise of this City’s discretion. Any effort by Embarc Fairfield to sue the City and/or Authentic under such circumstances would constitute an
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May 5, 2025
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abuse of process, against which Authentic would defend this City’s decision vigorously (just as it did, successfully, in the East of Eden and Culture Cannabis Club mandamus litigation against the City that Authentic helped to defeat in 2021 and 2022).
* * *
For all of the foregoing reasons, Authentic respectfully requests that the Council reject the proposed resolution to rescind Authentic’s preliminary approval and to allow Authentic to proceed with developing its property and license pursuant to the preliminary approval granted in Resolution 2021-143.
Sincerely,
Davis Wright Tremaine LLP
Nicole S. Phillis
EXHIBIT A
27th Floor
350 South Grand Avenue
Los Angeles, CA 90071-3487
Nicole S. Phillis
213-633-8657 tel
fax
March 31, 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: Statement in Opposition to Proposed Resolution re Revocation of Authentic Fairfield, LLC’s Preliminary Approval
Dear Mr. Lim and Honorable City Councilmembers:
Authentic Fairfield, LLC (“Authentic”) respectfully submits the following supplemental opposition to the proposed resolution to revoke Authentic’s preliminary approval (the “Resolution”).
If the City revokes Authentic’s preliminary approval on this record, Authentic will be forced to seek judicial relief to vindicate its rights. The record to date confirms that the contemplated adoption of the Resolution in these proceedings will violate Authentic’s rights in a variety of ways, including: (1) imposing ex post facto liability for laws that did not apply to Authentic 2022; (2) by depriving Authentic of its vested rights without due process; (3) by depriving Authentic the right to a fair and unbiased hearing; and (4) by selectively applying Fairfield Municipal Code (“FMC”) against Authentic, but not its similarly situated competitors, despite known violations of state and local law.
Resolution to Revoke Authentic’s Preliminary Approval
March 31, 2025
Authentic is confident it will prevail if this matter is forced to litigate, which would unnecessarily distract from the true business of the City and waste tax payer dollars. Authentic would much prefer to resolve this matter through an agreement that allows Authentic to open its doors within the City of Fairfield.
We request that you reject the Resolution and welcome the opportunity to discuss paths to settlement and resolution of any remaining concerns at the earliest opportunity.
A. Revocation of Authentic’s Preliminary Approval Would Give Rise to Serious Due Process Claims by Authentic against the City.
Authentic requests that the Council forego any further action on the Resolution to revoke its preliminary approval in connection with the public hearing opened on December 3, 2024 because of the serious due process issues that have occurred to date in the proceedings. The City cannot create ex post facto liability for laws that did not apply to Authentic in 2022, engage in discriminatory enforcement of laws regulating cannabis companies, deprive Authentic of its due process rights, or otherwise “prejudge” a quasi-judicial proceeding. All four impositions on Authentic’s rights are at issue here.
1. The City Cannot Retroactively Apply the FMC to Create Ex Post Facto “Permittee” Liability for Obligations that Did Not Exist in 2022.
The Resolution aims to revoke Authentic’s preliminary approval for a commercial cannabis permit under newly amended Chapter 10E, Section 11(b) of the Fairfield Municipal Code (“FMC”)1 and Exhibit A to Fairfield Resolution 2021-143 based on alleged violations of the FMC that do not apply to preliminary approval holders. The apparent basis for the City’s planned action is FMC 10E.11, which authorizes revocation of preliminary approval based on violation of state or local law, such as an alleged violations of Chapter 10E Sections 14(b), 15(a), and 15(b) of the FMC. (See Draft Res. 2025-37 at p. 2 [“The City Council revokes the preliminary approval of Resolution 2021-143 for a Commercial Cannabis Retail Permit granted to Fairfield Authentic, LLC due to the applicant’s failure to comply with FMC Chapter 10E Sections 14(b), 15(a), and 15(b).”]).
Under the plain language of those statutes and law, however, such a revocation is erroneous as a matter of law and violates Authentic’s due process rights for a variety of reasons detailed below. As an initial matter, Sections 14(b), 15(a), and 15(b) by their own terms only apply to “Permittees”—not a preliminary approval holder like Authentic. Moreover, those provisions cannot be applied retroactively and ex post facto to create liability for 2022 conduct, which long pre-dated the October 2024 amendments to Section 10E.11. Additionally, it is clear that even if the law does apply to Authentic (it does not), Authentic was in full compliance with
1 These amendments were passed pursuant to Fairfield Ordinance No. 2024-08, §§ 5, 6 in October 2024.
Resolution to Revoke Authentic’s Preliminary Approval
March 31, 2025
its requirements—unlike a plethora of other businesses who have not been subject to such targeted adverse attention. As such, we urge you to reject approving any resolution that would Authentic’s rights, violate the law, and be subject to an immediate injunction.
First, the plain language of Section 10E.14 and 10E.15 confirms that the requirements regarding disclosure and a renewed application apply only to “permittees” and not preliminary approval holders. The FMC expressly defines a preliminary approval holder as “an entity that has an approved application for a Commercial cannabis permit but has not yet completed all the requirements to receive the regulatory permit (Commercial Cannabis Business Permit) issued by the City[.]” (FMC 10E.5(aa) [emphasis added].) This definition makes clear that a holding “Preliminary Approval” is mutually exclusive to being a “Permittee” because, by definition, a preliminary approval holder “has not yet completed all the requirements to receive the regulatory permit.”
The plain language of Sections 14(b), 15(a), and 15(b) confirm that those sections only apply—and have only ever applied to “Permittees”—not preliminary approval holders like Authentic:
10E.14 Changes in Business Location or Permit Information.
A commercial cannabis business permit is nontransferable to another location and may not otherwise be modified, except in accordance with this section. Failure to comply with this section is grounds for permit revocation.
(a) At least 60 calendar days prior to an anticipated change to the location of the cannabis business, the permittee shall file a new application form with the City Manager, including a Zoning Verification Letter for the new location. The City Manager will hold an administrative public hearing to determine whether to approve or deny the change in location.
(b) The permittee shall file an updated application form with the City Manager at least 30 calendar days prior to an anticipated change to any other information listed in the permit application, including but not limited to a change in contact information, change in trade name, or change in the security plan; provided, however, that a change in ownership shall comply with Section 10E.15.
…
Resolution to Revoke Authentic’s Preliminary Approval
March 31, 2025
10E.15 Transfer of a Preliminary Approval or a Cannabis Business Permit.
A commercial cannabis business permit is nontransferable to any other person except in accordance with this section. Any attempt to transfer a commercial cannabis business permit without complying with this section shall be deemed void and is grounds for permit revocation.
(a) Prior to any transfer or change in ownership of a commercial cannabis business permit, the permittee shall file a new application with the City Manager. The application shall be accompanied by a transfer fee in an amount set by resolution of the City Council (or if not set, shall be the same amount as an application fee). (b) The City Manager shall review the application to determine whether the new owner(s) meet the minimum permit eligibility criteria. 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. A transferred permit shall be valid for a period of one year from the date of the City Council’s approval. (c) Notwithstanding the above, a permittee may change the form of business entity without applying for a permit transfer in either of the following scenarios; provided, that the permittee notifies the City Manager in writing of the change within 10 days of the date the change takes effect:
(1) The ownership of the new business entity is substantially similar to original permittee business entity (at least 51% of the ownership is identical); or
(2) If the original permittee is an unincorporated association, mutual or public benefit corporation, agricultural or consumer cooperative corporation and subsequently transitions to or forms a new business entity as allowed under MAUCRSA; provided, that the Board of Directors (or in the case of an unincorporated association, the individual(s) listed on the City permit application)
Resolution to Revoke Authentic’s Preliminary Approval
March 31, 2025
of the original permittee entity are the same as the new business entity.
(FMC 10E.14; 10E.15.)
Second, Authentic also cannot have its approval revoked through the retroactive application of the recently amended sections Chapter 10E to create ex post facto authority, based on conduct that occurred over two years ago (in 2022). The amendments to Chapter 10E were adopted by City Council in October 2024, nearly three years after preliminary approval was awarded to Authentic in 2021 and nearly two years after Albert Mitchell passed away (on February 10, 2022) and John Avidor terminated his employment with the company (May 2022)—the events that purportedly triggered the requirement to update Authentic’s records.
There is no language contained in these amendments to indicate that they are to be applied retroactively, nor was any notice given to Authentic of their potential retroactive application.
Retroactive application of the amendments to Chapter 10E.11 and the application of Chapter 10E.14, and 15 to revoke Authentic’s vested rights in its preliminary approval deprives Authentic of its due process rights and violates blackletter U.S. and California law . (See, e.g., People v. Burgos (2024) 16 Cal.5th 1, 11 [“‘a statute that is ambiguous with respect to retroactive application is construed ... to be unambiguously prospective.’’] [quoting People v.
Buycks (2018) 5 Cal.5th 857, 880 and citing People v. Brown (2012) 54 Cal.4th 314, 324; People v. Floyd (2003) 31 Cal.4th 179, 184 [recognizing general rule of statutory construction that ‘when there is nothing to indicate a contrary intent in a statute it will be presumed that the Legislature intended the statute to operate prospectively and not retroactively’”]; Tapia v.
Superior Court (1991) 53 Cal.3d 282, 287 [“It is well settled that a new statute is presumed to operate prospectively absent an express declaration of retrospectivity or a clear indication that the electorate, or the Legislature, intended otherwise”]; People v. Hayes (1989) 49 Cal.3d 1260, 1274 [same]; cf. Aetna Cas. & Surety Co. v. Ind. Acc. Com. (1947) 30 Cal.2d 388, 393 [“It is an established canon of interpretation that statutes are not to be given a retrospective operation unless it is clearly made to appear that such was the legislative intent”]]; People v. Arata (2007) 151 Cal.App.4th 778, 784 [retroactive effect of law to “impair rights a party possessed when he acted, increase a party’s liability for past conduct, or impose new duties with respect to transactions already competed” would not govern absent clear congressional statement of intent] [citing INS v. St. Cyr (2001) 533 U.S. 289, 293-93].) Here, the October 2024 amendments should not apply at all to Authentic as a “preliminary approval” holder, let alone to conduct that happened years prior to the amendments.
Indeed, it is concerning to Authentic that the amendments were undertaken between August and October 2024—when Authentic was the only preliminary approval holder remaining in Fairfield. The public record at the time confirms that the primary advocates for those amendments were not community members, but rather other current commercial cannabis permit holders in the City of Fairfield. Furthermore, further elimination of competition in the Fairfield
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cannabis market does not serve the interests of the community, who gain access to better quality products at cheaper prices. Such an improper revocation of Authentic’s approval does, however, serve the private interest and market share of Authentic’s competitors.
Third, there is no discrepancy between Authentic’s ownership based on the updated DCC website. The Resolution claims that “State of California Department of Cannabis Control Records for Authentic Fairfield, LLC ownership do not match the ownership record provided as part of the application for a Commercial Cannabis Retail Business Permit provided to the City of Fairfield.” As an initial matter, the records published on the DCC’s website do not reflect any factual findings of violations of local or state law. Moreover, there is no discrepancy with the current ownership of Authentic Fairfield LLC on the DCC website because as of February 28, 2025, the DCC corrected the website to reflect the same ownership now disclosed to the City Council in connection with these proceedings: Brian Mitchell, James, Kim and Tony Huang.
2. The City Cannot Deprive Authentic Of Its Vested Rights Without Due Process.
The City cannot deprive Authentic of due process by arbitrarily revoking its preliminary approval, particularly given that Authentic has invested over $1,100,000 in developing its property, in reliance on the Council’s grant of preliminary approval. Under California law, a vested right
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
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and liabilities are incurred for work and material, the owner acquires a vested property right to the protection of which he is entitled.’
(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, 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, which the City cannot show.
3. The City Has Engaged in Selective Enforcement of Its Cannabis Laws—Only Against Authentic.
The City’s deficient process is also further evidence of its improper selective enforcement against Authentic. To show impermissibly selective enforcement of laws, a party must show that it “has been deliberately singled out for prosecution on the basis of some invidious criterion.
Because the particular defendant, unlike similarly situated individuals, suffers prosecution simply as the subject of invidious discrimination, such defendant is very much the direct victim of the discriminatory enforcement practice.” (Baluyut v. Superior Court (1996) 12 Cal.4th 826, 832.) “Under these circumstances, discriminatory prosecution becomes a compelling ground for dismissal of the criminal charge, since the prosecution would not have been pursued except for the discriminatory design of the prosecuting authorities.” (Ibid.) As set forth below, Authentic has serious concerns that the City has engaged in discriminatory enforcement of its cannabis laws against Authentic when it has declined to impose the same laws against its similarly situated competitors. Indeed, each and every one of the permittees in the City of Fairfield has had some sort of violation of state and/or local law— and everyone except for Authentic has been permitted to keep their permit:
The Showcase has been 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].) Up until March 25, 2025, the Showcase had not filed a statement of information or designated a registered agent.
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These deficiencies were not cured until March 25, 2025—so for a period of approximately five months—The Showcase, LLC was operating out of compliance with applicable state law, but the City took no adverse action on their permit:
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.”
FMC 10E.6 expressly provides: “No person may engage in any commercial cannabis business or in any commercial cannabis activity within the City, including cultivation, manufacture, processing, laboratory testing, distributing, dispensing, or sale of cannabis or a cannabis product, unless the person (1) has a valid commercial cannabis business permit from the City; (2) has a valid State license; and (3) is currently in compliance with all applicable State and local laws and regulations pertaining to the commercial cannabis business and the commercial cannabis activities.” By August 2024, The Bright Spot’s license had expired in June 2024 and The Bright Spot had operated without a licensed for at least two months—but the City took no adverse action against The Bright Spot:
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Lastly, Responsible & Compliant Retail Fairfield, LLC—an established “permittee” well within the ambit of Sections 14 and 15 of FMC Chapter 10E, has been operating in violation state law—namely, Business & Professions Code § 26152, which provides that a cannabis licensee shall not “(g) Advertise or market cannabis or cannabis products on an advertising sign within 1,000 feet of a daycare center, school providing instruction in kindergarten or any of grades 1 to 12, inclusive, playground, or youth center.” Responsible & Compliant Retail Fairfield, LLC is advertising its Fairfield operations adjacent to I-680, an interstate freeway that connects California to Nebraska, roughly 600 feet from the Spectrum Center Schools and Programs, Solano Campus (“Spectrum School”), a special school for children who have highly individualized needs, in violation of Section 26152.
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Despite each of these above issues, the City has only acted against Authentic.
4. The City Appears to Have Pre-Judged Quasi-Judicial Proceedings Against Authentic.
Authentic has serious concerns that the City may have already prejudged ongoing quasi- judicial proceedings, depriving Authentic of its right to a fair hearing in violation of California law.
“When functioning in such an adjudicatory capacity, the city council must be ‘neutral and unbiased.’” (Save Civita Because Sudberry Won't v. City of San Diego (2021) 72 Cal.App.5th 957, 983.) “A decisionmaker must be unbiased (meaning that the decisionmaker has no conflict of interest, has not prejudged the specific facts of the case, and is free of prejudice against or in favor of any party).” (Petrovich Development Co., LLC v. City of Sacramento (2020) 48 Cal.App.5th 963, 973.) To that end, Authentic has a right to an adjudicator who has not “prejudged the facts of the case”—a right that the record suggests may have already been violated here.
On March 14, 2025, the City Council conducted a Special Meeting regarding a second continuance of the public hearing on the Resolution. During that hearing, the Council revealed
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that the entire process regarding revocation of Authentic’s preliminary approval started as a “political process” with direction to staff “find some way to do this”—this being revocation of Authentic’s preliminary approval. Notably, Authentic has submitted PRA requests regarding internal communications regarding this direction, but has yet to obtain a complete response (and reserves its rights to initial proceedings to compel this information from the City, if necessary).
Mayor Moy acknowledged during those proceedings that this is “not the way government should work” and that she was very “uncomfortable” with how the process has played out.
Mayor Moy also discussed the fact that the City knew when Dr. Mitchell passed away and there would necessarily be a change in Authentic’s ownership. Mayor Moy further stated that she had concerns that “others have violated our codes” and that no action had been taken as to the competitors.
At the same hearing, Councilmember Carr also disclosed that “at this time, I’m going to tell people how I’m going to vote – I’m going to vote to rescind,” further heightening Authentic’s concerns because the proceedings had specifically been continued for further deliberations. Moreover, when the initial public hearing was opened, on December 3, 2024, at least one councilmember who has subsequently recused himself from the process after disclosing that he had received a $5,000 campaign contribution from an Authentic competitor participated in that hearing and spoke strongly in support of revoking Authentic’s preliminary approval, while also voting against Authentic’s request for a continuance at the time, despite the lack of notice and due process to Authentic back in November 2024.
Given these issues, Authentic believes it would have a strong due process challenge to the ongoing public hearing to revoke its preliminary approval. Indeed, California courts have held that even so much as one biased Councilmember renders such proceedings subject to reversal as a deprivation of a fair hearing. (Petrovich, supra, 48 Cal.App.5th at p. 973–76.) Authentic would much prefer to focus its energies on building its partnership with the City and developing its property there.
B. Revocation is Not In The Best Interests of the City of Fairfield.
The Council should reject the Resolution because it is not in the best interests of the Fairfield community, who should have meaningful choice and healthy competition among its local cannabis market, nor is it in the best interests of the City of Fairfield, who could benefit significantly from increased tax revenues of approximately $1,000,000 per year.
Rather, it appears that the primary advocates in support of this Resolution are private interests—namely, Authentic’s competitors—who support the Resolution because they want less competition in Fairfield.
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The public record of proceedings on this point makes their advocacy for those private interests clear. On October 1, 2024, Josh Lewis, the Government Relations Manager for Responsible and Compliant Retail Fairfield, LLC testified in support of the amendments to the Fairfield Municipal Code solely to limit the number of operators to three and to reduce competition against his and other private interests within the Fairfield cannabis market:
“I’m here tonight to express our gratitude for the steps Council is taking to strengthen the local cannabis market and urge the Council to continue forward with only three cannabis retail locations.”
“The Fairfield free cannabis market has proven that three, not four, is the right number of cannabis dispensaries for this market. Providing the right level of access for consumers, competition between operators, and sufficient customer base to ensure long term viability.”
“It is clear that three operators is the right number for this City, and adding a fourth will not increase tax revenue; it will only take from existing operators.” “Fairfield already has three responsible and compliant operators who are committed to this Community. Again, we thank Council for these positive steps and positively encourage you to move forward in confidence with your three selected cannabis retail locations in order to protect the City’s cannabis business program and ensure that Fairfield’s market remains stable and competitive.”
“Moving forward with three operators will best serve this community and the health of the market.”
Mr. Lewis offers no explanation for how reducing competition in the local cannabis market would benefit anyone other than the currently licensed retailers in Fairfield. Nor could he.
As has been recognized by the United States government for years, “[b]asic economic theory demonstrates that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation.”2 In contrast, when market power becomes too concentrated “dominant firms can use their market power to charge higher prices, offer decreased quality, and block potential competitors from entering the market—meaning entrepreneurs and small businesses cannot participate on a level playing field
2 H. Boushey; H. Knudsen, The Importance of Competition for the American Economy (July 9, 2021), Biden Whitehouse Archives, available at: https://bidenwhitehouse.archives.gov/cea/written-materials/2021/07/09/the- importance-of-competition-for-the-american-economy.
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and new ideas cannot become new goods and services.”3 That is precisely what private interests want here—to limit competition, protect its market share, and further concentrate the Fairfield retail market.
But that is directly adverse to the best economic interests of the Fairfield community.
Fairfield is a sizeable city of 120,000, situated conveniently between Sacramento and San Francisco in Solano County. Studies have found that cities of the size and geographic desirability of Fairfield could withstand up to one license per 10,000 people before becoming oversaturated.4 Other California communities of comparable or smaller size, such as Ventura, El Monte, and Inglewood have authorized licenses for significantly more dispensaries per capita and still have vital cannabis markets. That is because competition is good for the cannabis industry, good for cities, and good for consumers. To the extent that Authentic’s competitors claim that market saturation is the largest issue in the cannabis industry, that is untrue. Multiple tiers of taxation and high regulatory costs—such as those caused by the multiplication of proceedings here—are far more harmful to the industry than healthy competition.
Ventura, which has a population of approximately 109,000, has licensed six (6) commercial cannabis retail permits. El Monte, which has a population of roughly 104,000, similarly capped its number of available licenses at six (6). Inglewood, a city of roughly 103,000, licensed four (4) retailers. For a city of Fairfield’s size, maintaining its cap at four licenses (as originally awarded) will promote healthy competition, avoid anti-competitive behavior and market concentration, and promote more safe access to product within the Fairfield community.
C. Authentic Is Eager to the Partner With this City.
Authentic is committed to being an excellent partner to the City of Fairfield in all aspects of its operations. As noted above, Authentic believes that its operations will likely generate between $800,000 and $1,000,000 for the City per annum. And Authentic’s commitment to promoting a vital, safe, and accessible cannabis market in Fairfield dates back years, including when Authentic’s legal team help defend the very licensing process through which its competitors obtained their permits. Now some of those very same operators seek to pull the ladder up behind them and exclude Authentic from the very licensing structure Authentic fought so hard to defend years ago. Unlike those operators, Authentic does not need to eliminate its competition to thrive in Fairfield’s local cannabis market. There is sufficient demand within
3 Id.
4 HdL Fiscal Revenue Analysis of the Commercial Cannabis Industry (Prepared for the County of Los Angeles), June 8, 2022 ; HdL Fiscal Revenue Analysis of the Commercial Cannabis Industry (Prepared for the County of San Diego), April 27, 2022.
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Fairfield to support at least four licenses, particularly given that Authentic’s main competitors will have the benefit of an established market share, whereas Authentic will not.
* * *
For each of these reasons, Authentic respectfully requests that the Honorable City Council reject the Resolution and allow Authentic to proceed with its preliminary approval and/or terminate any further public hearings on the Resolution to rescind Authentic’s preliminary approval.
Sincerely,
Davis Wright Tremaine LLP
Nicole S. Phillis