Lawrence J. Conlan
831 S TATE S TREET , S ANTA B ARBARA , C ALIFORNIA 93101-3227 LCONLAN @ CAPPELLONOEL . COM T EL (805) 564-2444 F AX (805) 965-5950 WWW . CAPPELLONOEL . COM May 1, 2025
Via Email
David Lim, Esq, City Attorney, City of Fairfield
Richards Watson Gershon
One Sansome Street, Suite 2850
San Francisco, California 94104
Email: dlim
@rwglaw.com
Re: Mandatory revocation of preliminary awarded permit of Authentic Fairfield LLC
Dear Mr. Lim:
We submit this letter on behalf of Embarc , as further support of the City’s proposed revocation of Authentic Fairfield LLC’s preliminary award of a retail cannabis permit. This letter also addresses concerns raised at the “impromptu” City Council meeting on April 15, 2025 that quickly transformed from an ostensibly general discussion about Fairfield’s cannabis ordinance into a specific, and we believe improper, discussion about the issues discussed in recent months regarding the status of ownership and numerous ownership changes at Authentic Fairfield LLC.
I. The City Council’s general discussion of the equal application of the Fairfield Municipal Code did not require the forced recusal of Councilmembers Bertani and Tonneson.
As you are aware, the agenda report for Item O (New Business) .3 (City Council Discussion and Direction Regarding Commercial Cannabis Businesses) described the agenda item as follows:
“Mayor Moy requested a discussion item be placed on the agenda for council to discuss the implementation of the Commercial Cannabis Businesses ordinance, Chapter 10E.1 of the Fairfield Municipal Code.”
By its own description, this agenda item specifically requested by Mayor Moy was a general discussion about the cannabis ordinance, not issues specific to Authentic, or seemingly to any other cannabis permittee. Indeed, the agenda item for Authentic had been continued again just prior to the meeting. Despite the agenda item being announced as a general discussion, two members of the City Council were required to leave the meeting, though they were not required to do so. The City Council website states that:
“[p]ursuant to Government Code 84308, City Council Members are disqualified and not able to participate in any agenda item involving contracts (other than competitively bid, labor, or personal employment contracts), franchises, discretionary land use permits and other entitlements if the City Council Member received more than $250 in campaign May 1, 2025
contributions from the applicant or contractor, an agent of the applicant or contractor, or any financially interested participant who actively supports or opposes the City's decision on the agenda item in the 12 months prior to the date the item is on the agenda. Members of the City Council who have received, and applicants, contractors or their agents who have made, campaign contributions totaling more than $250 to a City Council Member in the 12 months prior to the date the item is on the agenda are required to disclose that fact for the official record of the subject proceedings. Disclosures must include the amount of the campaign contribution and identify the recipient City Council Member and may be made either in writing to the City Clerk before the agenda item or by verbal disclosure during consideration.”
While the agenda item did not appear, as announced, to involve contracts, franchises, discretionary land use permits and other entitlements, and despite the fact that there was no specific “decision” on the agenda item announced before the meeting, Councilmembers Bertani and Tonneson were instructed to leave the dais and exit the building prior to discussion. Under the plain language of the government code and the City’s own interpretation of the Code, those City Council members should not have been required to leave the meeting and in fact should have been allowed to participate in the discussion.
Due at least in part to their improper disqualification from the City Council meeting, the meeting quickly devolved from a discussion about equal treatment of cannabis businesses (which the Code already provides for in plain terms, as Mr. Lim confirmed at the meeting) into a grievance- filled attack in which Embarc was openly slandered and accused of unfair business practices.
Specifically, in a patently biased attempt to excuse Authentic for months of Code violations and blatant misrepresentations to the City Council, Mayor Moy falsely asserted that Embarc had also “changed ownership” just like Authentic had. She also asserted that Authentic’s undisclosed changes of ownership followed by months of misrepresentations by its principals to the City Council was somehow a lesser offense than an allegation regarding an Embarc billboard near a highway outside of the City limits.
As I stated to Mr. Lim when we spoke after Embarc was notified about the billboard, following the retaliatory complaint by Authentic, we disagreed that there was a violation, but that as a matter of good business and truthful cooperation with the City, Embarc agreed to promptly address the issue. Moreover, what Embarc did not do was to engage in a coverup fueled by ongoing misrepresentations and acts of concealment, as did Authentic when it was caught red-handed changing ownership.
Mayor Moy’s pointed yet unfounded criticisms of Embarc reveal an irreparable bias that cannot be ignored.
II. Authentic’s threats of legal action have no merit.
Embarc has already provided substantial evidence of Authentic’s many unauthorized and undisclosed ownership changes, pointing to indisputable evidence from Authentic’s own records submitted to DCC. See Letters to the DCC dated October 4, 2021 (removing Brian Mitchell and Tony Huang, and adding Raquel Origel, Jon Avidor, Takayuki Sato, CJA Nevada LLC, and ZAN Nevada LLC as owners), January 11, 2023 (adding Greg Fink, removing Jon Avidor and Raquel Origel), April 18, 2024 (removing Greg Fink).
May 1, 2025
Rather than acknowledge its repeated changes of ownership and explain why, however, Authentic attempts to divert the City Council’s attention with purported legal claims that are baseless and will never overcome Authentic’s unclean hands. As explained below, Authentic’s threats have little to no legitimate weight, and should not cause the City any concern.
a. Authentic has had ample due process and an opportunity to be heard regarding its violations of the Code.
Generally, “due process” is opportunity to be heard at meaningful time and in meaningful manner. (Brown v. City of Los Angeles (2002) 102 Cal.App.4th 155, 174.) Under the California Constitution, the extent to which procedural due process is available depends on weighing of private and governmental interests involved; required procedural safeguards are those that will, without unduly burdening government, maximize accuracy of resulting decision and respect dignity of individual subjected to decision-making process. (Id.)
Authentic’ s assertions that it has been denied due process are meritless. The City of Fairfield has provided multiple opportunities for Authentic to present its position, respond to concerns, and address the violations of the Fairfield Municipal Code. Procedural due process requires notice and an opportunity to be heard – Authentic has received both, in abundance.
Authentic was granted a public hearing on December 3, 2024, at which it had the opportunity to present evidence and make legal arguments in support of retaining its preliminary approval. Following concerns raised during that hearing, Authentic successfully obtained continuance to allow additional time for preparation and for both sides to present further evidence.
The matter was again scheduled for further public consideration on March 4, 2025, during which additional public comment and discussion were held. Authentic was fully aware of the proceedings and actively participated.
The City has provided a process that has allowed Authentic to be heard, to explain itself, and to attempt to prove that it did not violate the law. It has failed to do so, in multiple public meetings with the Council. Any claim that this process was prejudiced or biased is contradicted by the length of the proceedings, the number of meetings held, and the City’s efforts to obtain definitive facts, including DCC records that reveal the depth of Authentic’s misrepresentations.
In repeated and clumsy attempts to a void accountability, Authentic has concealed and distorted the truth about its ownership structure. Despite evidence from the DCC showing multiple ownership changes, Authentic has yet to offer a clear or truthful explanation. And yet, it continues to stand on its false representations while refusing to explain the undeniable fact of its ongoing ownership changes and outright false statements to the City Council.
In sum, Authentic’s arguments that it has been denied due process have no merit and should be quickly rejected by any court.
May 1, 2025
b. Authentic is wrong that the City is regulating it by retroactive or ex post facto application of law.
Authentic has violated the Code for secretly changing ownership and then displayed a remarkable willingness to deny its culpability in the face of indisputable evidence. In any court, Authentic will have no credibility. Authentic argues that the Code is being applied retroactively against it. Not so. The Code has never allowed for unauthorized ownership changes, and violating that section of the Code is grounds for revocation.
Authentic’ s claim that the City is imposing ex post facto liability misunderstands the nature of municipal regulations and the ongoing nature of compliance obligations under Fairfield’s Municipal Code. Fairfield Municipal Code Section 10E.15 clearly demonstrates the City’s intent to regulate ownership changes at any stage of a permit and operation of a business.
There is no retroactive application of law here. Authentic’ s non-compliance is ongoing, as evidence by multiple, conflicting ownership disclosures to both the City and the Department of Cannabis Control (DCC), which persisted into late 2024 and early 2025.
Furthermore, the amendment itself reveals that the Fairfield Municipal Code does not retroactively impose new legal obligations but clarifies and reinforces the requirement that all ownership changes, at any stage of permitting process, must be disclosed and approved by the City.
The amendment did not create new liabilities for Authentic but codified the City’s continuous oversight of ownership to ensure transparency and regulatory compliance. Even if the amendment did have retroactive elements – which it does not – the law is clear that municipalities retain broad authority to regulate ongoing business conduct in the public interest.
Even if a law was being applied retroactively, which it is not. Authentic’s argument misses the mark. Retroactive civil laws are analyzed not under the ex post facto clause, but the due process clause, and the question is whether they deprive a party of vested rights. (21st Century Ins. Co. v.
Superior Court (2005) 127 Cal.App.4th 1351, 1358.) Authentic has had ample due process, as explained above. It’s argument about vested rights misses the mark.
c. Authentic’s violations of law are not excused by any claim to vested rights.
Authentic’s attempt to assert a vested rights argument has a glaring error. It assumes that a business that has been built out and made more than an investment in money has vested rights that allow it to violate the law any way it wants. This is incorrect. Under Authentic’s theory, it could open for business, change ownership into the hands of entirely unqualified, and disqualified owners, and then argue that the law does not touch it. This myopic interpretation of the law will gain no traction in court.
The vested rights doctrine is narrowly applied, and Authentic does not meet the legal threshold. Nor does it excuse or cure Authentic for its unauthorized ownership changes.
“The doctrine of vested rights is ordinarily applied when a local agency attempts to prevent the completion of use of a project on the grounds that the project, while lawful at the time a permit was issued, had been rendered unlawful by an intervening change in the law.” (Attard v. Board of Supervisors of Contra Costa County (2017) 14 Cal.App.5th 1066, 1076.) This is not the case here, May 1, 2025
as the Code’s prohibitions on unauthorized ownership changes are not intervening law, nor have they ever been legal under the Code.
It is generally recognized that while the issuance of a permit may insulate a party against subsequent changes in the law, it cannot create a vested right to construct or use property in violation of laws in effect at the time of the issuance of the permit. (Attard v. Board of Supervisors of Contra Costa County (2017) 14 Cal.App.5th 1066, 1077, citing City of Monterey v. Carrnshimba (2013) 215 Cal.App.4th 1068, 1097; Davidson v. County of San Diego (1996) 49 Cal.App.4th 639, 646.)
d. Authentic’s argument that it is not a “permittee” prohibited from changing ownership without authorization has no merit.
Authentic’ s argument that it is exempt from these requirements because it is not yet a “permittee” is contradicted by the plain language of the code. The requirement to notify the City of ownership changes applies from the moment a business receives preliminary approval, not merely after final permitting. To permit otherwise would enable evasion of municipal oversight during a critical regulatory phase.
After contending for months that it never changed ownership, Authentic now asserts that it is not a “permittee” and that the rules of the FMC regarding ownership changes that apply to other businesses do not apply to Authentic. Authentic argues that the Municipal Code sections relied upon in the proposed resolution (FMC 10E.14, 10E.15) apply to “permittees” and not “preliminary approval holders.” It asserts that the FMC defines preliminary approval 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 pursuant to this Chapter.”
Authentic’s argument ignores the plain language of Section 10E.15, the section at issue in this matter, which is titled: “10E.15 Transfer of a Preliminary Approval or a Cannabis Business Permit.” There is no legitimate argument that Authentic, whether it is considered a permittee or a preliminary approval holder is subject to the prohibition on change of ownership without notice to and approval by the City.
Authentic cannot seriously argue that applicants that are awarded a preliminary approval are allowed to change ownership at their sole discretion without getting City approval, or even notifying the City for that matter. Such a notion would be absurd, and it would not be consistent with the plain language, intent, and spirit of the FMC. That is precisely Authentic’s argument, however, and it should be rejected.
The entirety of Chapter 10 of the FMC would make little sense if a “preliminary approval holder” still completing its regulatory requirements was not subject to the same rules governing a business that had completed their regulatory requirements. For instance, 10E.9 “Permittee Selection Process” details the selection process for the City to select permittees, with section (i) stating that upon selection, “[t]he issuance of each commercial cannabis business permit shall be conditioned upon the permittee obtaining all required land use approvals. Upon the approval of a permit by the City Council, the permittee shall apply for any required land use approvals or entitlements for the business location. Land use approvals shall include compliance with the California May 1, 2025
Environmental Quality Act. The City Manager shall formally issue the commercial cannabis business permit(s) once the Community Development Director confirms that all of the required land use approvals have been obtained.” (Emphasis added). This is a clear example of the FMC referring to a business with preliminary approval being treated as a “permittee” even if it has not yet received its land use approvals, business location entitlements, or the formal commercial cannabis business permit.
As another example, the appeal and hearing procedures set forth in 10E.13 identify only two groups of aggrieved parties under Chapter 10: applicants and permittees. There is no third category of “preliminary approval holders.” Authentic is either an applicant or a permittee. Moreover, Authentic’s new position that it is not a permittee contradicts the argument it made in its February 27, 2025 letter to the City where it argued that “a permit may not be revoked arbitrarily without cause” and that “[i]f a permittee has acquired a vested property right under a permit, the permit cannot be revoked.” Importantly for the City, the corollary of Authentic’s new argument that it is not a permittee is that it can no longer rely on its threat that the City is depriving it of vested rights if its permission is rescinded.
Again, the sudden shift in Authentic’s argument should be scrutinized carefully by the City Council, and by the City Attorney. Authentic has tacitly admitted the falsity of its prior representations that ownership never changed or transferred. Embarc is confident, however, that DCC records it has requested, that the City should have requested, and that Authentic should be required to produce, will make it clear that Authentic has misled the City about its ownership, from its original application and through subsequent ownership changes resulting from efforts to distance itself from the well-publicized misconduct of its principals.
III. Authentic’s violations are not curable.
At the April 15 City Council meeting, there was discussion about allowing Authentic to “cure” its violations. While under certain circumstances where City Council discretion is being applied evenly and fairly, where violations are relatively minor, and where a business permittee has been transparent with the City, the opportunity to cure makes sense. But in the case of Authentic, its violations are not subject to cure.
The likely reasons Authentic changed ownership should cause the City grave concern. The fact that Authentic now represents that it has now changed ownership back to its original applicant owners is dubious and fatal to its position.
At the December 2024 hearing, Authentic representative Tak Sato pleaded with the Council that it could trust him, and that the representations he was making to Council could be relied on.
Any applicant now purporting to be submitted on behalf of Brian Mitchell must be carefully scrutinized. Mr. Sato represented Mr. Mitchell was still an owner, but neither he nor Mr. Mitchell were forthcoming about Mitchell’s prior undeniable removal from ownership and the reasons, as clearly demonstrated in DCC filings.
After Authentic submitted its application in 2020, Mr. Mitchell was sued by the State of California for insurance fraud. While it appears that Mr. Mitchell subsequently settled with the State of California, when the news of Mr. Mitchell’s actions was publicized in the media, Authentic and its parent company Shryne quickly distanced themselves from Mr. Mitchell and removed him May 1, 2025
from his officer positions (see Exhibit A)
1 and announced that “Brian Mitchell…has stepped down
from the role for personal reasons unrelated to Shryne.” (See Exhibit B.)2
Similarly, Tony Huang has had multiple instances where cities and counties have enforced civil actions against him relating to the illegal operation of cannabis businesses, including an unlawful retail store in Pasadena in 2020 (see Exhibit C) and an unlawful retail store in Los Angeles in 2023 (see Exhibit D). Huang was also the recipient of a civil enforcement action against him in Santa Barbara where he had been illegally operating a cannabis farm without local authorization, resulting in the farm being raided and shuttered by authorities and a civil judgment being entered against him (see Exhibit E).
Due to these brazen instances of unlawful cannabis activity and civil enforcement actions against Huang, he is prohibited by MC 10E.7 from holding a City cannabis license. Thus, even if Authentic is allowed to transfer ownership back to him and undo their previous unauthorized transfers, he cannot be an owner of a City cannabis license anyway. One can get a better sense of these facts from an LA Times article published in December 2023 which detailed Huang’s extensive connections to illegal cannabis activities (see Exhibit A).
It is for these reasons that Tak Sato, Stiiizy/Authentic’s current President, distanced the company from Huang, stating in a December 2023 interview with MJBizDaily, that Huang “is no longer an owner, employee or director of the company” and “Huang has not held a formal position within the company for years.” (See Exhibit B) (See Exhibit E.) It would be disingenuous for Stiiizy to suddenly resurface Tony Huang as an “owner” of its Authentic Fairfield license in the face of Sato’s public statement that Huang is no longer an owner nor does he have any formal role within Stiiizy’s operations and licenses.
Ultimately, Mr. Huang is disqualified under the law, and not eligible to hold a permit.
Code section 10E.7 defined “Persons Prohibited from Holding a Permit or from Employment with a Cannabis Business Permittee.” It prohibits anyone from holding a commercial cannabis business permit or from employment with a cannabis business permittee if the person has had a permit or license for commercial cannabis activity revoked by any city, county, or State cannabis licensing authority.
Mr. Huang was never and still is not eligible to hold a permit, and should have been denied from advancing in the original permit selection process. Code section 10E.9 details the “Permittee Selection Process” and provides that “[a]pplications shall be denied by the City Manager during this initial screening for any of the following reasons: the applicant or any owner has been convicted of an offense that is substantially related to the qualifications, functions, or duties of a cannabis business, including conviction for unauthorized, unpermitted, or unlawful cannabis
1 Exhibit A https://www.insurance.ca.gov/0400-news/0100-press-releases/2021/release094- 2021.cfm
2 Exhibit B https://www.businesswire.com/news/home/20210921006170/en/Jon-Avidor-Named- CEO-of-Shryne-Group
May 1, 2025
activities in any city, county or city and county in the 5 years immediately preceding the issuance of a cannabis business permit or cannabis business permit renewal.
Yet now, Mr. Sato and Mr. Mitchell invite this City Council to believe that Mr. Huang and Mr. Mitchell are and have always been owners of Authentic Fairfield. The City Council should decline that invitation. It is entirely disingenuous for Authentic Fairfield to publicly distance itself from Mr. Huang, claim that he has not been an owner or “held a formal position within the company for years” only to suddenly resurrect his involvement as an owner in an attempt to cure a default for which there is no remedy but revocation. The same can be said for Mr. Mitchell and Mr.
Avidor, who was also listed in the initial application but not on the DCC website.
e. Any decision that does not revoke Authentic’s permit will not be upheld in court.
Should the City fail to revoke Authentic’ s permit despite clear and documented violations of the Fairfield Municipal Code, Embarc is prepared to pursue all available remedies. This includes seeking mandamus relief under Code of Civil Procedure section 1085 to compel the City to perform its mandatory duty to revoke permits where unauthorized ownership transfers exceeding 51% have occurred without approval, as required by FMC 10E.15(d). Additionally, Embarc may pursue a writ of administrative mandamus under Code of Civil Procedure 1094.5, challenging any discretionary decision to retain Authentic’ s permit as an abuse of discretion, bias, and a denial of its due process.
Finally, Embarc may seek injunctive relief to prevent Authentic from continuing operations under an improperly retained permit.
There is no question that Authentic has violated the ordinance by changing at least 88.5% of its ownership without notifying the City. Nor is there any legitimate dispute that Authentic and its representatives have not been truthful and have attempted to mislead the City on numerous occasions.
As a matter of fairness for all licensees, and to uphold the intent of the original merit-based process to select the best possible dispensary operators for the City, the Code requires a license to be revoked for an unpermitted transfer of more than 50%. In this case far more than 50% was transferred, as evidenced by documents submitted to the state regulatory authority by Authentic.
To ensure fairness for all businesses, and to ensure that businesses dealing with the City are transparent, the City must revoke Authentic’s award.
Respectfully,
Lawrence J. Conlan
Cc: Mayor and City Council