A lawsuit filed against Baldwin Park seeks to break the monopoly the city created when it approved a sole distribution business to serve all local marijuana cultivation and manufacture businesses.
In December, the City Council granted Rukli an exclusive agreement to transport cannabis in the city. In a 3-2 vote earlier this month, the council amended the approvals for all 15 of the city’s marijuana businesses, including Rukli’s.
The complaint, filed in March by lawyer Bradley Pierce on behalf of resident Oscar Cereceres and Dusko Dan Meic, who also had applied to operate a marijuana distribution business in Baldwin Park but was rejected, seeks to have the city’s agreement with Rukli frozen or nullified.
Baldwin Park CEO Shannon Yauchzee declined to comment last week and instead directed questions from this publication to City Attorney Robert Tafoya, who did not respond to requests for comment.
Although the city has approved Rukli to operate, the state Bureau of Cannabis Control needs to sign off on the deal and is certain to overrule it because the agreement represents an illegal monopoly, forcing all marijuana cultivators and manufacturers in Baldwin Park to transport their products through Rukli, according to the lawsuit.
It all adds up to a colossal financial bust, the lawsuit said.
The city will not obtain any revenues from distribution operations, despite numerous businesses willing to pay the high fees accompanying a license and development agreement,” the lawsuit read. “This will also decrease revenues of other cannabis-related businesses, as they will not be able to distribute their product.”
At the April 18 council meeting, Councilwoman Susan Rubio postulated that the city is hedging the future success of all of its local marijuana businesses on a shaky bet.
“My understanding is that the state deems contracts in perpetuity and exclusives illegal, so by approving this, we risk that the state not give Rukli a permit,” Rubio said at the time. “The 14 other companies here may fail as a result.”
The lawsuit also takes issue with the way the businesses were approved, specifically that the city Planning Commission didn’t review any of the 15 development agreements, including Rukli’s, before the City Council approved their preliminary versions in December.
When pressed at the April 18 council meeting to opine whether Rukli represents a monopoly, Tafoya hedged.
“I would not use the word monopoly, but we are forcing 14 other companies to use this company,” Tafoya said at the meeting.
Published: May 1, 2018
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