Green Rush: Inside the Big Business of Pot Permits

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SACRAMENTO -- This isn't like any drug deal story you've ever heard.

Pot teeters on the edge of a ballot box, poised to crash the party for alcohol, to become California's intoxicant of choice.

"Everybody sees this as a 'green rush.' You've heard that term," Amy Jenkins, of the California Cannabis Industry Association said.

Pot is big business, and pot dealers have likely got a whole new game.

In 2011, a federal crackdown on pot led Sacramento County to shutter nearly all its dispensaries.

"We lost 13 locations in one day," Sheila, owner of the Heavenly Sweat dispensary said. "Thirteen."

She grew her pot business from her own kitchen. She makes edibles - food with the pot baked right in. She says it's gotten easier to do business now, especially in the City of Sacramento.

Sacramento has become something of a pocket of pot-friendly policy, surrounded by town after town and county after county, that have put dispensary bans in place.

1841 El Camino is the dispensary where we caught-up with Sheila making a delivery. In 2011, because of that federal crackdown, this dispensary was shuttered.

At the same time, the City of Sacramento froze the number of dispensary permits.

"We do believe we have enough in the city," City of Sacramento Director of Governmental Affairs Randi Knott said.

The law says a dispensary can't transfer ownership, management control or it's permit to another person. So, in 2014, the Sacramento City Council allowed this dispensary to reopen under the original owner, Linda Catabran. But in January of 2016, the CEO, CFO and secretary of the dispensary were all listed under a separate name: Mike Tomada.

Knott says that constitutes a change in ownership. The city allowed it to happen because the new owner's name does appear on the original application for a permit.

As for why the city allowed the dispensary to reopen, it was partly on the strength of letters of recommendation, written by a former Sacramento Vice Mayor, and a former Sacramento Police homicide detective.

"I am definitely concerned on public corruption on all different levels," Lanette Davies, of CanaCare, told FOX40.

If there is public corruption, it would start with a private conversation -- someone who wants a permit, or someone who wants to sell one, looking to make a deal.

"It's as easy as writing a check," someone familiar with the pot permit black market told FOX40. They spoke under the condition of anonymity.

While a gram of marijuana might go for $20 at the dispensary, a permit to sell marijuana might go for hundreds of thousands, even millions of dollars.

"They place them on the board, keep them on the board, and then eventually drop them off the board. And then the old owner would show up in public situations where they need to be the face," our insider said.

A deal that would have to be kept hidden from the City of Sacramento, even as the city moves forward with its own plans for pot.

City staff have been tasked with developing rules marijuana delivery services, and for turning abandoned industrial warehouses into cultivation centers for marijuana. Those grow operations would be great for Sheila and her Heavenly Sweets.

"They're all out of Humboldt County. All of them at the moment," Sheila said. She would love more local sourcing.

But not everyone relishes the idea of a pot plantations next door, even if they are kept indoors.

"We do have some concerns on this," Greater Broadway District Executive Director Michelle Smira said. Her group is part of an effort to revitalize the Broadway corridor in Sacramento.

They've hired strategic planners to do it, but the two spaces along that corridor that could be zoned for an industrial pot grow aren't part of their plan.

"We want to see that they're going to be good neighbors," Smira said. "But more importantly, we want to see if there are better uses for those properties."

Smira says an industrial pot plantation won't attract visitors, or potential customers for other Broadway businesses, but there's little doubt the potential boon in tax revenue is very attractive to Sacramento's City Council.

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