Crime

Why did SLO County issue a marijuana permit to a man facing federal drug charges?

In this June 21, 2018, photo, laboratory manager Emily Savage demonstrates how she uses an instrument to photograph cannabis samples at CW Analytical Laboratories, in Oakland, Calif. (AP Photo/Jeff Chiu)
In this June 21, 2018, photo, laboratory manager Emily Savage demonstrates how she uses an instrument to photograph cannabis samples at CW Analytical Laboratories, in Oakland, Calif. (AP Photo/Jeff Chiu)

The owner of West Coast Organix was indicted on federal charges for drug and money laundering weeks before his business received San Luis Obispo County's first land-use permit issued for a marijuana dispensary.

The county, it appears, was unaware of the owner's legal trouble when the conditional permit was issued. Background checks are performed on potential cannabis business owners, but that comes later in the permitting process. The dispensary hasn't yet received a business license from the county or a state license, both of which are required before it can legally open, and both of which are now in jeopardy.

Daniel McMonegal, 35, of San Luis Obispo and Mariposa was indicted by a federal grand jury in Fresno in May on suspicion of conspiracy to distribute a controlled substance, distribution of a controlled substance and money laundering. The investigation leading to the charges was part of a nationwide sting operation of alleged vendors selling illegal goods on the dark web.

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While running the nonprofit medical marijuana collective West Coast Organix on the Central Coast, McMonegal was allegedly selling marijuana online on a dark web marketplace and exchanging his Bitcoin payments for cash with an undercover federal agent based in New York.

"As far as I know, the county didn't know (McMonegal was indicted) until yesterday. I don't know if others in the county knew," Marvin Rose, interim director of the county Planning and Building Department, said Wednesday. "Had we known before the approval was granted, we may have pushed for a background check before approval.

"This is a new process for us. Everything we do is informing how we will do the process in the future, " Rose said.

Andrew Joseph Hafler shows his marijuana grows and talks about what it's like to grow cannabis in California Valley in eastern San Luis Obispo County.

McMonegal's business was issued a conditional land-use permit to operate a non-storefront dispensary near the airport on June 15, but "he doesn't have an effective permit," said County Counsel Tim McNulty. "It's a multi-step process that requires approvals before operating as a legal business, and he wasn't quite there yet."

To open legally in the county, West Coast Organix would need a business license and a state license.

It can't get a business license without the county sheriff's recommendation, which involves a review of state, federal and local criminal history information, as well as an applicant interview, site visit, and inspection, McNulty said.

And, in order to obtain a business license, McMonegal first needs to acquire a state license. A spokesperson for the Bureau of Cannabis Control said it doesn't appear as if the state has received an application from West Coast Organix.

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If or when it does, that application could be denied if McMonegal is convicted of certain felony offenses.

In response to questions about whether McMonegal is eligible for a state license, both the Bureau spokesman and McNulty pointed to a business and professions code that says, "State licenses may be denied based upon the applicant, owner, or licensee, having been convicted of an offense substantially related to the qualifications, functions, or duties of the license sought, including but not limited to certain felony offenses."

McMonegal appears to be out of custody, and his next court date has been set for Aug. 20. If convicted, he could face up to 20 years in prison and a $1 million fine.

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