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As Sessions targets legal marijuana, former Calif. AG launches cannabis company

Bill Lockyer is among a small but growing group of people making the switch from government to the cannabis industry


By Brooke Staggs
The Orange County Register

SANTA ANA, Calif. — While the nation’s attorney general is calling for a crackdown on legal marijuana, a former California Attorney General is launching his own marijuana distribution business.

Bill Lockyer, who served as the Golden State’s top cop from 1999 to 2007, is co-founder of C4 Distro, a Newport Beach-based company that hopes to distribute cannabis between licensed retailers.

In this Oct. 19, 2011 file photo, former State Treasurer Bill Lockyer testifies before a joint committee legislative hearing at the Capitol in Sacramento, Calif. (AP Photo/Rich Pedroncelli, file)
In this Oct. 19, 2011 file photo, former State Treasurer Bill Lockyer testifies before a joint committee legislative hearing at the Capitol in Sacramento, Calif. (AP Photo/Rich Pedroncelli, file)

Lockyer, who has experience fighting Washington on the issue of legal marijuana, is among a small but growing group of people making the switch from government to the cannabis industry.

Lockyer’s partner in the venture is Eric Spitz, who was president and co-owner of the Orange County Register from 2012 until 2016, when the newspaper was purchased out of bankruptcy by Digital First Media.

C4 Distro is headquartered in Newport Beach, state records show, which has some of the strictest marijuana policies allowed under state law. But they don’t intend to operate there, with plans instead to distribute marijuana products initially in the Los Angeles area.

Distributors are the only entities legally allowed to transport marijuana between other licensed businesses. C4 Distro — the business name for Golden Systems LLC — plans to focus on picking up manufactured marijuana products, such as edibles and concentrates, and delivering them to shops that sell them to the public.

The company doesn’t appear to have one of the 151 licenses the state had issued as of Wednesday for recreational and medical marijuana distribution, according to the Bureau of Cannabis Control’s online database. C4 Distro officials declined interview requests, saying they plan to share details of their business later this month.

Federal threat looms

The company’s plans don’t seem to have slowed despite the cloud that’s been cast over the industry at the federal level.

Marijuana remains illegal under federal law. The Drug Enforcement Administration still classifies it as a Schedule I controlled substance, on par with heroin.

U.S. Attorney General Jeff Sessions has been outspoken about his disdain for marijuana. And on Jan. 4, Sessions killed an Obama-era Department of Justice memo that offered some protection for marijuana businesses operating in compliance with state legalization programs.

California lawmakers and officials were quick to criticize the move. That includes current Attorney General Xavier Becerra, who said in a statement: “In California, we decided it was best to regulate, not criminalize, cannabis. We intend to vigorously enforce our state’s laws and protect our state’s interests.”

This fight isn’t new to 76-year-old Lockyer.

Lockyer launched his political career in the State Assembly in 1973. He was serving in the State Senate when Californians passed Proposition 215, which legalized medical marijuana in California in 1996. Lockyer has said he supported the ballot measure after watching his mother and sister both die from leukemia with only morphine to ease their pain.

He was California’s Attorney General when the second Bush administration went after California’s growing medical marijuana program. He called for meetings with federal regulators and filed a Supreme Court brief to protect patients’ rights.

After he termed out as Attorney General, Lockyer ran for State Treasurer. He held that post from 2007 through 2015, when he announced he was retiring from public service.

Lockyer is now an attorney with Brown Rudnik, specializing in government law and strategies out of the firm’s Irvine office.

He’s married to Nadia Lockyer, a former Santa Ana Unified School District board member who’s battled substance abuse. The couple have three children and divide their time between homes in Long Beach and Hayward.

From government to marijuana

Lockyer stands out for how long he served in high-profile government roles before diving into the cannabis industry. But he’s not alone in making the transition.

Andrew Freedman became Colorado’s first Director of Marijuana Coordination when the state legalized cannabis in 2012. Now Freedman runs the Denver-based cannabis consulting firm Freedman & Koski with Lewis Koski, who was director of the Colorado Marijuana Enforcement Division during the legalization process.

Patrick Moen was a supervisor with the DEA and led a Portland team that fought methamphetamine and heroin traffickers. In 2013, he became attorney for Privateer Holdings, a Seattle-based firm that owns the popular strain review app Leafly, Bob Marley’s legacy brand Marley Natural and Canadian cannabis company Tilray.

Clay Bearnson may be one of the first to fill both roles at the same time, after he opened Oregon Farmacy cannabis dispensary while serving as a councilor for the city of Medford, Ore.

It’s quite common for government workers to later become consultants to the industries they once regulated, using the knowledge they gained as public employees to help private business owners navigate bureaucratic red tape.

But the marijuana industry may be particularly susceptible to corruption, some worry, since the industry is still forced to operate largely in cash and because there’s still a massive black market in states where marijuana remains illegal.

Legal marijuana critics — including Sessions — point to the case of Renee Rayton.

Weeks after she left her post as a Colorado marijuana enforcement officer, a June 7 indictment claims Rayton started using her insider knowledge of the system to help marijuana cultivators illegally sell their plants out of the state on the more-profitable black market.

Rayton was accused of ignoring a Colorado law that says state workers must wait six months before taking a job in an industry they regulated.

So far, California doesn’t have any rules on the books about cannabis regulators going to work for cannabis businesses.

Assemblyman Ken Cooley, D-Rancho Cordova, tried to change that. He introduced a bill in February 2017 that would have prohibited former employees of the state cannabis bureau or any agency responsible for licensing marijuana businesses from working for any licensed cannabis business for one year.

“This simply ensures that persons in regulatory roles at the state or local level keep their focus on community, local quality of life, state quality of life,” Cooley said when he introduced the bill on the Assembly floor in May. “They’re not tempted to make decisions and then jump in the industry. It supports good government.”

Assembly Bill 1527 – which was coauthored by Tom Lackey, R-Palmdale – died in committee.

Without such rules in place to guard against corruption, some lawmakers fear California could invite scrutiny from Sessions and the U.S. Attorneys appointed to serve here.

In a July essay for Zocalo Public Square magazine, Spitz cited his previous experience working in the alcohol industry, arguing that independent cannabis contributors could help guard against black market diversion. He sided with the Teamsters, who were pushing for cannabis to have a distribution system akin to alcohol.

State lawmakers ultimately came down against that scheme, instead allowing companies that grow cannabis and make marijuana products to also apply for licenses to distribute it.

C4 Distro has only announced plans to focus on distribution — a segment needed to keep products moving through the state’s massive marijuana market.

©2018 The Orange County Register (Santa Ana, Calif.)

McClatchy-Tribune News Service

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