According to a lawsuit filed last week, it can’t hurt to do business in Oceanside if you have ties to a well-connected local family.
“There seems to be a strong nexus between local government and a local landowning family,” says attorney Tamara Leetham of San Diego’s Austin Legal Group. She says she has found a connection to the deeply-rooted Mellano family and the awarding of Oceanside's first-ever marijuana cultivation licenses.
Mellano & Company has been farming since the 1920s and maintains 375 farming acres in San Diego County. The company has traditionally been growing flowers for worldwide distribution. Mike Mellano says that he created Green Venture Farms Inc. as a separate entity that is concerned with cannabis cultivation and will operate on Mellano family property.
The lawsuit alleges that those Mellano connections can be so beneficial that a company that is officially forbidden from doing business in the California got a license to grow pot in Oceanside on Mellano property.
The lawsuit filed July 3 maintains that the city of Oceanside allowed the Mellano family to influence Oceanside’s own cultivation license awarding process. It claims that it is “inherently suspicious” that four of the five licenses given out by Oceanside to cultivate marijuana, are connected to the Mellano family. The suit says two of the firms that successfully applied to get licensed, Green Venture Farms Inc. and Oceanside Craft Farms Inc., are directly controlled by the Mellano family, and two others, White Mountain Farms Inc. and Second Sun Inc., will be doing business on Mellano property. Leetham says all four are part of a “Mellano monopoly.”
Second Sun Inc., is a Delaware Corporation with a San Jose address. It was first allowed to do business in California on October 31, 2016, but at the time the lawsuit was filed the business was suspended from doing business in California according to the Secretary of State’s website.
As of July 12 Second Sun Inc. was listed as a legal entity in California, according to the website. Mark Putney, a partner in Second Sun responded: "What happened was we changed addresses a year ago and it was never updated with the [Secretary of State] so they kept sending the request to update our addresses to the old address. All we had to do was update our address and statement of information."
Attorney Leetham says there were approximately 16 companies that initially filed to get a license to cultivate pot in Oceanside. There was a two-tiered rating system, including a “Phase 2” which awarded a total of 1500 points, and a “Phase 3” which had a maximum of 2500 points. These points were based on criteria including security plans and financial solvency. Leetham says she finds it strange that her firm’s client, Zenleaf LLC of San Diego, actually scored better than most of the four Mellano-connected applicants in Phase 2, but somehow did not make the cut when the five licenses were ultimately awarded in April.
She says the city provided details on the Phase 2 rating process when her firm asked but the city declined to reveal the criteria for Phase 3. “We believe they failed to provide all the public records,” she says. “We also dispute the amount and nature of the redacted records.”
But there’s more. “In April of last year the city issued its own rules that said there could be one cannabis cultivation company per parcel,” says attorney Leetham. “Then four months later they mysteriously changed their own rules so that more than one could exist on the same parcel. That ironically benefited four of the five winners [who will be on Mellano property].”
All of the applicants seeking a license to cultivate pot included facility and business plans. “Three of the four plans for [Mellano-connected] greenhouses appear to be almost identical,” says Leetham.
The Mellano family have been big spenders in Oceanside political campaigns. Mellano family members Michelle Keeler Mellano gave $2000 and Rosemarie Castellano gave $1000 to help elect Christopher Rodriguez to the city council in November. Mike Mellano’s Green Venture Farms gave Rodriguez $1000. Mellano and Company gave $15,166 to defeat the so-called SOAR initiative that would have forced a public vote on any zoning change from agricultural to residential.
When asked if the Austin Law Group has any smoking guns that could directly connect the Mellano family with any decisions that could have been made by city staff or elected officials, Leetham paused and said, “I prefer not to answer that question.” She says the lawsuit does not primarily seek monetary damages but rather is hoping to expand the number of licenses and/or get a full disclosure on how the rating process was conducted.
Calitopia was the fifth successful applicant who can now cultivate marijuana in Oceanside. The lawsuit does not allege that Calitopia is part of the “Mellano monopoly.”
Oceanside City Attorney John Mullen says that Second Sun can not ultimately be in forfeit status: "Neither the state license nor the conditional use permit can be issued unless proof of organizational status is documented. Second Sun has yet to even submit its [conditional use permit] application."