Cannabis and Conflict

Behind Supervisor Michelle Bushnell's recusal on the Measure S vote, and what it might mean moving forward



As the Board of Supervisors readied to hold a Feb. 1 public hearing to consider providing millions of dollars in tax relief to local cannabis cultivators pushed to the brink of insolvency by a plummeting wholesale market, the Humboldt County Growers Alliance broke the news on its Instagram page. Just minutes before the meeting was to start, it posted: "Supervisor Michelle Bushnell to recuse herself from today's discussion and vote on Measure S."

To drive home what that meant, the trade association punctuated the post: "80 percent of Humboldt's cannabis farmers just lost their representative."

The backlash was swift.

One could argue the recusal should not have come as a surprise — Bushnell was open about being in the process of getting a cultivation permit when she campaigned for office in 2020 and many seemed to relish her election as the first out-of-the-closet cultivator to serve as supervisor in perhaps the world's most famous cannabis county. But it seemed to blindside the industry. After all, when farmers rallied in front of the Humboldt County Courthouse several weeks earlier, calling on the board to suspend the county's cannabis cultivation tax, Bushnell had been there in support. With a majority of the county's cannabis farms in her Second District, she was the supervisor they'd written to and called to plead their case. It was even the ad-hoc cannabis committee Bushnell served on with Fifth District Supervisor Steve Madrone that brought forward the recommendation that spurred the day's public hearing. No one, it seemed, expected her to step away.

During hours of public comment at the meeting, speaker after speaker expressed dismay at Bushnell's recusal, with some saying it left the industry facing "taxation without representation" and others using words like "rattled" and "confused."

At the end of the marathon public hearing, Bushnell rejoined the group and explained that leading up to her decision, she'd had conversations with County Administrative Officer Elishia Hayes, county counsel and her private attorney. She said she has a cannabis farm — Boot Leg Farm LLC — that had received a state license Jan. 3. She had not yet cultivated cannabis on the farm and didn't know if she would, Bushnell said, but if planted, the farm would be subject to Measure S taxes, so she was advised to recuse herself to avoid jeopardizing the legitimacy of the board's discussion and potential vote, adding that she'd sought a written opinion from the California Fair Political Practices Commission but had not yet received one.

"I understand people are disappointed," Bushnell said. "I am, as well. I have slept very little. I really love my community and am very supportive of it, especially the cannabis community. I am a part of the cannabis community."

The balance of the board went on to vote 3-1 to approve a tax reprieve for the industry, giving farmers until September to make payments on bills due this year, while reducing next year's levies by 85 percent. Madrone dissented, instead supporting a more modest 50-percent reduction in next year's bills, while pointing to deep concerns about the county budget and the impacts of forgoing millions of dollars in revenue. While the cannabis industry got much of what it wanted in the vote, questions about Bushnell's recusal and its potential reverberations continue to swirl.

Despite the backlash, government ethics experts briefed on Bushnell's situation by the Journal say she did the right thing by recusing herself, as participating could have left the board's decision open to a legal challenge and damaged public faith in the institution of county government.

"Any time an elected official stands to benefit economically from a decision that's before the board, they should recuse themselves," said Michael Shires, a vice dean and associate professor of public policy at Pepperdine University's School of Public Policy. "That's how it's supposed to work."

The Law

As the Watergate scandal increasingly came to grip the nation in the months leading up to President Richard Nixon's resignation, California became the first state in the nation to pass a political reform package taking aim at the kinds of corruption and backroom dealing many had come to believe were pervasive in all levels of government. In June of 1974 — three months before Nixon left office in disgrace — California voters passed Proposition 9, known as the Political Reform Act, which aimed to bring a system of transparency and accountability to state and local governments.

The act did many things, from imposing restrictions on lobbyists and campaign spending limits to banning anonymous campaign donations of more than $100 and prohibiting incumbents from using public resources to aid their campaigns. It also mandated that politicians at all levels publicly disclose their personal financial interests and campaign contributions, and it made conflicts of interest a matter of law, while creating the Fair Political Practices Commission to enforce the act's provisions, giving it the power to levy hefty fines for violations.

The idea behind establishing law regarding conflicts of interest is simply to make sure an elected official is acting in the public's interest, Shires says.

"The intent of the law is to make sure officials don't do things to benefit themselves or close family members," he says.

Benefits generally fall into two categories, according to John Pelissero, a senior scholar in government at Santa Clara University's Markkula Center for Applied Ethics. First, there are financial benefits, where an official takes an action that directly profits them, like approving a government contract for a firm they own or changing a zoning designation on a property they own to make it more valuable. Then, there are personal benefits, he says, like doing something that would benefit a family member, friend or social organization the official is affiliated with.

But the underlying rule, Shires says, is that officials should always be acting strictly in the public interest. Pelissero adds that the mere appearance of a conflict — even in situations where an official feels they can cast aside personal interests in favor of the public good — can undermine crucial public trust in government institutions and processes.

"There's an ethical duty to avoid even the appearance of a conflict," Pelissero says.

Bushnell's Case

When Bushnell recused herself at the Feb. 1 meeting, she pointed to Boot Leg Farm as the reason. Incorporated by Bushnell with the California Secretary of State's Office in November of 2019, Boot Leg Farm LLC obtained a special county permit from county Planning Director John Ford — who answers to all five supervisors as his bosses — who was acting as the county's zoning administrator at the April 15, 2021 hearing. The permit allows the cultivation of up to 43,560 of outdoor cannabis on Bushnell's property in the Blocksburg area, though Bushnell says she has not cultivated on the property yet, as she just received a state license to do so in January.

But there are also two other county cannabis permits issued on Bushnell's properties.

Approved in May of 2021, Chronic Creek LLC has a permit for a 22,000-square-foot, mixed light farm on a property owned by Bushnell near Connick Creek in the Garberville area. Hum Fire LLC, meanwhile, has a conditional use permit to grow up to 17,900 feet of outdoor cannabis on another property owned by Bushnell near Sprowel Creek in the Garberville area. Both permits were approved by the Humboldt County Planning Commission.

Bushnell says she has no direct economic interest in either operation. Chronic Creek, she says, belongs to Tiffany Smith, a friend who she came to know through "the cannabis world." Smith, Bushnell says, was working for a distributor but looking to start a farm of her own, though she didn't have any land. Bushnell and her husband, meanwhile, had purchased the Chronic Creek property with the intent of subdividing and selling it. When that plan proved infeasible because the land isn't located in a fire district, Bushnell says she agreed to let Smith start her farm there. Under the terms of the deal, Bushnell says Smith was to pay for everything but could use the property rent-free to start.

"I said, 'Once you're up and running, I'll rent you the property. And after two or three years, if you're successful, we'll talk about you buying the property,'" Bushnell says.

Contacted by the Journal, Smith confirmed she does not currently pay the Bushnells rent for the property or grow cannabis on it, saying she's unsure if she will ever do so.

"We all know the current state of the market," she says. "It's a huge gamble that I'm not sure is financially smart at the moment."

Hum Fire, meanwhile, is owned and operated by Bushnell's son, who Bushnell says uses the property rent-free. The farm is up and running. According to records obtained from the Humboldt County Tax Collector's Office, Bushnell and her husband (as the property owners) were billed simultaneously for 2019 and 2020, with first installments due Feb. 15, 2021. (Tax Collector John Bartholomew said he was unsure why both years were billed together and referred the question to Ford, who did not respond to multiple emails and a voicemail message seeking comment for this story.)

According to county records, Bushnell paid the bills in cash. She says she agreed to pay the bills with money given to her by her son because she's "in the courthouse every day anyway."

In financial disclosure forms filed with the FPPC, Bushnell reported receiving no rental income from either the Chronic Creek or Hum Fire properties.

The Recusal Question

While Bushnell had participated in other votes impacting the cannabis industry in her time on the board — perhaps most notably a vote in October to allow farmers to make late payments without penalty on the second installment of 2020 Measure S taxes, an option her son's farm availed itself of, according to county records — she says she was confronted by the recusal question after Boot Leg Farms LLC received its state permit Jan 3.

Realizing her plans for the property could subject her to a Measure S tax bill of up to $43,560 (billed at $1 per square foot of cultivation space), Bushnell says she spoke with county counsel and her attorney, and "started inquiring about the FPPC."

Bushnell recalls, "My attorney said, 'You cannot do this.' I said, 'Are you sure?'" She adds she did not want to recuse herself from the vote and was scrambling to get a determination from the FPPC up until 8:45 the morning of the Feb. 1 public hearing.

According to records released by the FPPC, Bushnell reached out to the FPPC's helpline via email on Feb. 7 — roughly a week after the public hearing — on the morning the issue was to come back before the board as an action item.

"Good morning," Bushnell wrote at 8:14 that morning, according to an email chain released by the commission at the Journal's request. "I am a Humboldt County Supervisor 2nd District; I am writing to get a determination on a tax that I pay. I am a cannabis farmer in Humboldt County and have Measure S tax that come in my name. We are having a discussion about suspending the measure. I have been advised to not vote or discuss this measure. I have not currently but would like a ruling from you."

Bushnell, for her part, says she'd been in communication with the FPPC by phone weeks prior to this but was asked to follow up by email.

In any event, the FPPC responded to Bushnell's email that afternoon to request additional information. She replied nine days later, on Feb. 16, and says correspondences have continued since, with the FPPC repeatedly asking for additional information.

"I'm still waiting for the FPPC ruling," she says.

It's worth noting that even if fully operational, Boot Leg Farm would seemingly represent a very small piece of Bushnell's business portfolio. According to her financial disclosure forms, she reported making more than $400,000 in combined gross income from operations of a ranch, clothing store, logging company and property rental company she owns, while she disclosed owning 16 properties valued at a combined $3.3 million to $15 million.

But the law does not take into account the relation of a potential financial benefit to an official's overall wealth, meaning a potential $1,000 financial benefit is viewed the same for an official who is in debt as for one who is a billionaire. The law does, however, view an act benefitting an elected official the same as one that would benefit their immediate family member.

"A public official has a disqualifying financial interest if the decision will have a reasonably foreseeable material financial effect, distinguishable from the effect on the public generally, directly on the official, or the official's immediate family," states regulation 18700.

Both Shires and Pelissero say it was appropriate for Bushnell to recuse herself from the Measure S vote, though she hopes the FPPC will ultimately decide otherwise.

An Answer to the East?

Those looking to read the tea leaves of what the FPPC might decide with regard to Bushnell need not look very far. In November of 2019, the commission weighed in on a potential conflict involving Trinity County Supervisor Jeremy Brown, who was wondering if his permitted 10,000-square-foot cannabis farm would prohibit him from voting on some cannabis matters coming before the board. Specifically, Brown wanted to know if he could participate in votes concerning the rezoning of a property about 50 miles away from his to allow for the creation of a cannabis storage and distribution facility, adoption of an environmental impact report on amendments to the county's commercial cannabis program and — perhaps most pertinently to Bushnell's situation — a cultivation tax initiative.

In an eight-page opinion, the FPPC found the rezoning application was unlikely to have a material financial effect on Brown, so he was free to participate in the decision. The commission also found the cannabis EIR decisions "will affect a significant segment of the businesses in the county, and do not appear to have a unique effect on [Brown's] financial interests," clearing him to participate. On the tax initiative, however, the commission advised Brown that it "involves a specific tax rate applicable to your type of business, and thus has a unique effect on your financial interests," finding he could not participate in that decision.

While Bushnell maintains she does not think she has a conflict, it would seem those advising her may have zeroed in on this element in Brown's case, as she says she was told that because Measure S "was about money," she should not participate. It's worth noting, however, that weeks after recusing herself from the Measure S discussion and vote, Bushnell brought forward a letter for the board's consideration in support of Senate Bill 1074, which would eliminate the state cannabis cultivation tax. It passed unanimously on the board's consent calendar without discussion. Interestingly, Shires and Pelissero split a bit on this issue, with Shires saying the importance of the cannabis industry to the county overall coupled with the fact that sending the letter wouldn't have "an immediate, direct benefit" financially probably meant it was OK, while Pelissero says he does see the action as having a potential financial benefit to the supervisor's business.

Moving forward in Humboldt County, the board's passage of tax relief has to some extent pushed the issue to the back burner. But it seems unlikely to stay there too long, with the industry in a seeming free-fall and the county looking to do all it can to help save it. When Bushnell narrowly upset incumbent Estelle Fennell in November of 2020, some credited support from a cannabis industry frustrated with the state of local regulation and thirst for a larger voice in the conversation with helping propel her to office.

Bushnell says she's eagerly awaiting the FPPC's determination, hopeful it will clear her to participate in all future board discussions and decisions on the cannabis industry, including the long-term fate of Measure S, which will come back before the board later this year. Recusing herself, she says, felt "terrible" and she understands why it upset some of her constituents.

"I understand where people are coming from — I'm elected to represent people, and I have a lot of cultivators in my district," Bushnell says. "And I have a lot to add to that conversation."

But she says she also hopes those cultivators understand her decision, saying that she ultimately feared participating could leave the board's decision vulnerable to a legal challenge that could have delayed desperately needed tax relief for months, potentially dooming some local farms to insolvency.

"I could have maybe participated — it was that gray area — but I just couldn't risk it for my cultivators — my constituents — who needed that tax relief so bad," Bushnell says.

Thadeus Greenson (he/him) is the Journal's news editor. Reach him at 442-1400, extension 321, or [email protected]. Follow him on Twitter @thadeusgreenson.

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