Fair Political Practices Commission Says Mayor Can Participate in Vote to Legalize Cannabis Businesses

Rohan Sidhu (left) stands next to his father, Harry Sidhu, the night he was sworn in as mayor of Anaheim in December 2018.

By DUANE ROBERTS
Editor & Publisher

Kevin Cornwall, Counsel for the Legal Division of the Fair Political Practices Commission, has notified City Attorney Robert Fabela that Mayor Harry Sidhu “may take part in the upcoming City Council decisions related to the regulation of cannabis distribution, manufacturing, cultivation, and retail sales” within the City of Anaheim because the “facts” show he currently does not “share his son’s economic interests.”

Cornwall’s opinion, including the legal rationale behind it, is contained within a three-page letter dated May 27th and was issued in response to a “Request for Formal Advice” Fabela sent to the commission twelve days earlier. Fabela wanted to know whether Mayor Sidhu’s adult son’s involvement in the cannabis industry precluded him from voting on related matters coming before the council at the June 9th meeting.

The text of Fabela’s missive is as follows:

As City Attorney for the City of Anaheim, I am seeking an immediate Formal Advice letter from the Fair Political Practices Commission (FPPC) on behalf of Anaheim Mayor Harry S. Sidhu, P.E. This request concerns two related decisions that will be before the Anaheim City Council on June 9, 2020, involving the proposed regulation of cannabis distribution, manufacturing, and cultivation in the City of Anaheim. Cannabis is currently banned in the City of Anaheim for all purposes. Mayor Sidhu’s adult son provides consulting guidance in the cannabis industry in Orange County, California, and the Mayor wishes to take every precaution to confirm that no conflict of interest exists that prevents him from participating in these decisions.

The Mayor’s son, Rohan S. Sidhu, is 23 years old and lives at home in the Mayor’s house, which is located in the City of Anaheim. The Mayor claims Rohan as a dependent, pays for utilities, food, and other amenities for the entire household, including Rohan, and receives no rent or other payments in return. While Rohan has no immediate plans to move out of the house, he is contemplating such a move before the end of the year.

Rohan started a small business in 2018 to provide ‘engineering consulting’ to individuals and businesses working in the cannabis industry. In general, he provides guidance on starting and operating cannabis businesses, with a specialization in consulting on the process of obtaining state licenses issued by the Manufactured Cannabis Safety Branch and Bureau of Cannabis Control, among other licensing agencies. He does not manufacture or distribute cannabis himself, nor does he profit directly from the manufacturing and distribution of cannabis by his consulting clients. Rohan also has no intent to provide any consulting guidance to cannabis businesses which may at any time be authorized to legally operate in the City of Anaheim.

Mayor Sidhu has never held any ownership interest in his son’s business. He has not invested in the business or made loans or gifts of money to his son that were used in the business.

The Anaheim City Council will soon face two decisions that could result in the regulation and taxation of cannabis manufacturing, distribution, cultivation and retail sales within the City. The first is an ordinance that would repeal existing Anaheim Municipal Code chapters banning cannabis use and adding chapters regulating cannabis distribution, manufacturing, cultivation and sales. The second is a City Council Resolution approving a ballot measure that would place a cannabis tax before the voters at the next general election, which requires a two-thirds vote of the City Council under the City’s Charter. If passed, the first item (the regulation ordinance) will only take effect if the voters actually approve a cannabis tax at the November 2020 general election.

Thus, Mayor Sidhu’s request is for immediate advice as to whether his relationship with his adult son, and particularly his provision of financial support to his son in the form of room, board and other amenities, creates a conflict of interest that prevents the Mayor from voting on an ordinance amending the Anaheim Municipal Code to allow regulation of cannabis, or a resolution adding a cannabis tax to the November 2020 ballot.

Because this matter will be on the Council’s June 9, 2020 agenda, we ask that you provide an advice letter before that date…

In the letter that Cornwall typed in response, he carefully reviewed the “facts” as Fabela laid them out, and then gave his opinion as to how the Political Reform Act (hereinafter referred to as the “Act“), the main state law that deals with issues pertaining to conflicts of interest among public officials, would be applied in Mayor Sidhu’s case.

In his analysis, he wrote:

Under Section 87100 of the Act, ‘[n]o public official at any level of state or local government shall make, participate in making or in any way attempt to use his official position to influence a governmental decision in which he knows or has reason to know he has a financial interest.’ ‘A public official has a financial interest in a decision within the meaning of Section 87100 if it is reasonably foreseeable that the decision will have a material financial effect, distinguishable from its effect on the public generally, on the official, a member of his or her immediate family,’ or on certain specified economic interests. (Section 87103.) Among those economic interests is any source of income aggregating five hundred dollars ($500) or more in value provided or promised to, received by, the public official within 12 months prior to the time when the decision is made. (Section 87103(c).)

Section 82029 defines the term ‘immediate family’ to include an official’s ‘spouse and dependent children.’ The term ‘dependent children,’ in turn, is defined by Regulation 18229.1 to mean ‘a child… of a public official who is under 18 years old and whom the official is entitled to claim as a dependent on his or her federal tax return.’ Although Mayor Sidhu claims his son Rohan as a dependent for tax purposes, Rohan is over the age of 18 years old and, thus, is not considered a ‘dependent child’ or ‘immediate family’ for conflict of interest purposes under the Act. Additionally, given that Rohan has not made rent payments or similar payments to Mayor Sidhu, he also does not qualify as a source of Mayor Sidhu’s income.

Accordingly, the provided facts do not indicate that Mayor Sidhu has any economic interest implicated under the Act …

However, Cornwall stated that “in the future, if Rohan were to qualify as a source of income, such as by making rent payments, Mayor Sidhu would have an economic interest in him. In such a scenario, Mayor Sidhu would generally be prohibited under the Act from taking part in governmental decisions that would have a reasonable foreseeable, material financial effect on Rohan.”

Cornwall warned Fabela early on his advice “is limited to the provisions of the Act. We cannot provide any advice regarding other conflict interest provisions that may apply, including common law conflict of interest…” Furthermore, he added “any advice we provide assumes your facts are complete and accurate” and that if those “facts” change, “you should contact us for additional advice.”

Downloadable PDF copies of Fabela’s and Cornwall’s correspondence can be found by merely clicking here and here.