The FBI is investigating whether public officials in Sacramento, California accepted bribes in return for favorable treatment for applicants for licenses to operate cannabis businesses in the city, according to a report in local media. Three sources with direct knowledge of the probe have told the Sacramento Bee that the FBI has questioned several local cannabis businesses over the last three months about the potential corruption of city officials.

The sources of the information declined to be identified so that the identities of the marijuana businesspeople questioned by the FBI would remain confidential. The sources said that those interviewed by agents were asked if they had knowledge of any bribes paid to public officials in return for favorable treatment during the cannabis business licensing process.

Gina Swankie, a spokeswoman for the FBI, refused to comment on a possible investigation into public corruption in Sacramento related to the city’s cannabis industry.

“The FBI neither confirms nor denies such an investigation,” Swankie wrote in an email. “Who is making such a claim?”

However, only two months ago, the FBI said in a podcast that it was “seeing a public corruption threat emerge in the expanding cannabis industry” and asked for tips from anyone with knowledge of corruption among public officials and marijuana businesses.

City Officials Probe Ukrainian Connection to Local Cannabis Industry

City officials in Sacramento are investigating how cannabis business owner Garib Karapetyan and his associates have been able to amass eight licenses to operate dispensaries in the city, or about one-third of the permitted retailers. One of Karapetyan’s partners, Ukrainian businessmen Andrey Kukushkin, was one of four men indicted by federal prosecutors for involvement in a scheme to direct foreign funds into campaign donations and investments in legal marijuana businesses in Nevada and other states.

Two other men indicted in the case, Lev Parnas and Igor Fruman, are also associates of Rudy Giuliani, President Trump’s personal attorney, and have been implicated in a reported plot by the former mayor of New York City to discredit Democratic presidential candidate Joe Biden and his son Hunter.

Sacramento Mayor Darrell Steinberg’s spokeswoman Mary Lynne Vellinga said on Sunday that the mayor wanted to know how Karapetyan and his partners were able to obtain so many licenses under city regulations, which were designed to prevent a concentration of ownership in Sacramento’s cannabis industry.

“If this story is true, then our cannabis licensing process, which was designed to protect consumers and reward local law-abiding businesses, is being improperly exploited,” Vellinga said in a statement. “The mayor is calling for an immediate investigation and will lead an effort to add additional safeguards to the licensing process.”

Dale Gieringer, the director of the California chapter of the National Organization for the Reform of Marijuana Laws (NORML), said that under state law, local governments have too much authority over the licensing of cannabis businesses.

“Corruption is always worse at the local level because there are so many more local officials and they aren’t under as much scrutiny as those in Sacramento,” Gieringer said. Sacramento is also the state capital of California.

State agencies, he added, “have been doing their best to expedite licensing, but too many local players have been getting their hands in the pie.”

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