On Nov. 9, the Blythe City Council directed staff to continue working with GW Blythe LLC – a prospective cannabis business for 1455 W. Hobsonway, the former Kmart building – for a possible commercial cannabis cultivation permit.

Officials’ direction followed back-and-forth discussion on the matter, the agenda item of which did not include staff recommendation to approve the commercial cannabis business’ submitted permit application due to an inability to provide satisfactory proof of financials per the city’s established process.

“Wally Mona of GW Blythe LLC submitted an application for a Commercial Cannabis Cultivation business at 1455 W. Hobsonway(, APN [Assessor Parcel Number] 848-100-007). This site is the former Kmart and is zoned General Commercial (C-G) which allows for the development of commercial cannabis structures. The subject property has been leased by GW Blythe for this operation,” reported Blythe Interim City Manager Mallory Crecelius to officials on Nov. 9. “During the owner background investigation and Phase III Interview with (City) Staff, (City) officials worked to determine how the Commercial Cannabis Operation would be financed, and the amount of financing necessary for the operation. Although a letter of investment was provided after the Phase III Interview, staff is not fully satisfied with the financial information submitted during the application process. Due to this, staff cannot make recommendation to approve this Commercial Cannabis Business Application. Therefore, it is recommended that Council decide if a Commercial Cannabis Cultivation permit should be issued to GW Blythe LLC for a business located at 1455 W. Hobsonway.”

The proof of financial information in the Phase III background investigation part of the application process’ were noted as:

a) A list of funds belonging to the commercial cannabis business held in savings, checking, or other accounts maintained by a financial institution. The applicant shall provide for each account, the financial institution’s name, the financial institution’s address, account type, account number, and the amount of money in the account.

b) A list of loans made to the commercial cannabis business. For each loan, the applicant shall provide the amount of the loan, the date of the loan, term(s) of the loan, security provided for the loan, and the name, address, and phone number of the lender.

c) A list of investments made into the commercial cannabis business. For each investment, the applicant shall provide the amount of the investment, the date of the investment, term(s) of the investment, and the name, address, and phone number of the investor.

d) A list of all gifts of any kind given to the applicant for its use in conducting commercial cannabis business. For each gift(,) the applicant shall provide the value of the gift or description of the gift, and the name, address, and phone number of the provider of the gift.

“Good evening, sir – thank you for coming. I see some items here that have been requested from you to provide to city staff to move forward with this project. Do you have any problems providing this information in a timely manner?” asked Blythe Mayor Dale Reynolds of GW Blythe LLC’s listed agent and attending representative Waleed Mona.

According to the Secretary of State’s public LLC registry of business entities, GW Blythe LLC is based out of Long Beach, Calif., and has a registration date of April 25, 2021.

“From what I understand, the (BPD) Chief (of Police) has been in contact with the group that’s actually financing this project; they’ve sent him multiple letters in regards to financing. So, I really don’t know what else you would need. Without getting full permits from the city to move forward – get blueprints, get plans – there’s no one that’s going to guarantee financing to a project that, they don’t know what they’re going to get final cost of the project,” stated Mona to officials. “So, we need to get through this step first before they will guarantee financing. But they’ve already told the chief that they’ve already done a background on us, as far our ability to get financed. And they said that we meet all their criteria. So, they’re just waiting on us to get from the city an approval and move on to the second phase. Which is actually getting building plans, and everything else, and actual costs on the project for them to be able to fund what they’re going to fund. Because they have to show their investors what’s going on. They can’t just give you a blank check and say, ‘OK, here you go. It’s going to cost $100 million, $50 million, $30 million. We’re just going to give you a blank check.’ It doesn’t work that way. So, they’re looking for us to get this done. And then move on to the second phase of getting the actual blueprints and plans and what the actual costs are going to be.”

Mona noted officials could approve the permit contingent on funding.

“You guys could always pull the approval if we don’t get financed,” said Mona. “We’ve already paid tens of thousands of dollars to the city in fees and everything else – to get to this point. So, I don’t get what the problem would be to approve this contingent on getting financing.”

Crecelius further specified that what staff is looking for, in-line with the application process, is “a budget that demonstrates sufficient capital in place to pay start-up costs and at least three months of operating costs, as well as a description of sources and uses of” the project’s according funds.

“Basically, what we’re looking for is: how much is it going to cost to do this business and do you have those funds available to produce,” stated Crecelius. “Already the recommendation states that, if you approve this license, a cannabis permit will be issued once the site’s security and fire assessments are complete and a Certificate of Occupancy is issued by the building department. So, already he has a couple of things that he would have to complete before the Commercial Cannabis Business permit was issued if approved by you. So, if he wanted to add to that list – ‘proof of financial documentation’ – he would have to understand that he is continuing in the process at his own risk. That if he can’t satisfactorily provide proof of funding for the project, that the license wouldn’t be awarded.”

After further clarity on what staff is asking for from Reynolds, Mona stated, “There is no operation. So, what operation are we funding? There is no operation; (the) building is vacant. What are we funding?”

Crecelius directly asked Mona: “So, you have no idea what it’s going to cost you to get this business up and running?”

Mona responded: “No. There’s no plans; there’s nothing. We don’t know if we’re going to do this in stages; we don’t know if we’re going to do this – you know, a whole 100,000-sq. ft. or are we going to do it in 22,000-sq. ft. Or are we going to do – we don’t know yet. Until we get plans and get the full cost of what this is going to cost, we don’t know what that is. Until we move, after this step, we don’t know what those full costs are. The price of what it would cost a year ago, it’s gone up three times, alright? So we don’t know what it’s going to be in six months. So, you’re asking me to tell you, ‘Yes, I have, you know, the full project today.’ We don’t have it. I don’t know what it is.”

While noting the possibility of projects’ timelines shifting, Crecelius underlined the proof of funds as a point developers can still provide.

“And obviously, things change. We’ve had a number of projects come back after they go through their PRC (Project Review Committee) process and say, ‘You know what, instead of doing all this at once, we’d like to do this in phases. Generate some cash flow, and then develop the rest of the property.’ But they still have some idea of what is needed up-front; and they provided proof of capitalization,” said Crecelius. “So, I think what we’re just looking for is some number – that we understand could change – but an estimate of what it’s going to take to get this business up and running. And then proof that the financing is available.”

Mona stated the group backing the project to be an energy company, noting a willingness of up-to $15,000,000; however, as stressed by officials, no satisfactory proof of funds has been provided.

“It is not a loan; it is not an investment. It is an energy play with this company. So this company is an energy company – they fund FBI buildings. The chief spoke to the group – they fund FBI buildings all over the world. They want to go off the grid; so we’re getting this project funded with a co-gen,” said Mona. “A co-gen operator. So basically, they come in; they put in generators that operate the whole facility. We run off of natural gas instead of electricity. And we become very energy efficient; we’re green. They fund the project through the co-gen project that they have – they fund it, and they become our energy company.”

Mona noted that the stated energy plan would be in effect for 20 years.

“And that’s how they get paid back on the loan. So, it’s essentially a loan that they’re funding through an energy plan – if that makes sense,” noted Mona. “The company is called RWH Energy – that’s what they do. They do this for multiple groups; they’ve done this (with) multiple cannabis facilities that they’ve done, so. I don’t know how else to explain it.”

As queried by Blythe Councilmember Johnny Rodriguez, BPD Police Chief Garth Dale stated RWH Energy has noted they were able to fund the GW Blythe cannabis business; however, the entity did not provide proof via financial documents on the ability to do so.

“Guys, listen – I’m leaving here today. (And) won’t be back. This was a total waste of time,” said Mona following more back-and-forth. “It is what it is. I think you guys are making a huge mistake; but that’s your city. You guys do what you want to do.”

During public comment, the area Sheltering Wings Corporation nonprofit voiced support, in addition to two residents, toward commercial cannabis business at the location.

“You are aware that we intended to occupy approximately 10,000-sq. ft. of the old Kmart building. This was originally going to be a shared occupancy. And after many potential tenant screenings – nine – Fifth Street Funding has now been able to secure a potential long-term tenant for the building. This tenant – your project applicant – desires the entire space,” said Sheltering Wings Corporation Board member Leslie Jessop-Watkins. “(After a) long-thought decision by our entire board, we have terminated our lease agreement with Fifth Street Funding. The terms of the agreement are confidential, and our board is in full support of the application for a cannabis manufacturing site at the location. Our decision included many facets – many that have been talked about already. First, our organization and its most valued assets – our clients and our people. How much this city and community have learned about cannabis over the last several years – that was huge with regard to the ordinance. Last, the fact that we have a 100,000-plus sq. ft. building that could be generating income and jobs for our community rather than standing vacant and deteriorating. We are hopeful this project can assist our community as we continue to strive for economic viability.”

Rodriguez provided further clarity on the city’s stance.

“Almost every cannabis project – we’ve worked, bent over backwards, trying to get going; trying to open up. To some peoples’ dismay – but we do want the jobs. But we do want to have business here that meets all legal qualifications for the state to protect people. You don’t want a business, such as some of the ones that have started building and (then) gone. Why would we want to get into that position? I understand jobs – we lost Kmart, we lost over 100 jobs,” noted Rodriguez. “We want to do what’s right, with every single one of them, as best we can. I think we will find – (Mona’s) invested as much as he has – I think we will find some common ground. But you can’t have a developer say, ‘This is the way it’s going to be. Or nothing.’ I guess we can – but we have a process. It’s not that difficult; I don’t think. Many, many other cannabis companies have gone through that process. Smaller, less capitalized than this gentleman. So we have a process; we have an ordinance; we have laws we have to follow. And we work with them. We’re lucky to have a chief that’s very well-versed in the cannabis laws and its requirements (...) I hope this gentleman is successful; we want the jobs. We want that building occupied. We made ordinance changes, zoning changes – so it can be occupied. So, it’s not like we want to stand in his way.”

Blythe Councilmember Joe Halby additionally echoed the sentiment in favor of the project and more jobs, while underlining the permit application’s process.

“All the other applicants were able to provide those things in the past; we’re not asking for anything else that we haven’t asked (of) any other applicant. So, that’s the hold-up there. But, I hope that – like Johnny said – I hope that (Mona) does find some common ground and does start to work with staff. We’re not asking for much,” said Halby, further noting previous’ projects failure to deliver on hopeful ambitions to date. “(Like the) 700 jobs over on Intake. You know, another thing too about it is – you know, we let these guys come in and give them these licenses right off the bat and, unfortunately, we lost our bowling alley because of that. So, you know that’s one thing that – people need to remember that. They gutted that building and then they walked from the project. That could be a bowling alley right now still, but it’s not.”

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