Emails given to FBI reveal state purged weed records, approved license swap

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Gov. Steve Sisolak signing a Cannabis Compliance Board bill as Taxation Department Director Melanie Young looks on. (Governor's press office photo)

When state employee and declared whistleblower Rino Tenorio went to the FBI alleging potential wrongdoing by marijuana regulators, he took along some possible evidence — mostly pictures of department emails. 

That visit with the feds likely catapulted Tenorio to the top of Department of Taxation Director Melanie Young’s list of employees suspected of commiserating with unsuccessful marijuana establishment applicants who are suing the department, alleging corruption and/or ineptitude in the licensing process.    

Now, Tenorio fears the attorneys hired by the state to represent him in that lawsuit are acting in the state’s best interest, not his.

Tenorio, who was subpoenaed by a marijuana industry plaintiff to testify in the lawsuit, was represented at a December deposition by private attorneys contracted by the Attorney General’s office, which represents the Department of Taxation in the lawsuit.

It was a recent email from one of those government-contracted attorneys, Robert Warns, that had Tenorio questioning their allegiance.

“… if the Department uncovers information or conduct in the course of its investigation of you that the Department deems to be criminal in nature, they likely could use that information for criminal purposes,” Warns wrote last week to Tenorio. “In that regard, as you testified in your deposition, you copied State files and provided them both to your prior employment counsel and the FBI, which they could perceive as potentially criminal.”

“Are they trying to scare me into silence?” Tenorio asked. 

The email came six weeks after Tenorio’s deposition and just days after the Current reported Tenorio turned to the FBI with his concerns about marijuana regulation.  

“They are trying to intimidate me,” Tenorio says of his attorneys and Director Young. “It’s witness tampering.”

“I’m going to uncover every stone I can to find out who this person is,” Young vows in an audio recording obtained by the Current. “…if I find out who’s sharing this information outside the department, I’m going to come down like a hammer.”

Tenorio, an auditor with the Department of Taxation’s Marijuana Enforcement Division, says he’s been targeted by Young, who opened an internal investigation of him a year ago after he told colleagues he was approached by an unsuccessful dispensary applicant alleging corruption on the part of a Department of Taxation official.     

Young then turned the investigation over to the Department of Public Safety’s state police, according to documents.

“On Oct. 11, 2019, Mr. (Tyler) Klimas our new deputy director told me that HR wants to have a word with me and not to worry but as we both went down to HR he led me to a room with a DPS officer there waiting to investigate me again and the complainant again is Melanie Young,” Tenorio wrote in correspondence with the Equal Employment Opportunity Commission. “This is like calling the police.” 

Klimas, who was tabbed by Gov. Steve Sisolak to head up the new Cannabis Compliance Board, slated to take regulatory control of the industry this year, did not respond to requests for comment on this story.

Sisolak also failed to respond to requests for comment.

“I don’t know why the attorneys are trying to scare me or if they are trying to intimidate me so I won’t talk anymore,” Tenorio said in an interview. “They knew what I was going to say in my deposition. Why didn’t they warn me at the time?” 

Warns refused in an email to the Current to say why he waited six weeks to tell Tenorio his testimony could open him to a criminal investigation.

“I met with the FBI again,” Tenorio said Tuesday. “They told me it’s not a crime to give them evidence.”

Nevada law (NRS 281.621) declares that state employees “are encouraged to disclose, to the extent not expressly prohibited by law, improper governmental action, and it is the intent of the Legislature to protect the rights of a state officer or employee and a local governmental officer or employee who makes such a disclosure.”

Federal law prohibits supervisors from taking personnel actions against employees who disclose information they reasonably believe to be evidence of a violation of the law, waste of money, abuse of authority or risk to public health and safety.

But the Trump administration is increasingly cracking down on so-called whistleblowers.

“The Attorney General has stated that investigations and prosecutions of unauthorized disclosure of controlled information are a priority of the Department of Justice,” Assistant Attorney General of National Security John Demers said in 2018 when a U.S. Senate employee was indicted for allegedly making false statements to investigators about leaks to reporters.

The employee, James A. Wolfe, was sentenced to two months in prison after pleading guilty.

Records purged

Among the items Tenorio turned over to the FBI are internal emails revealing the chief investigator of the state’s marijuana program, Damon Hernandez, protested in 2018 when then-deputy executive director Jorge Pupo instructed an administrator to direct auditors and inspectors to purge records of marijuana sales to minors at three Las Vegas dispensaries.  

Pupo is no longer employed by the state. He was placed on leave after court testimony revealed his questionable meetings with applicants and their representatives in the days leading up to scoring for the valuable licenses.   

“Please remove the investigation SODs (Statements of Deficiencies) regarding self-reported incidents of sales to a minor from the following: Integral, Nevada Organic Remedies, Henderson Organic Remedies,” marijuana program administrator Karalin Cronkhite wrote, on behalf of Pupo, in April 2018 to Tenorio and another employee. “These investigations should be removed from the log.”

“It turns out there are three separate incidents on three separate dates,” Chief Investigator Damon Hernadez responded to Cronkhite’s email regarding Integral Associates Inc., the parent company at the time of Essence dispensaries. “In addition it appears the manager lied about the number of incidents of sales to minors stating that there was only one when there were three.” 

But Pupo maintained his position that the records should be purged, according to a subsequent email on his behalf, in which Cronkhite told auditors and inspectors to know the regulatory history of the establishments they visit.

“If they are consistently self-reporting incidents, this is something we can look into,” Cronkhite wrote. 

“How are we supposed to know the history if there is no log?” Tenorio asked rhetorically during an interview with the Current.

Under Nevada law, four instances of selling marijuana to a minor within a two-year period can result in license revocation and the inability to apply for additional licenses.

“The 2 dispensaries are those that were awarded most of the dispensary licenses in December 2018,” Tenorio wrote in a July 2019 email to the FBI. “The 2 dispensaries could have been disqualified from even applying for a dispensary license if legal action was pursued on the state part.” 

Integral Associates, which won all eight of the licenses for which it applied in 2018, was purchased that year for $290 million by Green Thumb, a national giant in the cannabis industry, with 95 retail locations in 12 states, according to its website.   

Nevada Organic Remedies is the parent company of The Source, which won seven of eight applications it sought in 2018. 

“The way we conducted ourselves is the epitome of compliance and the model that should be encouraged,” says Brandon Wiegand, regional general manager of The Source, regarding the sale of marijuana to a 19-year-old.

“What kind of message are we sending if you disqualify a licensee or harshly penalize them for being honest and self-monitoring?” Weigand said in response to Tenorio’s contention that the violation could have been disqualifying.

Wiegand says the company terminated an employee who “had deliberately circumvented established processes to allow this person into the dispensary even though they were not of legal age.” 

The Department of Taxation did not respond to inquiries from the Current

Identity issues 

When the marijuana dispensary Thrive was under the gun last year to use or lose a City of Las Vegas special use permit for a new West Sahara Avenue location by Aug. 21, an injunction imposed by Judge Elizabeth Gonzales against all successful 2018 dispensary applicants prohibited Thrive’s owner, Cheyenne Medical, from opening.  

The Department of Taxation, which oversees the marijuana industry, stepped in and approved an unprecedented orchestration of regulatory musical chairs.

“RD (recreational dispensary) 027 currently located at 1112 Commerce is moving to 3500 Sahara,” attorney Amanda Connor, who represents Cheyenne Medical and its sister corporation, Commerce Medical, wrote in an email to the state in late July 2019.  “RD 264 currently located at 3500 Sahara is moving to 1112 Commerce. D (Medical dispensary) 027 will remain at 1112 Commerce. Does that help?” 

“The law and regulations provide for ‘combined marijuana establishments’ which are establishments with identical ownership and that share the same parcel of real estate,” says former Nevada Assembly Speaker John Oceguera, who also represents Commerce Medical and Cheyenne Medical.

Oceguera and Connor dismiss the fact the two companies are owned by corporations with separate identities and tax identification numbers.  

“They are both single-member LLCs,” says Connor of CPCM Holdings, the shared corporate parent.  

Attorney Dennis Prince, who also represents the two corporations, says the Department of Taxation “looks past the corporate identity” to the controlling owners who call the shots.  

But other marijuana industry attorneys contend a common parent company does not constitute identical ownership.

“Corporations have identities,” said one attorney who asked not to be named because she represents clients in the industry. “It’s the license that has value. It’s not interchangeable between corporations. What happens if the dispensary is sued? Are both corporations liable?”  

Oceguera, who said he would inquire about liability, has yet to respond.

Corporations are widely recognized to possess an identity separate from their owners, which offers shareholders protection from liability claims.

“This move by our office to allow dual licenses to be split up in different locations is unprecedented,” Tenorio wrote in a 2019 email to the FBI.

The Department of Taxation failed to respond to numerous requests for information and documents for this story.

A state hearing regarding Tenorio’s whistleblower claim is scheduled for March.

Dana Gentry
Reporter | Dana Gentry is a native Las Vegan and award-winning investigative journalist. She is a graduate of Bishop Gorman High School and holds a Bachelor's degree in Communications from the University of Nevada, Las Vegas. Gentry began her career in broadcasting as an intern at Channel 8, KLAS-TV. She later became a reporter at Channel 8, working with Las Vegas TV news legends Bob Stoldal and the late Ned Day. Gentry left her reporting job in 1985 to focus on motherhood. She returned to TV news in 2001 to launch "Face to Face with Jon Ralston" and the weekly business programs In Business Las Vegas and Vegas Inc, which she co-anchored with Jeff Gillan. Dana is the mother of four adult children, three cats, three dogs and a cockatoo.