San Francisco is suing the owner and property manager of two Bayview warehouses that were illegally operating as cannabis grow houses, the city announced Thursday.
The warehouse tenants had been cultivating nearly 6,000 marijuana plants without a license in violation of city and state laws, according to City Attorney David Chiu. The city alleges that the property manager David Chi-Yu Lai was aware of the operations and profited from leasing the warehouses for the illegal activity.
Chiu said growing cannabis illegally directly impacts legal growers and amounts to unfair business practices by flooding the marijuana market with cheaper product since not paying taxes or regulatory fees keeps costs lower.
“That’s why it’s so important,” Chiu said in a phone interview with The Standard. “We have many lawful operators and small businesses that have invested their life savings in playing by the rules and this undermines their industry.”
California legalized recreational cannabis in 2016. In order to grow it, operators in San Francisco must have a license from California’s Department of Cannabis Control. The two warehouses were leased by Lai’s company P.A.A. Property, LLC to two separate tenants — one renting 1355 Fitzgerald Ave. and the other renting 1510 Wallace Ave. — both of whom used the space to grow pot.
During its investigation of the two properties in 2023, the state “seized 4,485 mature cannabis plants, 1,332 immature cannabis plants, and nearly 300 pounds of cannabis shake,” or finer consistency buds.
Aside from the impact on the local industry, the grow houses posed major safety risks to the surrounding residential Bayview community, Chiu said. Court documents detail code violation after code violation — exposed wires, loose CO2 tanks, missing sensors and warning systems — that could have resulted in an explosion or fire.
Chiu said the Bayview grow houses were just two of many illegal cannabis growing operations “shirking the rules and undercutting legal pot businesses” across the state. But for San Francisco, this was a “very significant operation” given the thousands of plants that were found in the Bayview warehouses, he said.
Lai did not respond to requests for comment. According to the city, he admitted to knowing about his tenants’ illegal activity after surveillance images showed him entering one of the houses.
While it is not yet clear whether Lai was getting a cut from the tenants, Chiu said that, based on the scale of the operation, “clearly someone was making significant money.”
The warehouse tenants had been cultivating nearly 6,000 marijuana plants without a license, according to City Attorney David Chiu. Read More