SAN FRANCISCO—On October 24, the San Francisco City Attorney David Chiu filed a lawsuit against the owners of two Bayview warehouses for aiding and abetting their tenants in illegally cultivating over 5,800 cannabis plants and evading taxes and regulatory oversight.
The lawsuit was filed against the property owner P.A.A. Property, LLC and the LLC’s manager and president, David Chi-Yu Lai, who profited from leasing warehouses used for illegal cannabis cultivation and undermining the legal cannabis industry.
California legalized cannabis for recreational use in 2016. In order to cultivate cannabis for commercial purposes, operators in San Francisco must have a license from the California Department of Cannabis Control (DCC) and a permit from the San Francisco Office of Cannabis (OOC).
Since 2020, P.A.A. Property, LLC owned two warehouses in the Bayview located at 1510 Wallace Avenue and 1355 Fitzgerald Avenue. Lai is the manager of P.A.A. Property, LLC and is directly involved in the operation, management, and maintenance of both properties. P.A.A. Property, LLC leased 1355 Fitzgerald Avenue and 1510 Wallace Avenue to tenants who illegally cultivated cannabis at the respective properties.
“The Office of Cannabis, Department of Cannabis Control, and various City departments have been working side by side to enforce against unregulated cannabis businesses in San Francisco,” said Nikesh Patel, Director of the Office of Cannabis. “Today’s filing by the City Attorney represents a critical step in elevating that work and sending a clear message that unregulated cannabis businesses and those associated with them will be held accountable. We look forward to continuing this necessary work together and supporting the legal cannabis industry that plays by the rules.”
Lai admitted knowledge of the illegal operations at both properties only after being confronted with surveillance photographs showing him entering one of the warehouses. By allowing the tenants to engage in unpermitted and unlawful cannabis cultivation, the defendants assisted their tenants in violating the law and avoiding regulatory oversight.
