Stephanie Smith was balancing one of her 2-year-old twins on a hip during a quiet morning in December when she heard a commotion outside her home in Los Angeles’ affluent Pacific Palisades neighborhood.
Someone began banging on her front door. As she moved to open it, she saw a line of police officers in her front yard and red laser gun sights coming through the windows, bouncing off her and her children.
Officers searched her home. They found and took blueprints for a kitchen remodel project and her cell phone.
At the same time, 80 miles due east in San Bernardino, dozens of officers were raiding two warehouses and another home owned by Smith. They seized nearly 25,000 marijuana plants and arrested eight men for growing cannabis in the three locations without city permits.
Smith wasn’t arrested or fined. But headlines the next day painted the 43-year-old as a “queenpin” and the “mastermind” of a multimillion-dollar illegal marijuana-growing operation.
“To be labeled a ‘drug lord’ in international press was a surprise,” she said.
“I don’t even have house plants.”
Though the mother of five boasts that she’s the biggest cannabis landlord in California, Smith insists she’s just that, a landlord. She says she isn’t involved with the marijuana businesses ran by her tenants.
Smith also insists her San Bernardino clients weren’t hiding. She says they’re part of California’s entrenched cannabis industry that’s struggling to join the emerging legal market, and that those efforts are being hampered by “corrupt” and “regressive” city policies.
Smith shrank from public attention when she was part of a very different scandal a decade ago, legally changing her last name to something that’s as anonymous as it can get.
This time, she says she’s fighting back.
Smith has filed lawsuits against San Bernardino and three other Inland Empire cities over their marijuana policies. And she’s floating marijuana ballot measures in six communities, determined to make conditions fairer for the industry that’s been so good to her.
First brush with infamy
Smith, whose name at birth was Stephanie Darcy, was raised in Minneapolis by a single working mom. She grew up dreaming of being an artist, and she still nurses a passion for painting.
After studying marketing in Boston, and using her artist’s eye to flip houses in the Phoenix area, she moved to Southern California in 2005 to attend business school at UCLA.
She was dating and working for Dr. Craig Alan Bittner, who had a successful liposuction practice in Beverly Hills. Things were going well until 2008, when a trio of lawsuits claimed Bittner had let Smith perform botched liposuction procedures even though she had no medical training. The lawsuits were eventually dismissed.
“At the end of the day, I made a regulatory mistake a decade ago and paid a $242 fine,” Smith said.
Things got more complicated when authorities caught wind that Bittner was violating medical waste laws by using fat removed from his patients to power his and Smith’s cars.
Smith said the intent with “LipoDiesel” was never to suggest that people could actually run their vehicles on human fat. She said it was simply a way to illustrate what was possible if people opened their minds to alternative energy sources. And she said they asked permission from every client, with all but one of some 8,000 patients enthusiastically consenting.
There was no word for internet “trolls” then, but Smith said she was intimidated into silence.
“If I could go back in time, I would have talked very openly about our goals for changing our view of energy,” she said. “I would have talked about my passion for the environment instead of being afraid.”
Becoming a cannabis landlord
Smith’s foray into another controversial industry started as a favor.
With the housing market in crisis a decade ago, Smith dove into commercial real estate.
A friend of a friend was growing cannabis under California’s loose medical marijuana laws as he put himself through law school in 2009. But he was struggling to find space to house his operation, with local and federal policies that made it risky for landlords to take on marijuana tenants.
Smith says she’s never been a “hardcore” marijuana consumer herself. “But like a lot of people, I wanted the laws changed.” So she let the small-time grower lease one of her L.A. properties.
The tenant finished law school and moved on. So Smith put the site back on the market, thinking its water and power stations would make for a good laundromat or nail salon.
She said she had no idea then that anyone would recognize signs of a grow house. But 45 minutes after the property went up on Craigslist, a cultivator offered double the asking price. Soon, she was in a bidding war, eventually landing a grower who paid three times the requested rent.
Stephanie Smith in San Bernardino, CA., Friday, May 18, 2018. Smith is the self-proclaimed largest cannabis landlord in California and has become a major advocate for the industry. (Staff photo by Jennifer Cappuccio Maher, The Sun/SCNG)
Stephanie Smith helps canvas for signatures, for a San Bernardino ballot initiative, with Alexander Navarrette in the Verdemont neighborhood of San Bernardino, CA., Friday, May 18, 2018. (Staff photo by Jennifer Cappuccio Maher, The Sun/SCNG)
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Today, she said her company, Industrial Partners Group, owns two million square feet of industrial space. Most of it is in Southern California, but she has property as far north as Sacramento. And, while she rents buildings to Walmart and bakeries, many of her warehouses are leased to cannabis growers and manufacturers.
One reason Smith believes she’s been so successful is that many cannabis entrepreneurs were accustomed to dealing with landlords who refused to sign leases or made them use fake names so they could feign ignorance. Smith said she tried to “inject some professionalism” by treating them like other valuable tenants.
She’s also discreet.
B-Real, stage name for lead Cypress Hill rapper Louis Freese, leases a Downtown L.A. warehouse from Smith. When asked if she has any other famous tenants, Smith pauses, flashes her frequent smile and says: “I have a nice reputation among hip-hop and sports celebrities.”
Smith considers her work with the industry a form of activism. But this election cycle, she says, is different.
“This is my first time taking it to the streets.”
Raid prompts activism
Smith wore a gray cotton shirt, jeans and colorful sneakers on a recent Friday evening as she joined a political support team canvassing San Bernardino’s Verdemont neighborhood. The goal is to collect the 8,602 signatures needed to get her proposed cannabis measure on the November ballot.
Residents seemed largely receptive, though they’ve been through this before.
When Californians voted to legalize recreational marijuana under Proposition 64 in 2016, San Bernardino voters also approved Measure O, which laid out a framework for cannabis businesses to operate in town.
The measure was needed because Prop. 64 gives cities the rights to regulate businesses in their borders. And a study of local marijuana policies shows more than two-thirds of cities in California still bans all marijuana ventures.
San Bernardino awarded its first business permit under Measure O last year, to the owners of Flesh Showgirls. They now run a strip club in one half of the building and Captain Jack’s marijuana dispensary in the other.
But multiple lawsuits were filed over Measure O, and in December a judge threw the initiative out because, he said, it used spot zoning to create a monopoly that allowed just two shops in town. That ruling is being appealed.
Smith says her San Bernardino tenants had applied at least eight times for licenses to operate their businesses legally under Measure O, inviting city officials to inspect their high-end security and odor filtration systems.
A week after the raids, she said two of the tenants received letters from the city saying they could legally grow marijuana if they paid $140,000 in fees. Smith said they paid up but still haven’t been cleared to operate, leaving 100 people out of work. And she said police have been called 10 times since the raids over reports of vandalism and homeless people squatting in the vacant buildings.
The city is now accepting applications under its own licensing scheme. But a new policy says companies previously deemed to be operating illegally aren’t eligible for permits, leaving Smith’s clients with no route to run legal cannabis businesses in San Bernardino.
City and police officials declined to comment on any of Smith’s claims, citing pending and potential litigation.
Spurred by what happened in San Bernardino, Smith has filed additional lawsuits against Colton, Hemet and Moreno Valley.
Concerns raised in the suits include Colton’s requirement that residents get permission from the city if they want to grow marijuana plants at home for personal use, as allowed under Prop. 64. And that anyone working for a marijuana business in Moreno Valley, from contractors to janitors, first get a city permit.
Her team is also collecting signatures for marijuana ballot measures in Colton, Hemet, Upland, Bakersfield and Kern County.
The initiatives are tailored for each area, Smith said. That means Central Valley policies support a cultivation-heavy market while San Bernardino is encouraged to put its affordable industrial properties to work by becoming a manufacturing hub, making vape pens and edibles popular with cannabis consumers.
California is close to an inflection point, Smith believes, where marijuana businesses won’t have to hide or beg cities to let them in. When that happens, Smith said she hopes Southern California cities will have fair policies in place that position them to compete for the jobs and tax revenue the cannabis industry can generate.
And Smith, of course, will have properties ready to house those valuable tenants.
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