Deseed the peppers. Turn your stove on medium heat and place the peppers in a non-stick frying pan or cast iron skillet.
Cook for 30-60 seconds on each side until it changes color. Remove the peppers from the pan and place in the bowl with the boiling water and let sit for 30 minutes.
Brush olive oil and salt on the onions, garlic and tomato and place in the skillet and cook each side for about 2-3 minutes. Cook until charred. Remove garlic as soon as the color changes.
Place the vegetables on medium-high heat and cook for about 5-7 minutes turning as necessary until they are charred. Remove the garlic as soon as it changes color as you do not want this to burn.
Remove the peppers from the bowl and reserve the water. Place all the peppers, garlic, tomato, onion, salt, pepper, and cinnamon into the vitamix or blender with 1 cup of the reserved water. Blend for 45 seconds. Set aside.
Shred the stems of the mushrooms using a fork to pull individual strands apart.
Heat oil in a thick bottom pan and sear the mushrooms on high heat so they get nice and brown. Be sure to press down and release the liquid. Stir often -Remove from pan and set aside.
Heat oil in a pan and fry onion for about 8 minutes until soft and translucent. Stir often. Add the mushrooms to the pan and cook for another 3-4 minutes.
Add sauce, 2 cups of the reserved water, bay leaves, salt, pepper and sugar to taste. Bring to a boil for 5 minutes.
Reduce the temperature to medium heat and cook for 30 minutes until the sauce thickens.