Denver Cannabis Business Owners Pleads Guilty to Drug and Racketeering Charges

Denver Cannabis Business Owners Pleads Guilty to Drug and Racketeering Charges

Most Denver cannabis businesses work hard to comply with Colorado’s cannabis laws. In any industry, there are always exceptions, and three owners of a large cannabis retailer, Sweet Leaf, pleaded guilty on January 25 to charges of drugs and racketeering. The three men made a plea deal and will each serve one year in prison, with a year of parole for the drug charge and a year of probation for racketeering.

Looping

The practice for which Sweet Leaf’s owners were charged is known as looping. Under Colorado law, a customer can only purchase one ounce of cannabis daily, or the edible equivalent. Looping occurs when the same customer returns to the same store and purchases more product on the same day. These illegal sales tend to head to the black market.

According to prosecutors, approximately two tons of cannabis from Sweet Leaf stores supplied the illegal market. Investigators found that Sweet Leaf’s owners not only knew about, but actively encouraged and planned the looping, pushing the illegal sales.

The Investigation

The investigation by Denver law enforcement began back in November 2016, when a neighbor of one Sweet Leaf location notified the police. The neighbor alleged he had witnessed a customer traffic pattern, in which a number of people parked their vehicles near his home, returned with cannabis from Sweet Leaf and then immediately went back and bought more, repeating the looping several times.

Acting on the information, police surveillance showed various looping actions, with one individual going back and forth to Sweet Leaf ten times. When that man was stopped by police, he admitted that employees told him he could buy more than one ounce daily if he parked his car away from surveillance cameras.

However, when the man was booked, it turned out he had given the police officer a false name and he was actually a person with felony drug charges pending in several states. The police then obtained a search warrant and found roughly 10 pounds of cannabis between the individual’s house and his car.

A plainclothes detective joined the loopers in a sting operation, entering and exiting the store seven times and buying a total of seven ounces of cannabis inless than 90 minutes. He noted that no store employee confronted him at anytime. Similar undercover operations went on for the next year.

Inside Information

In addition to surveillance and stings, the police received inside information from a Sweet Leaf budtender who also worked as a security guard for a company guarding Sweet Leaf locations.

He told them he challenged both Sweet Leaf and security officials regarding customers buying more than permitted amounts, and was told as long as the customer receives a mandated note with their purchase regarding Colorado cannabis laws – and they leave the surveillance cameras’ view – it wasn’t a problem. The former budtender also said that if someone was arrested at one Sweet Leaf location, looping moved to another Sweet Leaf site.

Five Customers Arrested

The owners of Sweet Leaf aren’t the only ones facing prison and probation. So are some of the five customers arrested during the investigation. The individual who gave police a false name pleaded guilty to marijuana possession and is also facing a year in prison, while others have received probation or have not yet been sentenced.

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Joseph Tully

Joseph Tully is a certified specialist in criminal law by the California state bar and has been recognized as a Top 10 Criminal Defense Attorney by Attorney and Practice Magazine. He is also one of an elite few having earned the designation of The Nation's Top 1% by the National Association of Distinguished Counsel.

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