Black market marijuana bust leaves bruises on Colorado's marijuana industry

Published: Jul. 25, 2017 at 6:11 PM MDT
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Owners of a marijuana head shop in Colorado Springs were allegedly running a criminal enterprise that illegally distributed about 200 pounds of marijuana.

Thirteen people have been indicted in connection to the case, including Hoppz' Cropz owners Joseph Hopper, Dara Wheatley, Joseph Sergio Crivici and Adam Donaldson.

The Colorado attorney general, flanked by several local law enforcement leaders, announced the indictments Tuesday.

"They are alleged to have conspired to purchase medical marijuana from licensed facilities and then resell it for profit under the guise of the marijuana being offered as a free giveaway with the purchase of a low-cost item at a dramatically inflated price," said Attorney General Cynthia Coffman.

According to Coffman's office, one of the techniques they were using to move the marijuana was through selling cheap cigarette lighters at a high price while offering 1 gram of marijuana for free. For example, the shops would sell a lighter for $15 that was only worth 5 cents and then would "give away" 1 gram of marijuana for free. The street value of 1 gram of marijuana is about $15. By doing so, the business was evading paying fees regularly associated with retail recreational marijuana dispensary licensure and avoided excise taxes.

"Hoppz' Crops, its owners and managers and its employees, failed to report proper figures on nearly half a million dollars in retail sales," Coffman said.

Coffman said the employees also avoided paying taxes by receiving "under the table" wages, thereby evading the associated wage withholding taxes otherwise due to the Colorado Department of Revenue.

"Managers allegedly instructed to works to inform any government official who inquired that they [salespeople] were merely volunteers working at their respective stores without pay," Coffman said.

"The defendants were operating in plain sight, pretending to run a legitimate business. In fact, their behavior was not really any different than what we see from other drug dealers. They were still illegally securing drugs and selling them for profit."

The defendants are charged with a violations of the Colorado organized crime control act, money laundering, evasion of taxes, attempting to influence a public servant, possession with intent to manufacture or distribute marijuana, and other alleged crimes. As of 5 p.m. on Tuesday, some of the suspects had been arrested. Others had yet to turn themselves in, according to the state attorney general's office.

"t's a delicate balance to be a law enforcement and to deal with a product, a commodity, that was illegal one day and legal the next," Coffman said. "It is a challenge for all of us."

At the public announcement of the indictment, 4th Judicial District Attorney Dan May said marijuana is the gateway drug to homicide.

"Colorado Springs Police Department put out this year we had 22 homicides in Colorado Springs last year, 2016. Eight of those were directly marijuana. That isn't somebody just using marijuana, that is somebody being murdered over legal marijuana grow in their house. Murdered over an illegal marijuana grow."

May went on to say local authorities are overwhelmed with trying to stop the crime involved with marijuana.

"Marijuana is pouring out of Colorado," May said. "It's much more valuable in the streets of New York City than it is in the streets of Denver. Colorado's system is terrible."

May also stated the homeless population has gone up 50 percent each year in Colorado Springs since marijuana was legalized.

The Southern Colorado Cannabis Council released a statement in regards to May's comment on the link to marijuana and homicide. Part of the statement released:

"Today, District Attorney Dan May made some very concerning comments linking cannabis use to murder. He stated that, “Marijuana is the gateway drug to homicide, in our community and across the state and people need to start recognizing that." This statement is utterly false. Study after study has shown that there is no correlation between cannabis use and violent crime. We would ask the District Attorney to retract his statement or provide proof of correlation between the two. This is an extremely dangerous statement. It is dangerous to Colorado’s fastest growing industry and it is dangerous to anyone associated with cannabis Colorado."