Today, Colorado Attorney General John Suthers' office announced that a state grand jury indicted Conley Hoskins, Dallan Dirkmaat, Brenden Joyce and nine others "for defrauding investors and running an illegal medical marijuana grow operation," reads the release. "The twelve indicted individuals face 71 criminal counts related to the Colorado Organized Crime Control Act (COCCA) and felony charges for tax evasion, securities fraud and money laundering."
More from the release:
“The first red flag that something was askew came from the careful oversight of Colorado’s Department of Revenue,” said Deputy Attorney General Matthew Durkin. “These individuals stole money from their investors to pay off personal debts and hid their illicit proceeds from law enforcement and taxing authorities and illegally expanded their medical marijuana production capabilities.”
The other nine indicted individuals are David Krause (DOB 03/27/51) Nathan Newman (DOB 09/29/81), Kurt Criter (DOB 03/09/73), Yesenia Melendez (DOB 08/26/90), Carlos Meza (DOB 09/29/89), Ryan Tripp (DOB 10/14/79), Dialyne Parker (DOB 03/09/76), Gerald Searle (DOB 11/06/78) and Audra Wimer (DOB 02/03/87).
The indictment alleges an elaborate pattern of racketeering that began in January 2008. Hoskins, Dirkmaat and Krause are accused of engaging in a scheme to buy, sell, deal, cultivate and/or distribute medical marijuana in Colorado and at least one other state while committing securities fraud, theft, forgery, evading taxes and attempting to influence public servants through deceit. The enterprise evolved into a distribution ring, in part, because many members had longstanding personal and business connections with one another.
Hoskins, and Dirkmaat’s ran business ventures together in construction, car washes and medical marijuana dispensaries. The dispensary that Hoskins owned and managed occasionally used the legal services of Dirkmaat and were co-located in the same building as the People’s Law Firm. The indicted dispensaries are Jane Medicals, LLC, and All Care Wellness Centers, LLC.
Over time, Hoskins’ business interests evolved and he drew on his personal relationships and business experiences to raise capital from investors. He then used those investor funds to run illegal grow operations in Adams, Denver and Larimer Counties.
The filing of criminal charges or an indictment is merely a formal accusation that an individual committed a crime. Each defendant should be presumed innocent until proven guilty. These cases will be prosecuted in Jefferson County by the Colorado Attorney General’s Office. The next appearance for most of the indicted individuals is July 9, 2013.
In this week's CannaBiz column, we wrote that House Bill 1114 — the effort to limit the amount of THC allowed in a Colorado driver's blood to 5 nanograms per milliliter — had passed out of committee and would likely see the full House before the end of the week.
As luck would have it, the full House gave the bill its first consideration yesterday, reported the Denver Post, and it seems like making it to the Senate for final consideration won't be a problem.
Two amendments to the bill passed Tuesday prevent a person's status as a medical-marijuana patient from being used as evidence of impairment or probable cause for a blood test. The bill requires a second, recorded vote in the House before heading to the Senate, but its passage in the House seems assured. No representatives spoke against the bill Tuesday.
The paper also noted that a bill that would allow Colorado MMJ businesses to take state tax deductions also passed the House.
Coming on the heels of an audit that showed major inefficiencies and incompetencies at the Medical Marijuana Enforcement Division, a part of the Colorado Department of Revenue, state legislators are seriously doubting the MMED's ability to also regulate recreational marijuana.
From John Ingold, at the Denver Post:
After [Rep. Brian] DelGrosso's comments Thursday, committee chair Rep. Dan Pabon, D-Denver, abruptly called a recess, and committee members moved to an adjacent room to vent their frustrations.
"They need to tell us how they will do things differently," Sen. Cheri Jahn, D-Wheat Ridge, said of marijuana regulators.
"If you're in the real world, all these flipping people are gone," DelGrosso said.
"Heads should roll," said Sen. Vicki Marble, R-Fort Collins.
That theme continued in another Post story, by Eric Gorski, about outrageous expenditures by the MMED — then led by longtime regulator Matt Cook — including $250,000 spent on furniture in one year.
"I am speechless," said Rep. Angela Williams, D-Denver, the committee chairwoman. "It appears there was a shopping spree."
"Apparently," said Sen. Steve King, R-Grand Junction, "we haven't learned anything from $400 federal hammers."
The Colorado Office of the State Auditor, a state agency responsibly for checking facets of government, today released the first of two reports that shows the Medical Marijuana Enforcement Division has failed to fully implement its mission to regulate and enforce in a variety of ways.
"The Division has not adequately defined the oversight activities it must perform," the report concluded, "or determined the resources it need to implement the regulatory system envisioned by the General Assembly to oversee Colorado's emerging medical marijuana industry."
In a press release, the Medical Marijuana Industry Group says the state needs to do as good a job with compliance as the business owners it sometimes hammers on.
"The [MMIG] calls upon the state to properly fund the enforcement division responsible for oversight of the medical marijuana industry," says Michael Elliott, the group's executive director, in the release. "The responsible business owners who are members of MMIG are doing their part to make sure the system works. Our members follow the law and expect state officials to give the Medical Marijuana Enforcement Division the budget it needs to ensure proper enforcement. We want more inspectors and oversight of the industry."
The Associated Press had one Colorado legislator's reaction to the news:
"We can't move forward unless we have a baseline. We have a baseline now," said Barbara Brohl, head of the Department of Revenue, which oversees the MMED. She assured lawmakers hearing the audit, "When we come back here in one year, this will be significantly different."
Brohl pointed out significant staff turnover in the MMED, which has to lay off a majority of its staff because of budget shortfalls. Her argument got a sharp response from Sen. Lois Tochtrop, D-Thornton.
"It's not an excuse," Tochtrop said. "You have guidelines, by statute and by rule, and they should be followed."
On Friday, BuzzFeed (your favorite work time-waster and mine) posted an article with an anonymous edibles baker in California, complete with a lovely spread of photos of the baker at work.
Author Emily Fleischaker followed the owner of Ruby Doobies, who works out of Los Angeles. While the cookies and cakes RD offers ring familiar with those of us in the Centennial State, the business side of her operation is decidedly different.
For one, RD has no website ("it's not considered wise to have one," the baker says, alluding to her reasons for anonymity) and she barters for her shake. Her products are also sold not with prices, but donations, since you can't make a profit off medical marijuana in California. All of this leaves RD on terribly precarious ground.
Like Colorado MMJ companies, the industry is inherently hazardous, from the lack of bank backing to the schism between state and federal laws. However, RD faces the added danger of a highly unregulated system. California MMJ is a somewhat underground industry as compared to that of Colorado, which is litigiously tracked from seed to sale.
But you knew all that. And you may also know that Colorado's own Jessica Catalano is making edibles incredibly easy to do at home. When the Indy interviewed Catalano last July, she was just about to put the finishing touches on her cookbook The Ganja Kitchen Revolution, a treasure trove of recipes that include your basic sweets as well as medicated soups, entrees, drinks and breakfast items. Most notably, Catalano breaks down the self-medicating process with a precise dosing chart that converts THC and bud amounts to conventional kitchen measurements. You can now buy it here.
Meanwhile, RD's baker is still working out of her home kitchen 20 to 30 hours per week, and hopes to soon move on to savory edibles. If the response from a hundred BuzzFeed commenters from across the country means anything, she has the support of the people.
The other day we got an e-mail letting us know the video was ready. Strap on your YouTube glasses, and fire it up. (The action gets going around 1:35.)
——— ORIGINAL POST: Nov. 30, 2012, 1:02 P.M. ———
The Rocky Mountain Kyngz really require no explanation. Like the picture of a dollar bill on their Facebook page shows, it's all about the "Richest Dollar Pursuit." (I mean, they attended Stack Your Money University.)
Anyway, the Kyngz just seem to be a fun-loving bunch working to go hard and celebrate a certain lifestyle. To that end they've released their latest joint, titled "Amendment 64." (Look for the video soon.)
Some of our favorite parts:
• "I'm from that smoky state, you can see us from the coast / Rocky Mountain Kyngz, yeah we smoke the fuckin' most / Legalized weed, man, thanks to your votes / What up Colorado, roll another one to make a toast"
• Them Colorado chicks smoke the most, bakin' them goodies, blowin' clouds like a ghost / RMK, yeah we on the way, smokin' good all day, from that dispensary"
• "Been legal, red-card holder / I could smoke from the Springs up to Boulder / Without one weight on this kid's shoulders, now everyone statewide can — thank you voters / The police-man can't trip no more / Feds stay out this unless you want civil war"
This upcoming Tuesday Raul Perez and the University of Colorado at Colorado Springs chapter of Students for Sensible Drug Policy are hosting an informational session on the effects of Amendment 64 "and what we as citizens can expect," reads an e-mail from Perez. "Learn about the personal protections, the retail and taxing process, and the incredible importance of Hemp.
"The event will take the form of two Q&A sessions, the first will be led by Raul Perez and Michael Mangin Chairs of SSDP and [Young Americans for Liberty] at UCCS respectively. Then we will have an audience driven Q&A," Perez writes. "Our panel members are Mark Slaugh, Jason Lauve and Loring Wirbel. Mark is the CEO of iComply, a local cannabis regulatory company, and he was the southern Colorado director for the pro a64 campaign. Jason is the publisher of Cannabis Health News Magazine and is a longtime hemp activist. Loring is the Pikes Peak ACLU Chapter Chair and has long advocated for the rights of American citizens."
The Contra Costa Times is reporting that yesterday Aaron Sandusky, a 42-year-old former dispensary owner, was sentenced to 10 years in federal prison for conspiring to manufacture marijuana; possession with intent to distribute; and conspiring to operate a drug-related premises.
Sandusky faced as much as life in prison, but U.S. District Court Judge Percy Anderson gave him the minimum sentence possible under federal guidelines.
"In this case, as the defendant was warned, the court's hands are tied," Anderson said. "Whether you agree with the defendant's position or not." ...
"I want to apologize to those with me and their families who have been victimized by the federal government who has not recognized the voters of this state," Sandusky said in court.
Though the case is by no means unique, it's a good reminder that, whether you think it justified or not, pioneers in the cannabis industry risk it all.
Just when you think the saga of leukemia sufferer (and medical marijuana patient) Bob Crouse has ended, it pulls you back in. Finally able to return to normalcy after winning his protracted trial with the help of the public defender's office, and then winning the return of his marijuana, seized as evidence, with the pro-bono help of attorney Clifton Black, Crouse is confronting a final hurdle: repayment.
The Independent has learned that on Dec. 27, Black and attorney Charles Houghton filed suit against the city of Colorado Springs for its failure, via the police department, to maintain the marijuana as required in Amendent 20. Though Black declined to elaborate on the case's details at this time, it has come out previously that the roughly 60 pounds of seized crop — some 55 plants and 6.5 pounds of matter — were worth around $307,000.
It became an issue after Crouse was arrested in May 2011, and charged with possession and distribution of marijuana. When police collected the plants as evidence they cut them down, as opposed to just taking clippings. The problem is that the constitutional amendment, passed by Colorado voters in 2000, says, "Any property interest that is possessed, owned, or used in connection with the medical use of marijuana or acts incidental to such use, shall not be harmed, neglected, injured, or destroyed while in the possession of state or local law enforcement officials."
"I'll be very brief," says Black. "We just feel that our client should be compensated for the damage to his property."
City Attorney Chris Melcher's office has said Melcher will be available for comment later in the day; this post will be updated when we hear back.
For more on Crouse, see our 2011 profile here; our story detailing the string of losses District Attorney Dan May has experienced with recent MMJ cases (which include Crouse's June acquittal, and Ali Hillery's acquittal in December) here; and everything else related here.
• In Wednesday's Independent we've got an interview with Colorado Springs Rep. Mark Waller on what's coming up for the third attempt at passing legislation that codifies how much THC can be in the blood of Colorado's drivers. In the meantime, though, the Daily Sentinel in Grand Junction has a pretty good look at what's happening.
"Under the justice committee bill that [Sen. Steve] King and incoming House Minority Leader Mark Waller are to introduce, the bill will call for a 5-nanogram standard, but make it a 'rebuttable inference' law," writes Charles Ashby. "That’s legalese for something that’s not quite certain, and therefore, rebuttable with expert testimony in a court of law."
• The first marijuana-focused private establishment opened today in Denver at 4:20 p.m. Club 64, the Denver Post reports, will disclose various meeting sites to its members via its website, which people can apply to join for $29.99 (payable via PayPal).
The rules around cannabis clubs have yet to take shape, which becomes all the more clear in this pure-gold passage detailing the full-circle run around the reporter, Electa Draper, got from a string of government officials.
"Nothing in the amendment language permits consuming (marijuana) openly and publicly," said Mark Couch, spokesman for the state Task Force on the Implementation of Amendment 64.
The rules on any clubs or lounges, Couch said, "will be sorted out in the months ahead by legislators, law enforcement and the task force." He suggested law enforcement should be contacted for clarification.
Denver Police spokesman Sonny Jackson said the department would have to consult with city attorneys. Denver Assistant City Attorney David Broadwell said he had no comment, except the city awaits further guidance from the state.
State Attorneys General Office spokeswoman Carolyn Tyler said the task force should be asked questions related to implementation of Amendment 64.
Today, we received a copy of the notice Colorado Springs Police Chief Pete Carey distributed to patrol officers around the middle of December. There's nothing ground-breaking here, but it's nice to know how the results of the passage of Amendment 64 are being looked at internally.
Based on Governor John Hickenlooper’s December 10, 2012 proclamation certifying the vote on Amendment 64, members of the Colorado Springs Police Department need to be aware of the immediate changes related to the enforcement of marijuana possession and use.
Amendment 64 decriminalizes the non-public use, and possession, of less than an ounce of marijuana by persons twenty one years of age and older. The Amendment does not change any of the current Municipal Ordinances and/or Colorado Statutes as they relate to individuals under the age of twenty one. An individual twenty one or older is authorized to possess an ounce or less of marijuana but they are not permitted to use the marijuana in a public place or in a manner that endangers others. If it is necessary to issue a summons for public consumption of marijuana it should fall under Municipal Court 9.7.206: Possession of Cannabis.
Citizens are allowed to grow up to six marijuana plants, not more than three of which may be mature, flowering plants, in an enclosed, non-public, locked space. There are no current requirements that personal grows need to be in the home.
Today's the day you'll cite when you tell your kids where you were when Gov. John Hickenlooper signed a "declaration [that] formalizes the amendment as part of the state Constitution and makes legal the personal use, possession and limited home-growing of marijuana under Colorado law for adults 21 years of age and older."
"Voters were loud and clear on Election Day," the governor wrote on his Facebook page. "We will begin working immediately with the General Assembly and state agencies to implement Amendment 64."
So, hey, voters in Colorado (and Washington) finally did themselves what no majority of legislators has had the political courage to attempt: ending prohibition of marijuana. It's a hell of a thing, says Mason Tvert, co-director of the amendment-backing Campaign to Regulate Marijuana Like Alcohol.
"This is a truly historic day," Tvert says in a separate release. "From this day forward, adults in Colorado will no longer be punished for the simple use and possession of marijuana. We applaud Gov. Hickenlooper for issuing this declaration in a timely fashion, so that adult possession arrests end across the state immediately."
Now we can all back to doing what medical-marijuana business folk have been doing the past years: waiting to see when (or if) the federal hammer will fall. As the New York Times reported on Thursday, there are a variety of possibilities:
One option is for federal prosecutors to bring some cases against low-level marijuana users of the sort they until now have rarely bothered with, waiting for a defendant to make a motion to dismiss the case because the drug is now legal in that state. ...
A more aggressive option is for the Justice Department to file lawsuits against the states to prevent them from setting up systems to regulate and tax marijuana, as the initiatives contemplated. ...
Another potential avenue would be to cut off federal grants to the states unless their legislatures restored antimarijuana laws, said Gregory Katsas, who led the civil division of the Justice Department during the George W. Bush administration.
In a separate statement issued today, the U.S. Attorney's office for the state of Colorado essentially restated its previous position: "The Department of Justice is reviewing the legalization initiatives recently passed in Colorado and Washington state. The Department's responsibility to enforce the Controlled Substances Act remains unchanged. Neither States nor the Executive branch can nullify a statute passed by Congress. In enacting the Controlled Substances Act, Congress determined that marijuana is a Schedule I controlled substance.
"Regardless of any changes in state law, including the change that will go into effect on December 10th in Colorado, growing, selling or possessing any amount of marijuana remains illegal under federal law. Members of the public are also advised to remember that it remains against federal law to bring any amount of marijuana onto federal property, including all federal buildings, national parks and forests, military installations, and courthouses.”
Ultimately, President Obama's in an unenviable position, the Times reports.
“It’s a sticky wicket for Obama,” said Bruce Buchanan, a political science professor at the University of Texas at Austin, saying any aggressive move on such a high-profile question would be seen as “a slap in the face to his base right after they’ve just handed him a chance to realize his presidential dreams.”
A release from the Marijuana Policy Project, a Washington, D.C.-based advocacy organization, says that a poll conducted by Public Policy Polling between Nov. 30 and Dec. 2 shows that 58 percent of respondents agree that marijuana should be legal, an increase from the former high of half. Also, 50 percent said they think the federal government will legalize the substance in the next 10 years, and 4 -percent said they think President Barack Obama should not interfere in recent laws passed here and in Washington state.
"These results demonstrate that the American people do not want the federal government to interfere in state marijuana laws," says Steve Fox, the director of government relations for MPP, in a statement. "More than 55 percent of voters in Colorado and Washington have elected to regulate the sale of marijuana, rather than have the market controlled by gangs and cartels. The Obama administration should not undermine their rational action by putting profits back in the hands of criminals. Now is the time to respect the people of Colorado and Washington and their desire to opt out of the failed policy of marijuana prohibition."
"Marijuana prohibition's days are numbered," he says. "New prominent voices are joining the chorus calling for change every day. Most thoughtful politicians have known for a long time that our marijuana prohibition laws are broken, but until recently the issue was considered too controversial to speak out about. Now more elected officials are beginning to realize that working to repeal failed status quo policies is not only the right thing to do, but that there's a large and growing constituency of voters who will have their backs in case out-of-touch opponents decide to launch stale 'soft on crime' attacks."