Big Weed (10 page)

When it comes time to pay our state taxes, we literally walk cash into the Colorado Department of Revenue office, which is next door to the gold-domed Colorado State Capitol Building, and hand over the Benjamins with our tax forms. Our federal taxes must be remitted electronically—no cash or checks accepted. Paying those requires the same kind of ingenuity we use to pay any large bill from a vendor or contractor.

In the eyes of the federal government, we are laundering money every time we do this. But as yet no law enforcement agency has cracked down on us. In his 2014 announcement, President Obama instructed the Justice Department to leave cannabis entrepreneurs alone if they were “in clear and unambiguous compliance with state marijuana law.” But that instruction was not terribly clear, either, and certainly did not carry the full weight of law behind it.

It's almost as if we're trapped in bureaucratic limbo: Until Congress sprouts the balls to deal with the issue, everyone on the federal level is content to look the other way. Meaningful legislation will come inevitably, but that will mean breaking it to the American people that Congress is finally saying okay to marijuana. Our representatives in DC know that once they open a door, they won't be able to close it. If it's okay to deposit legal marijuana money in federal banks, then why is marijuana still illegal on the federal level?

You see? It's a slippery slope.

So: Where does that leave us? Well, for all other transactions, we use cash. The more the better, because the more cash we can offload, the more we can invest in expansion, say, or use in some other substantive ways, the less we have to hold and hide.

If it sounds ridiculous, insane, and dangerous to do business this way—I agree. When you consider that every person in the legal
marijuana business in Colorado must wear a badge clipped to their shirt at all times and that they are not permitted to carry a weapon to protect themselves, it's even more ludicrous. What could be more dangerous than proclaiming to the world through a badge you must wear that you are unarmed and that you are most likely carrying weed or copious quantities of cash?

Many of the cannabis firms I know have signed with security firms—bodyguards and armored truck providers—to safely convey their cash from their places of business to the various safes hidden throughout the city. We follow strict protocols to pick up cash from our stores. We installed cameras and alarms and pricey security systems. But those services and equipment don't come cheap, and there are always days when you need to ferry a few thousand dollars to a vendor by yourself.

We don't like doing it. In fact, we hate it. But we do it anyway, usually looking over our shoulders. Most of the people we deal with—like the architect I mentioned at the beginning of this book—now know that they wouldn't get our business if they weren't comfortable accepting at least a little cash.

Please don't misunderstand: I am grateful for the abundance in my life and business, but cash leaves me feeling vulnerable. Yes, Denver is a relatively safe city. In all the time I've worked in the industry, I know of no one who was ripped off while transporting money earned in the legal marijuana industry.

The danger of being robbed aside, there's another reason legitimate businesses don't traffic in cash: It's a pain in the ass.

Think about it: At most businesses of our size, the chief executive and shareholders don't meet to discuss paying bills. All that stuff is managed by the company's accountants. You authorize a check, the checks get cut, and someone in middle management signs them before they're shipped out. Case closed. You don't call a board meeting to figure out a plan to pay your electrician, no matter how much he's charging you. Doing so is an amateurish way to run a company.

So many of our pop culture references associate copious quantities of cash with illegal activities. Who can forget those scenes in Brian De Palma's
Scarface
where Tony Montana's crew pulls up in front of a bank and whisks duffel bags of illegal drug money inside to be laundered? At first, the corrupt bank manager is happy to have their business, but as time goes on, he's increasingly unnerved by the ceaseless stream.

The chemistry teacher–turned–meth kingpin Walter White in the
Breaking Bad
cable TV series goes through a similar process of cash fatigue. First, he gets by laundering cash through his lawyer's office. Then he buys a legitimate business—a car wash—to be able to launder it all. His wife, Skyler, becomes increasingly frustrated with him, because no matter how creatively she cooks the books, it's not enough to hide the flow of cash. By the end of the series, Walter's world unravels and he is reduced to desperately burying millions in the desert.

These stories are meant to be entertainment with a little bit of morality tossed in for good measure. The cash Montana and White earn become symbols for their criminal obsessions gone wrong, gone awry, gone out of whack. Their stories are actually not far from the truth. In 2011, Mexican authorities raided a Tijuana home of an illegal drug kingpin and found more than $15 million in cash. That's a lot of green, but it pales in comparison to the largest drug cash seizure in history: $206 million, which was lying around the home of an influential player in Mexico's meth industry.

The legal cannabis movement is all about making things right again. This plant was maligned by the federal government for nearly a hundred years. Now the cash raised by legal marijuana enterprises is supporting the budgets of at least twenty U.S. states, with more on the way. It's paying for schools, it's helping our neediest citizens, and
it's helping to balance state budgets at a time in the nation's history when states need it most.

The U.S. Treasury, via the Internal Revenue Service, happily sticks our money in its hip pocket but refuses to give us the one thing we need to be recognized as capitalists and full-fledged partners in American productivity.

I am not Tony Montana.

I am not Walter White.

Yet every day I commit two federal crimes. I grow and sell marijuana, and I “launder” the money I earn from those crimes by passing that cash on to my employees, contractors, and landlords. Being the nice, law-abiding drug dealer that I am, I also pay my state and federal taxes with the money I earn from those enterprises. It's downright Orwellian.

We are not criminals, but the law is forcing us to behave like them.

6

The Haze of Paranoia

I had just parked in the lot of a Denver Safeway. When the other car drove up, I waved hi and popped my trunk.

Money changed hands.

I slipped the cash in my pocket and helped my new friend stash the product in the trunk of his car. The product consisted of fifty or so tiny sprouts peeking out of containers of damp soil.

Just as we were about to go our separate ways, we heard the
woop, woop, woop
of a police cruiser's siren as the vehicle pulled into the lot beside us.

A woman police officer got out, her hands lightly grazing the grip of her holstered pistol.

“Is something wrong, Officer?”

“I got a call that people were trading . . .
plants
in the parking lot,” she said. “Do you mind telling me what you're doing?”

It was early autumn 2009 and I had been in the business just a few months. I had done everything by the book. I had followed all the state regs, even ones that the state's marijuana regulators were still hazy on. Our industry was so new, so five minutes old, that the authorities were interpreting the law on the fly.

This was not the first police encounter I'd ever had in my life, but it was the first since I'd started growing marijuana.

“Do you mind telling me what's going on here?” she said again.

“Not at all, ma'am,” I said. “This gentleman and I are both in the legal marijuana business. I just sold him my extra plants. You'll find fifty clones in the trunk of his car, and the money's in my pocket.”

“Okay . . .” she said, her voice trailing. The look in her eyes was already anxious and judgmental. I had said the magic word. The word that set many people in law enforcement on edge:
marijuana.

“Give me your identification, and you wait right here.”

At the time, Colorado had not yet rolled out its medical marijuana dealer badges. We used our red cards as part of our state documentation. So I passed her my red card and driver's license, and so did my new friend. And she retreated to her police cruiser.

I was sweating bullets. I had never been in a situation like this. You'll recall that the state of Colorado had a rule that said that for every medical patient I enrolled, I could grow six plants. That meant that our grow facility always had the maximum number of plants we could legally have at any one time. The minute our clones—small plants that had been clipped from a mother plant and rooted in soil—took us over the legal limit, we were obliged to destroy them or sell them to someone else who could legally use them. That's all I was doing. I just didn't anticipate that someone would call the cops on us.

My mind was racing.

I was terrified. I forced myself to think logically, rationally. What should I do? If she arrested me right now, they would probably impound my vehicle. If so, any valuables on my person would probably be checked into the police station.

Planning for what then felt inevitable, I started removing my watch, my wallet, my wedding band, anything I thought was too valuable to be hanging around a police station evidence locker.

As I finished stashing this stuff in my glove compartment, the police officer stepped out of her vehicle and was waiting to resume our conversation.

As I stepped over to her, her hand came up, my documentation held lightly between her index and middle fingers.

“Here you go,” she said.

And then she stopped, my ID dangling from her fingers.

“You know you're playing with fire, don't you?” she said.

“Excuse me?”

And off she went, launching into an angry, two-minute lecture.

We were ruining ourselves.

We were ruining the city.

We were ruining children.

How could she protect us?

We had to be careful.

People killed over this stuff.

Marijuana was wrong. It would always be wrong.

But then, as she was talking, there was this moment when I could sense that she was running out of steam. The fire in her eyes was dying, just as it became clear that we were off the hook.

She wasn't going to bust us.

She knew that we weren't the same as the criminals and drug dealers she and her fellow cops saw every day.

We were licensed; the law was on our side.

The law was on our side!

The police officer's rant was really more about
her
frustrations. The newfound complexities of her job. The world she knew was changing, and from this day forward, she would have to delineate in her mind between
legal
marijuana dealers and
illegal
marijuana dealers.

“I know it's legal,” she said, “but no one's telling us how to handle this stuff.”

If people could now buy and sell marijuana like geraniums in the parking lot of a Safeway, what was her role? Was she supposed to stand by and watch? Check it out? Ignore her dispatcher's call? Laugh it off? What?

Her supervisors hadn't briefed her on any of this stuff, which only made her feel . . . edgy, uncomfortable, and isolated.

She handed back my documents. “You're free to go.”

Marijuana is most closely associated with feelings of euphoria. But if you don't watch what you're doing, you can have dysphoric effects from the drug, too. One of the most common is a sense of paranoia—a feeling that you're about to be busted when the reality is just the opposite.

From my earliest days in the business, I noticed that a bizarre paranoia surrounded the industry. The funny thing about it was that it was coming from people who
weren't
smoking marijuana.

I call this paranoia marijuana legalization denial syndrome. Citizens in the grip of MLDS are incapable of accepting marijuana's legality on its face. There has to be a catch, they think.

You'll recall that when Mr. Pink and I first invested in the legal cannabis business, our spouses worried that the law might be repealed and everyone who had gone into the legal marijuana business would be instantly arrested without a chance to defend themselves. Longtime marijuana smokers fretted that the law was a ploy to root them out and get them on the record so they could be arrested later, when the law was repealed. Certainly it wouldn't be the first time the government had lied to its citizens.

Mr. Pink and I didn't make a big deal of this, but we, too, worried about it privately. For that reason, many of my leases were negotiated to expire on inauguration day, every fourth year, on the twenty-first of January—just in case the new presidential and gubernatorial
administrations and state legislature were unfavorable to our business. We hypothesized that the previous autumn's election would give us some hint if they intended to shut us down. If anti-marijuana candidates won the election, we would know by November. That would give us until January to conclude operations and then not renew our lease. This was the closest we ever came to an emergency exit plan, and one we needed uniquely for this type of business. It's also one we've never needed to employ, thankfully.

When we started going downtown to apply for a host of paperwork—from business licenses to building permits—we were met with quiet resistance ripped from the MLDS playbook. Some city and state employees were solidly in the grip of MLDS. “I know it's the law,” was their attitude, “but I haven't been told how to handle it and I am not going out of my way for people like you.” This was the first time in my life that I felt the sting of a negative stereotype. These employees assumed that I was a criminal who was trying to exploit a loophole in the law. Let me say for the record that there is no such loophole; the law was as unambiguous as possible. Marijuana was legal. But now I was being confronted with a form of prejudice. It wasn't a typical example of prejudice, but it was prejudice just the same. It could only be met by my own quiet persistence and compassion.

“I'm opening a medical marijuana business,” I'd say. “I have the legal paperwork to prove it. We just need a business license.”

“There's no such thing as a business license for medical marijuana.”

Or . . .

“I need a building permit for a medical marijuana growing facility,” I'd say.

“Can't help you,” the bureaucrat at the desk would say. “There's no such thing as building code for a marijuana grow.”

Well, duh. The law was so new, no one really knew what sort of specs such a building should have. But were they really going to sit there and tell me they couldn't help me?

Turns out, they were.

Nothing irritates an entrepreneur as much as a pencil pusher who can't be motivated to solve problems and think his or her way out of a situation.

Surely they had heard that marijuana was legal in the state?

Yep. They just hadn't been told what to do about it. And they couldn't be bothered to look into it. They had a break coming up in a few minutes.

I was less irritated when I visited the state offices that were charged with regulating our new industry and enforcing the laws surrounding it. There, the folks wanted to be helpful but were underfunded and overwhelmed.

Over at the Department of Health, the office in charge of processing all those medical marijuana red cards was hopelessly backlogged. All over the state, prescribing physicians were giving their patients a temporary card with the promise that their official red card would arrive from the state within thirty days. That office had been slammed with more than fifty thousand red card applications and had only one person to deal with it all.

The new Medical Marijuana Enforcement Division (MMED), run as part of the Colorado Department of Revenue, hadn't set up its new offices yet. It had yet to lease space, furnish the offices, and hire and train personnel. The division drew enforcement personnel from the ranks of the state police, who wore badges and carried weapons on their hips.

When the MMED first opened, it rented space in a dog track that was about to be torn down. It used to be the home of live greyhound racing. That business had stopped operating some years ago. The dirt track and manicured infield had gone to seed. On the site, an off-track betting parlor, or OTB, continued to operate. It lured a strange assortment of weathered men who all seemed to smell of stale beer and cigarettes.

The first of my many meetings with the MMED took place at the dog track, staring out at an unkempt field of tall grass. A few years later, when I'd take meetings with senior MMED officials who remembered the old dog-track days, we couldn't help reminiscing about where it had all started and how much had happened to get us where we were today. That's where I met Lewis Koski, who started as a staff-level investigator and now, at the time of this writing, is the director of the newly renamed Marijuana Enforcement Division for the Colorado Department of Revenue.

In the end, of all the people we were dealing with, the cops would turn out to be the coolest and most level-headed. And I say that in spite of my run-in with that officer in the parking lot.