SWEET LEAF SHUT DOWN
THIRTEEN PEOPLE ARRESTED,
TWELVE DISPENSARIES
SHUT DOWN!
SWEET LEAF MARIJUANA CENTERS
BY NOW, many industry insiders (and
outsiders) have probably heard about
what happened to Sweet Leaf Marijuana
Centers in Colorado. The long and short
of it? The company was shut down, twelve
stores were closed, 60,000-square feet
of grow space was seized, and thirteen
people were arrested. Why? Well, that can
get a bit more complicated, but ultimately,
it is all a result of not following the rules
and regulations established by state
governments regarding marijuana. First
the story of what happened, and then the
lessons that should be learned from it.
A yearlong investigation by the Denver
Police Department in conjunction with the
Denver Department of Excise and Licenses
culminated in the arrest of thirteen
employees for selling amounts of cannabis
to their customers that was deemed to be
unlawful. Specifically, Amendment 64 in
Colorado establishes that marijuana can
be sold, displayed, used, or transported for
personal use in sizes of one ounce or less
on the recreational side of the industry.
Unfortunately for Sweet Leaf, the arrested
employees—most of whom were lower
level and customer facing—were utilizing a
tactic called “looping” to sell larger amounts
to individuals. Looping is where you make a
purchase, take it to your car, then come back
into the store to purchase more. According
to Tom Downey, former director of Excise
and Licenses, looping is a tactic which
happens in both small and large operations
and can, at times, be difficult to detect.
“LOOPING IS WHERE YOU
MAKE A PURCHASE, TAKE
IT TO YOUR CAR, THEN
COME BACK INTO THE
STORE TO PURCHASE
MORE. ACCORDING TO
TOM DOWNEY, FORMER
DIRECTOR OF EXCISE AND
LICENSES, LOOPING IS A
TACTIC WHICH HAPPENS
IN BOTH SMALL AND
LARGE OPERATIONS
AND CAN, AT TIMES, BE
DIFFICULT TO DETECT.“
After investigating, police opted to
conduct raids on Sweet Leaf. This resulted
in a suspension of twenty-six licenses for
Sweet Leaf’s medical, retail, extraction,
and cultivation operations, effectively
shutting down their entire operation in
Colorado, leaving only their location in
Portland, Oregon, still operating. At the
time of the raids, no other dispensaries
were raided, only those operated by
Sweet Leaf in Denver and Aurora. This
was handled by local police, not the DEA,
but it is still an issue which has shaken the
foundations of the cannabis industry in the
state. Think about it for a minute. Thirteen
people arrested, an entire company shut
down, and many millions of dollars at risk.
What, exactly, did Sweet Leaf do wrong?
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It’s hard to know exactly who did what
wrong as the case is still ongoing, but
ultimately it boils down to a few key things
which can and should be avoided by other
operations:
• Not enough oversight of lower level
employees led to the practice of
“looping” which effectively allowed
too much cannabis to be sold to
individuals for personal use and,
thus, violated Amendment 64 in
Colorado.
• Tracking of sales was inadequate,
which is what likely led to those
employees to do, or at least be able
to do, what they did.
• Inadequate tracking of customers
and the sales to those customers.
Internally, there should be some
system in place to maintain
compliance and ensure customers
are not buying more than they are
legally allowed.
Had proper oversight and tracking
systems been in place, the illegal sales
would likely not have occurred. This is
particularly true when it comes to the
tracking of sales to individual customers,
which is something that isn’t difficult
to implement and would have likely
prevented all of this from happening in
the first place. Management should have
put more controls in place to monitor their
compliance with the rules and laws.
If you own a dispensary, you need to
understand the rules and put in place