Final Decree Colorado concludes its case against Sweet Leaf

After one year of allegations and deliberations of intentional “looping,” officials made a decision to revoke Sweet Leaf, one of Denver’s largest cannabis dispensary chains, of its licenses to operate storefronts and cultivate cannabis. Colorado’s Marijuana Enforcement Division (MED), the District Attorney and Department of Excise and Licenses came to a decision that Sweet Leaf must sell all 26 of its cannabis licenses. The money from the sale is required to go toward paying off approximately $2 million in fines, fees, taxes, penalties and interest. Owners Anthony Suaro, Christian Johnson and Matthew Aiken agreed to do so and acknowledge that they are forbidden to apply for any licensing or be affiliated with the Colorado cannabis industry in any way for the next 15 years. They must also destroy and relinquish any remaining cannabis product intended for sale.

The yearlong investigation conducted by the Denver Police Department (DPD) came to head on Dec. 14, 2017, when eight Sweet Leaf dispensaries in the Denver area were raided. The Recommended Decision report by the Department of Excise and Licenses states that between 2016 and 2017 employees knowingly and repeatedly sold cannabis products to the same person numerous times, and multiple times in one day, which is referred to as “looping.” The report goes on to say, “The evidence establishes that respondents implemented a looping scheme not only for their retail marijuana sales but also for medical marijuana sales . . . There is substantial evidence of all of these aggravating factors. Respondents doing business as Sweet Leaf operated as a criminal enterprise, where respondents’ unlawful sales resulted in the proliferation of illegal marijuana that supplied criminal drug dealing. Respondents’ looping scheme was a willful and deliberate practice of evading quantity limitations on the sale of medical and retail marijuana.”

These actions violate a MED rule, which states that no more than one ounce of cannabis may be sold to a recreational customer and no more than two ounces to a medical patient in a “single sales transaction.” However, Sweet Leaf said their interpretation of the law was that a single transaction could occur multiple times a day. So in January 2018, the MED amended the rule to clarify the meaning that a “single transaction” was to mean one transaction per day. The excise department’s report also stated that one customer was found with about three pounds of cannabis in his home and that Sweet Leaf stores sold over 5,550 pounds of cannabis and cannabis concentrates to customers between June 1, 2016 and Dec. 3, 2017, with a sum total of gross revenue sales of $6,779,795.06. After the initial raid in December 2017, Sweet Leaf was required to suspend all business operations until an official decision was reached and 18 budtenders were arrested. However, their charges have since been dropped, but they are required to pay fines.

Local neighbors of the Sweet Leaf spoke out against the stores, saying that they noticed the looping and didn’t feel safe in their own homes. “All residents testified that they observed looping activity by Sweet Leaf customers, usually involving cars with out-of-state license plates, including Texas, Wyoming and Missouri,” the report stated, “The residents also observed public consumption of marijuana by Sweet Leaf customers, employees and security guards.”

“The vast majority of Denver’s marijuana industry operates legally and have established themselves as legitimate businesses contributing to Denver’s economy.”

 

Ashley Kilroy of Denver’s Department of Excise and Licenses shared the final decision to revoke Sweet Leaf licensing. She said in her statement, “The vast majority of Denver’s marijuana industry operates legally and have established themselves as legitimate businesses contributing to Denver’s economy. Denver will continue to strictly enforce our marijuana rules and regulations that have played an important role in our successful marijuana management in America’s first major city with legalized recreational marijuana.”

From high profile lawyers on both sides to the DPD, the MED, the District Attorney and the Department of Excise of Licenses, the Sweet Leaf case had many moving parts and decisions to be made. State officials and law enforcement watched this case extensively and based on the information gathered, concluded to revoke Sweet Leaf’s privilege to operate a cannabis business in Colorado, going to show that anyone who doesn’t operate within the confines of the law will not be allowed to do so.

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