The marijuana business owner had been under surveillance for over two weeks, and the police were there to arrest him. Sermos was charged with possession of over fifty pounds of marijuana, money laundering and violating the Colorado Organized Crime Control Act, according to an arrest affidavit provided by the Denver District Attorney's Office.
On February 23, the Denver Department of Excise and Licenses announced that Sermos's last Denver license, held under the business name Colorado General Service Provider (CGSP), had been revoked after he reached a settlement with the department. In that agreement, Sermos admitted to no crimes, but he is now banned from applying for another marijuana business license in Denver.
Documents on file in U.S. District Court, including an asset forfeiture claim made by the U.S. Attorney's Office, lay out more of the story. Over six years, Sermos reportedly never made a legal sale, while continually buying bulk amounts of legal marijuana in Colorado — over 3,000 pounds, according to the state's tracking system.
Sermos obtained his first marijuana business license in 2014, registering it in Denver under Mega Giant LLC. In 2015, he got another marijuana license, which he registered in Boulder under the name Flatirons General Service Provider; he got the CGSP license in 2018. All three of Sermos's licenses were designated for marijuana-infused-product facilities, which require large amounts of plant matter from which to extract marijuana's cannabinoids for concentrate, edibles, lotions and other infused products.
However, the U.S. Attorney's Office claims that Sermos never manufactured or sold infused products during his time as a licensee, despite the state Marijuana Enforcement Division's tracking system showing that he'd purchased over 3,130 pounds of marijuana for an estimated $4.2 million. According to court documents, Sermos's companies were "created to disguise the illegal sale of marijuana," and the 2020 surveillance wasn't the first time he was investigated.
In 2015, the MED reported that Sermos was given a "verbal warning" for failing to enter his manufactured products into the tracking system, but Sermos denied ever receiving a warning. In 2017, the MED investigated Sermos for 1,175 pounds of pot that showed up missing in the tracking system; according to that report, Sermos told MED investigators he had destroyed the product.
"Based on the average purchase cost of marijuana under FGSP of $1,160 a pound, David Josh Sermos would have destroyed approximately $1,363,000 of retail marijuana," a U.S. Attorney's Office document notes.
Sermos's Mega Giant license has since expired. He sold his Boulder license for FGSP in 2017 for $475,000, according to the state Department of Revenue. The U.S. Attorney's Office claims that was the only gross receipt of sale posted by Sermos's businesses during his time as a marijuana licensee.
A Denver Fire Department inspection of CGSP's registered Denver address at 6767 East 39th Avenue in 2019 noted that there was no extraction equipment at the facility, which had been registered for about fourteen months at the time; Sermos told the DFD inspector that he was only using the facility for storage. A Denver Excise and Licenses inspector attempted to conduct another inspection at the building several months later, but was unable to meet with Sermos, who reportedly ghosted subsequent phone calls and emails from the city and MED investigators. Excise and Licenses then alerted the DPD, which obtained a warrant to track Sermos's car with a GPS device on February 26, 2020, according to court documents.
From March 10 to March 13 last year, DPD detectives reported that they followed Sermos as he drove around the metro area in his 2018 BMW SUV, watching him meet an associate at a Bed, Bath & Beyond parking lot and put something in the trunk of the other man's car. On more than one occasion, investigators also followed Sermos to an alleyway behind a Denver Noodles & Company, where he threw away several bags of trash that ended up being "marijuana packaging, rubber gloves, and rubber bands," according to the DPD. On March 13, Sermos was seen visiting a mechanic, who removed the GPS device. Police arrested Sermos at his home that day.
According to DPD investigators, Sermos admitted to illegally selling marijuana after his arrest, explaining that he had to start selling marijuana to pay his rent and child’s school tuition. He reportedly told investigators that he would typically turn on a machine that paused state-mandated video surveillance of his marijuana business, then take his legally purchased marijuana to his car, where he vacuum-sealed the pot and put the new packages in trash bags for black-market sales.
According to Sermos's attorney, however, his client has admitted to no illegal activities. The attorney declined further comment.
The Denver District Attorney's Office confirms that Sermos is still facing charges and is scheduled for an arraignment hearing on April 12.