Sweet Leaf Raids Casts Dark Shadow Over Colorado Pot Industry | Westword

Sweet Leaf Raids Cast Shadow Over Pot Industry

According to a DPD announcement, the raids were conducted because Sweet Leaf stores were allegedly selling unlawful amounts of cannabis to customers, a term known as "looping."
Sweet Leaf's eleven locations across Colorado were closed Thursday, December 14, after a series of police raids.
Sweet Leaf's eleven locations across Colorado were closed Thursday, December 14, after a series of police raids. Scott Letnz
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Update, Friday, December 15, noon: The Denver Police Department has released the names and booking photos of the thirteen suspects arrested in connection with the raids on Sweet Leaf dispensaries. None of the dispensary chain's owners listed in the Denver Department of Excises and Licenses suspension order, including Anthony Sauro, Christian Johnson and Matthew Aiken, were among those arrested. Most of the employees taken into custody were budtenders or lower-level employees, according to family members and social-media accounts of suspects.

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The fallout from law enforcement raids at Sweet Leaf dispensaries on Thursday, December 14, is still raining down. According to the Denver Police Department, the raids were conducted because Sweet Leaf stores were allegedly selling unlawful amounts of cannabis to customers, a practice known as "looping."

As of December 15, thirteen arrests had been made after a year-long investigation into the Sweet Leaf operations, according to the DPD. "The operation is the result of an extensive, year-long criminal investigation into illegal distribution of marijuana at those locations," reads the announcement. "The alleged criminal actions are related to the sale of marijuana in excess of allowable amounts established by Amendment 64. Amendment 64 allows for the personal use of marijuana, and specifically allows the possession, use, display, purchase, and transport of one ounce or less of marijuana."

A suspension order was sent to Sweet Leaf owners Anthony Sauro, Christian Johnson and Matthew Aiken on Thursday, explaining that the Denver Department of Excise and Licenses had suspended 26 of the company's cultivation, processing and dispensary licenses. A hearing to decide additional action is expected within thirty days, says Excise and Licenses communications director Daniel Rowland.

The arrests seem to have stretched throughout the company's totem pole, with multiple family members of current and former budtenders and cultivation staff reporting to Westword that their daughters, husbands and wives had been arrested at their homes and at work. The DPD is expected to release the names, booking photos and arrest documents of those arrested at some point today.

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A sign at Sweet Leaf's Walnut Street dispensary announces the store's license suspension.
Thomas Mitchell
Attempts to reach AJS Holdings, the investment firm that owns three of Sweet Leaf's new dispensary licenses, were unsuccessful. A Sweet Leaf executive sent Westword a statement Thursday afternoon in response to the raids:
"This morning, Sweet Leaf was surprised to receive notification from the Department of Excise and License suspending all of our city licenses in the City and County of Denver. It is unclear at this point exactly what actions, if any, Sweet Leaf took to cause the city to issue this order. Sweet Leaf is cooperating with the authorities to resolve this issue and hopes to have all of their stores back in operation as soon as possible."
Sweet Leaf has not responded to requests for further comment since the DPD's December 14  announcement that contained the looping allegations. Looping occurs when a dispensary customer buys the maximum amount of cannabis allowed — one ounce for recreational customers and two ounces for medical patients — and then leaves the dispensary, returns, and buys more cannabis. Although there is a state tracking system in place for medical patients, there is none for retail purchases.

The raids have shaken the industry. Terrapin Care Station budtenders say they received an email from the company prohibiting them from discussing the raids with customers. According to Terrapin communications director Peter Marcus, that was more about keeping employees calm than muzzling them. "There was a little bit of panic at first. Some folks thought it could be the start of some federal raids," he says. "It became pretty clear that it was an isolated local incident. We just sent an email to employees saying it was the Colorado regulatory system at work and to keep doing their jobs."

Marcus says that Terrapin, which has five Colorado locations and one in Oregon, has an internal system that prevents customers from purchasing more than the legal amount. "You'd have to go out of your way to conspire to get around this," he explains. "If [Sweet Leaf] are bad actors, they're not going to be operating anymore."

Denver regulatory attorney and former director of Excise and Licenses Tom Downey believes that looping is done in both small and bulk operations throughout the state, based on his conversations with his clients in the cannabis industry. "The pipeline may be completely sealed — seed-to-sale tracking has made diversion shrink — but out-of-state folks are either buying here and taking it across the border, or it's going to underage kids," he says. "The good operators should have protections."

Sweet Leaf has eleven dispensaries in Colorado, with ten in Denver and one in Aurora, and also one in Portland, Oregon. All eleven dispensaries in Colorado are now closed, but the Portland store was still open as of this posting. Sweet Leaf was scheduled to open a dispensary in Thornton in 2018; the City of Thornton is still reviewing the matter before deciding on the status of Sweet Leaf's license to operate, according to city communications director Todd Barnes.

Aurora police participated in the investigation, and the City of Aurora is still waiting for more details before it makes a decision on the company's license status, according to city communications specialist Julie Patterson.

The Sweet Leaf stores that were searched by law enforcement include locations at 1475 South Acoma Street,  2647 West 38th Avenue, 5100 West 38th Avenue, 4400 East Evans Avenue, 2609 Walnut Street, 4125 Elati Street, 7200 East Smith Road and 15200 East Sixth Avenue in Aurora.

The raids were a collaborative effort of multiple law enforcement and regulatory agencies across the metro area, including the Denver District Attorney's Office, the Denver Department of Public Health and Environment, the DPD, the Colorado Marijuana Enforcement Division and the Aurora Police Department.

Denver Drug Enforcement Administration media officer Randy Ladd says that the DEA had nothing to do with the raids, and the United State Department of Justice also denies any involvement.
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