What the Sweet Leaf Raids Mean For the Cannabis Industry

By Kyle Swartz

December 18, 2017

Shockwaves hit the legal cannabis industry last week when police raided eight locations of the retail chain Sweet Leaf in and around Denver. The case should serve as an example for all regulators and law enforcement of how new issues require oversight and intervention in a post-legalization world.

Sweet Leaf is among Colorado’s largest vertically integrated cannabis companies. It operates 11 stores in Colorado and one in Oregon. The raids on Dec. 14 included the arrests of 13 people all employed by Sweet Leaf, mostly as budtenders (those who sell pot products to customers).

The police action also resulted in the suspension of 26 Sweet Leaf licenses for the cultivation, processing and retail of cannabis.

Denver police said their intervention followed a yearlong undercover investigation into illegal sales of cannabis at the raided locations. Allegedly the arrested employees had taken part in a practice known as “looping.” Customers known as loopers will visit stores multiple times throughout the day to repeatedly purchase the legal limit of pot in Colorado, one ounce per transaction.

According to reports, Sweet Leaf employees knowingly sold to these repeat buyers because they feared loopers were involved in the criminal world and would retaliate, and also because Sweet Leaf managers approved the illicit sales to drive up sales.

Undercover Denver police alleged that they were able to buy pot multiple times from the same budtender in one day, and as much as 15 ounces in two hours from the same location.

Sweet Leaf has reportedly closed down all eleven of its businesses in Denver, while its one Oregon location remains open.

Unlike with medicinal pot purchases in Colorado, there is no state-tracking system for retail purchases. While such a system might represents an overextension of government regulation, the illegal activity of looping cannot continue. It puts the legal cannabis industry at risk of involvement by criminal parties.

Cannabis-business owners would be wise to train and empower their staff to turn away loopers. Employees should know that they are safe to say no, and encouraged to report illegal activity to proper authorities. Budtenders also cannot operate under the impression that looping is an acceptable evil so long as it results in additional sales.

Any short-term gain in the bottom line through looping will surely damage the business and the industry in the long run. A large part of what supports the legal cannabis industry, in the opinions of many government regulators and law enforcement, is the idea that it reduces black-market sales. If looping is allowed to feed the black market, then the legal industry loses a major component of what lets it exist.

The Sweet Leaf raids were a joint effort by the Denver Police Department, Aurora Police Department, the Denver District Attorney’s Office, the Denver Department of Public Health and Environment, and the Colorado Marijuana Enforcement Division. As this demonstrates, through a combination of police and regulatory government intervention, looping and other illicit activities that crop up in the new cannabis industry can be weeded out for a brighter, safer future.

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