On a crisp late-autumn day last month, federal agents raided more than a dozen medical marijuana dispensaries and grow facilities in Denver and Boulder, Colo. Armed Drug Enforcement Administration officers wearing camouflaged fatigues and black balaclavas smashed store windows, stacked crates of evidence in U-Haul trucks, and confiscated so many pot plants that the piles of foliage had to be removed by front-loader. It was the largest federal medical marijuana bust in Colorado history—and it occurred less than two months before the state is set to launch the world’s first legalized pot system on Jan. 1.
How did Colorado’s marijuana industry react to the raids? If anything, with approval.
“Really, I see enforcement actions happening as a sign our industry is maturing and this program is working,” Mike Elliott, executive director of the Colorado-based Medical Marijuana Industry Group, told the Denver Post the day of the bust. Even Mason Tvert, the celebrated firebrand of the local marijuana movement, was unusually circumspect. “If a business is suspected of violating state laws, they will likely face increased scrutiny, and if they are found to be in violation, they will likely face consequences,” he told the Post.
Why the calm reaction? Mainly it was because the busts did not appear to be an attack on the state’s medical marijuana system, as has been the case with DEA raids in other states, but a targeted action against a few bad apples who were apparently flouting Colorado’s medical marijuana regulations—allegedly selling pot out of state, hiding profits, and working with Colombian drug cartels.* In other words, the raids reinforced Colorado’s medical marijuana rules rather than undermining them. This was good news, since Colorado’s medical regulations form the basis of the recreational pot rules that will go into effect on Jan. 1.
The busts, in fact, were exactly the sort of enforcement Colorado policymakers and marijuana stakeholders should want right now. It’s not easy obeying Colorado’s complicated, time-consuming, and expensive marijuana rules, so those who jump through all the state’s hoops want to be sure that the competition does, too. If someone is cheating, they can cut into everyone else’s profits. That’s why nearly everyone in the industry wants the cheaters busted, since it suggests the regulatory system is working and it rewards those in compliance. (Hence the tip line posted on Colorado’s marijuana enforcement website that folks can use to report on scofflaws and “keep our industry legitimate.”) It’s why marijuana policy expert Mark Kleiman predicts legalization won’t stop pot busts anytime soon. “[T]he implication of … a legal commercial market is not that you need less enforcement,” he told Patrick Radden Keefe of The New Yorker. “In the long run, there shouldn’t be much of an illegal business … In the short run, though, the answer is just the opposite.”
So, what, exactly, are law enforcement and law-abiding marijuana businesses trying to prevent—what are Colorado’s extensive marijuana laws supposed to do? The big concern has always been “diversion”—taking marijuana ostensibly grown for legal purposes and offloading it to the black market or selling it out of state. No one wants a Colorado Winnebago pulled over on its way to Kansas packed with Maui Wowie. And no one wants to see a dispensary owner busted for selling regulated marijuana in an unregulated way—such as to underage buyers. And, of course, the state wants to be sure that all sales are being recorded, since unrecorded sales mean less tax revenue.
To minimize diversion, Colorado has vowed to track every legit marijuana plant—whether medical or recreational—from seed to sale. The stakes are high; in an August memorandum on marijuana legalization, the U.S. Justice Department made clear that any such enforcement program “must not only contain robust controls and procedures on paper; it must also be effective in practice.” If the regulations are just a paper tiger, there’s still a chance the feds could shut the whole thing down.
Is it really possible to track every marijuana plant from seed to sale? Right now, for example, according to Colorado’s medical marijuana law, there can be six marijuana plants for every registered marijuana patient. With 112,000 registered patients in the state, that means there could be up to 672,000 legal marijuana plants in Colorado, each of which can produce several ounces of smokeable product in the span of a few months. (This is just the medical side of the equation; since Amendment 64 passed in 2012, every Coloradan has been entitled to grow up to six plants for personal use.) So how do you keep an eye on all of that pot?
Let’s follow the lifespan a single Kosher Kush plant grown by the Clinic, a Denver-area medical marijuana chain comprised of three grow facilities and six dispensaries. When a clipping is taken from a “mother plant” at one of the facilities’ nurseries to create a clone (growing directly from seed can lead to greater genetic variation and less product consistency), it’s designated for a particular Clinic retail location and, as required by Colorado law, tagged with a unique serial number that will stay with it as it matures and flowers. Once the plant is harvested, it’s weighed, then weighed again after it’s been hung to dry, to account for water loss. Then it’s weighed a third time after being trimmed of its stalks and stems (the trim is also weighed before it’s discarded, so that every last bit of the plant is accounted for). Finally, the Kosher Kush is packaged and transported via a carefully traced delivery route to its predetermined Clinic shop, all the while sporting a sticker emblazoned with its serial number. This number is entered into the store’s inventory system, so the sale of each bit of the plant can also be registered. All to ensure that not one iota of this Kosher Kush ends up somewhere it doesn’t belong.
As an added precaution, Colorado is taking a page from casinos’ “eyes in the sky” camera systems, requiring marijuana operations to maintain video surveillance of the production process, keeping several weeks’ worth of footage on file and available for inspection. According to Clinic general manager Ryan Cook, that equals 40 to 60 cameras at each of his grow facilities, about 16 cameras at each of his stores, and 12 terabytes of video footage stored on a series of $50,000 servers.
Now, imagine this production process spread across the 745 grow facilities, 517 dispensaries, and 140 marijuana-infused product facilities all across the state. No wonder, then, that according to a recent state audit of Colorado’s Marijuana Enforcement Division, the tracking program hasn’t worked out as planned. The high-tech system the division planned to put in place to digitally track every pot plant? It was over budget—and not yet completed. The transit manifests for all marijuana delivery routes and other tracking forms businesses are required to submit? None had been reviewed by division employees. And that’s just a sampling of the audit’s complaints. Like many government programs, Colorado’s marijuana enforcement divisions seemed to be trying to do way too much with too little money. As Marco Vasquez, the division's former chief, put it at the time, “We had a champagne wish list on a beer budget.”
From here on out, tracking Colorado’s marijuana only gets harder. Keeping an eye on an industry with 120,000 medical patients is far easier than keeping an eye on a recreational market that could be nearly limitless in size. Colorado has millions of possible adult users, and its tourist industry brings in millions more each year. So has Colorado overpromised on its oath to track every pot plant?
Hank Hasler deals with this question every day. A one-time sheriff’s deputy and former investigator for the Colorado Division of Gaming, which oversees the limited-stakes gambling that’s allowed in certain mountain towns, Hasler is now the MED agent in charge of field enforcement, which means he’s responsible for ensuring that marijuana businesses are keeping track of their pot. Last Friday, he stopped by one of the three Denver locations of the Pure Medical Dispensary chain to check on their compliance.
Pure, it turns out, is complying quite well. There are 48 security cameras capturing nearly every inch of the dispensary, grow facility, and commercial kitchen for making marijuana edibles that share the sprawling brick building in an industrial zone off a main highway. The company has also developed its own digital inventory system that far exceeds what’s required by the state’s tracking program, which is scheduled to finally launch in the next few weeks.
If Pure’s owner, Frank Quattrone, has complaints about the state’s enforcement program, it’s that he wishes it were as advanced as his own. There’ll be no easy way to connect his tracking system to the state’s less-thorough version, for example, meaning his employees will have to duplicate data entries, including entering sales data into the state’s system by hand. “It’ll be back to the Dark Ages,” Quattrone grumbles.
Leaving the inspection, Hasler says operations like Pure give him hope that it’s possible to keep track of all the pot. Savvy business owners know that keeping an eye on the pot is about much more than merely complying with state law. Diligence discourages employee theft, pinpoints choke points in production procedures, and helps calibrate inventory to consumer demand. As Quattrone puts it, “You want to know where your assets are.”
Still, Hasler believes it’ll be a while before every Colorado marijuana business operates like Quattrone’s. “Right now, I am seeing less enforcement than I expected,” he says. He’s seen marijuana operations with no business records whatsoever other than a moldy stack of harvest sheets, a pot shop illicitly growing its product on the roof of a strip mall, and a grower who insisted all she had to list on her product labels for cultivation ingredients, as required by law, were “sunshine and love.”
Such incidents make for good anecdotes—but aren’t necessarily a good sign for an industry working to become legitimate in the eyes of the DEA. “I’m in the middle of the biggest public policy development of our time,” says Hasler. “It’s fascinating, but sometimes, it could be a little less fascinating.”
Next up: Welcome to the Highest State: Colorado wrestles with the marijuana tourism that could arrive come Jan. 1. Will there be enough pot to go around?
Correction, Dec. 19, 2013: This article originally misspelled Colombian as Columbian.