While recreational cannabis is legal in Colorado, there are's a limit on how much marijuana someone can buy in a day. And if you think that's more of a guideline than a strict rule, then you might wind up in the same trouble as three owners of the Denver-based Sweet Leaf dispensary chain, who recently pleaded guilty to organized-crime and illegal-distribution charges by exceeding the sale limit.
The owners tried to get around the limit using an illicit tactic called 'looping,' where a customer would go to a shop and buy the maximum amount multiple times a day. As a result, Christian Johnson, Matthew Aiken and Anthony Sauro of Sweet Leaf are now the first members of a state-legalized cannabis business to do time for violating marijuana regulations.
"I think this was obviously a first case in Colorado," lead prosecutor Kenneth Boyd told The Denver Post. "I think it was the first in the nation where a state prosecution office went after a licensed marijuana company. We did not see this scope with anybody else."
All three men pleaded guilty to the charges and now face one year in prison, followed by one year of mandatory parole and one year probation, to be served concurrently. That punishment might seem harsh if the owners had simply made a mistake, but Boyd insists that the owners knew exactly what they were doing.
"This was a case where it was widespread. And the owners knew what was going on and encouraged the practice." He added that investigators have been monitoring Sweet Leaf's business practices for the past few years. Prior to January 1, 2018, they were able to exceed the limit using a loophole in Colorado's cannabis laws. The old regs stipulated that cannabis stores were "prohibited from selling more than one ounce of Retail Marijuana flower or its equivalent in Retail Marijuana Concentrate or Retail Marijuana Product during a sales transaction to a consumer." By putting a limit on the amount you can sell per transaction, customers could stockpile cannabis through multiple purchases so long as each transaction did not exceed the legal limit of one ounce.
"It has always been my view that what they were doing was exploiting a loophole in the law," said Sam Kamin - the Vicente Sederberg Professor of Marijuana Law and Policy at the University of Denver, who served as an expert witness on behalf of the Sweet Leaf owners during a previous administrative hearing. "At the time, there was no explicit ban on multiple sales on the same day…I believe they got close to the line but didn't cross it."
But the new law says a person can't buy more than a single ounce per day, regardless of how many times they leave and come back.
Boyd has argued that looping had become so extensive at Sweet Leaf that often times a small handful of customers would buy up all of the medical marijuana before other patients could get any of it. Additionally, he says it created a very easy and convenient means of illicit cannabis sellers to get a hold of product.
"Sweet Leaf essentially operated as a safe haven, if you will, for people to buy marijuana for the black market," Boyd said.
This case is likely to set wider precedent in legal marijuana markets around the country, where regulators will likely have to deal with businesses who break cannabis regulations, noted Kamin says.
The Sweet Leaf case shows that as loopholes in the legal marijuana framework are exposed Colorado will work diligently to close them and that business owners should be careful to ensure that they are in total compliance with local regulations.