The motive force of an armored automotive carrying $712,000 in money from licensed marijuana dispensaries was heading into Barstow on a Mojave Desert freeway in November when San Bernardino County sheriff’s deputies pulled him over. They interrogated him, seized the cash and turned it over to the FBI.
A couple of weeks later, deputies stopped the identical driver in Rancho Cucamonga, took a further $350,000 belonging to authorized pot shops and gave that money to the FBI too.
Now, the FBI is attempting to confiscate the practically $1.1-million bounty, which it'd share with the San Bernardino County Sheriff’s Division. The FBI says the cash is tied to federal drug or money-laundering crimes, however has specified no illegal conduct and charged nobody with a criminal offense.
The money seizures — and one other from the identical trucking firm in Kansas — increase questions on whether or not the Justice Division below President Biden is shifting to disrupt the operations of licensed marijuana companies in California and different states the place pot is authorized.
The case has additionally rekindled allegations that federal legislation enforcement businesses in Southern California have been abusing forfeiture legal guidelines by seizing money and valuables from folks when the federal government has no proof that they dedicated crimes.
The FBI and the U.S. legal professional’s workplace in Los Angeles have been compelled to return tens of thousands and thousands of dollars in money and valuables seized by federal brokers final March from a whole lot of protected deposit packing containers in Beverly Hills after the federal government failed to provide proof to again up its allegations that the cash and items had been legal proceeds. A few of that cash belonged to homeowners of state-licensed marijuana companies.
Now, Decide John W. Holcomb of U.S. District Courtroom in Riverside is weighing a request by Empyreal Logistics, the corporate whose armored automobiles had been emptied in California and Kansas, for an emergency order to power the FBI and the Sheriff’s Division to cease pulling over its autos and seizing money with out proof of criminality. The corporate can also be attempting to get again the money.
Empyreal says it follows U.S. Treasury Division tips on the way to deal with the money of state-licensed marijuana companies with out working afoul of federal legislation and verifies that the dispensaries whose cash it carries are in good standing with state regulators.
“That is among the many extra egregious forfeiture instances that we’ve ever seen,” stated Dan Alban, senior legal professional on the Institute for Justice, a libertarian group that fights forfeiture excesses nationwide and represents Empyreal in its lawsuit.
Alban known as the money seizures a “very cynical try to take advantage of the variations between federal and state legislation” on marijuana.
Possession and sale of marijuana stays unlawful below federal legislation, however 36 states have legalized medical hashish, and 18, together with California, enable leisure pot.
Through the 2020 presidential marketing campaign, Biden promised to let states “proceed to make their very own decisions relating to legalization.” He additionally vowed to decriminalize marijuana, however he has taken no steps to maintain that pledge.
A Justice Division spokesperson didn't reply to repeated questions by electronic mail on whether or not the Biden administration’s insurance policies on marijuana enforcement allow seizures of money from companies licensed to promote hashish.
Empyreal’s lawsuit describes the site visitors stops of their vehicles as “freeway robberies” by authorities brokers looking for to pad their budgets with forfeiture cash.
It accuses the San Bernardino County Sheriff’s Division of breaking a California legislation that protects monetary establishments serving pot dispensaries. It additionally alleges that the FBI and the U.S. Drug Enforcement Administration violated a federal legislation that bars spending authorities cash to intrude with medical marijuana companies in states the place they're authorized. Empyreal says seven of the eight state-permitted dispensaries whose money was taken in San Bernardino County had been licensed to promote medical marijuana.
The Sheriff’s Division and federal authorities deny wrongdoing, saying Empyreal is looking for a courtroom injunction that may improperly impede lively legal investigations of suspected cash laundering and unlawful drug gross sales.
Federal prosecutions of marijuana crimes have been uncommon in California since 2013, when a memo by then-Deputy Atty. Gen. James M. Cole suggested U.S. attorneys in states which have legalized the drug to bypass all however probably the most critical instances, resembling these involving violent gangs or cartels.
The Trump administration rescinded the Cole memo, however federal prosecutors in California are nonetheless reluctant to carry marijuana instances earlier than juries accustomed to widespread pot smoking.
Black-market marijuana — untaxed, unburdened by environmental guidelines and cheaper than authorized hashish — has continued to thrive within the 5 years since California legalized leisure pot, and San Bernardino County Sheriff Shannon Dicus has been cracking down on unlawful farming within the excessive desert.
Within the 5 months since he launched Operation Hammer Strike, deputies say they've seized greater than 400,000 hashish vegetation and arrested 527 suspects.
In response to the lawsuit over the armored automobiles, Dicus launched a assertion claiming that greater than 80% of the marijuana bought in licensed dispensaries is grown illegally, however he supplied no proof that any of the eight companies whose money deputies seized from Empyreal’s vans had been promoting black-market hashish.
“My deputies are skilled, and I'm assured we'll prevail,” Dicus stated.
The reluctance of banks to do enterprise with marijuana dispensaries has compelled many to function totally with money. However since 2014, when the federal government’s Monetary Crimes Enforcement Community launched steerage on the way to take deposits from state-licensed dispensaries with out breaking federal legislation, greater than 700 banks and credit score unions nationwide have begun accepting their cash.
Empyreal, a Pennsylvania firm that transports money for dispensaries, comfort shops and different purchasers in 28 states, depends on banks and credit score unions to do the federally mandated due diligence on marijuana outfits whose money it carries, stated Deirdra O’Gorman, Empyreal’s chief govt. The corporate checks state licensing information to confirm compliance, she stated.
The primary signal of bother for Empyreal got here on Could 17, when a sheriff’s deputy in Dickinson County, Kan., pulled over one in every of its vans’ drivers on I-70 for an alleged site visitors violation and questioned her.
She informed the deputy she was on her strategy to choose up money at medical pot dispensaries in Kansas Metropolis, Mo., then deliberate to drive the cash again via Kansas the subsequent morning to deposit it at a credit score union in Colorado, in response to the DEA. Medical marijuana is authorized in Missouri however not in Kansas.
The subsequent morning, the DEA put the driving force below surveillance as she made her stops in Kansas Metropolis. On her method again via Kansas, the identical sheriff’s deputy stopped her once more on I-70. This time, the deputy seized the greater than $165,000 in money that the driving force had collected at 5 state-licensed dispensaries in Missouri.
The DEA and the U.S. legal professional’s workplace in Kansas are attempting to confiscate the money, claiming it's tied to unspecified federal drug and money-laundering violations by unnamed folks.
In a courtroom submitting, Empyreal stated an audio recording that it obtained from a federal prosecutor captured DEA agent Bryson Wheeler telling the Kansas sheriff’s deputy that legislation enforcement ought to “crush each one in every of their automobiles that they will determine,” referring to Empyreal. Wheeler additionally was recorded telling the deputy that authorized hashish proceeds can't be transported lawfully throughout state strains, which the corporate says is fake.
The deputy responded, “We’ll begin taking all of them down without delay,” in response to an Empyreal courtroom submitting.
Within the Barstow case, sheriff’s deputies say they pulled over the armored automotive on Nov. 16 after allegedly seeing the driving force tailgating. The motive force and his supervisors, who spoke to a deputy by telephone through the cease, gave “inconsistent statements,” creating suspicion the van was carrying “illicit proceeds of illegal drug gross sales,” Sheriff’s Sgt. Alex Naoum stated in a courtroom assertion.
The deputy obtained a state Superior Courtroom choose to signal a search warrant authorizing the seizure of foreign money, electronics and every other proof of unlawful transport of “marijuana proceeds.”
In its courtroom papers, Empyreal says Deputy Jonathan Franco’s obvious confusion over how the corporate operates led him to falsely inform the choose that it converts dispensaries’ money into cryptocurrency. Empyreal says Franco additionally falsely informed the choose that among the pot shops whose money was within the van had been unlicensed. Franco’s warrant utility acknowledged that Empyreal lacked a marijuana enterprise license. The corporate says no license is required to hold money from authorized dispensaries to banks.
On Dec. 9, deputies pulled over the identical driver in Rancho Cucamonga, this time for allegedly altering lanes with out signaling and “driving too quick for situations.” The FBI says money-laundering suspicions had been raised through the cease partially as a result of the driving force was carrying a doc instructing him to by no means say “hashish” or “marijuana” if stopped by legislation enforcement officers, and to by no means determine Empyreal’s purchasers.
A drug-detection canine named K9 Eros alerted deputies to the odor of narcotics close to the open driver’s door, Naoum stated.
Empyreal’s lawsuit says that video footage from the van exhibits that K9 Eros was “barely within the car.” With combined success, deputies tried to cowl the van’s cameras, it says, however an audio recording captured them counting the $350,000 in money and voicing disappointment it was lower than half the haul in Barstow.
“That’s it?” one in every of them requested the deputy who had seized the cash in Barstow. “You set the bar too excessive.”
One of many deputies stated he’d anticipated to search out “one million or two,” and one other responded: “At the least we obtained over one million.”
No site visitors citations had been issued to any of the Empyreal drivers.
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