Pubdate: Thu, 03 Jan 2013
Source: Helena Independent Record (MT)
Copyright: 2013 Helena Independent Record
Author: Eve Byron


Paul Schmidt, owner of the former medical marijuana dispensary
Sleeping Giant Caregivers in Helena, has been sentenced to one year in
prison for growing marijuana and money laundering and ordered to
forfeit $750,000 in alleged profits.

In letters to Senior U.S. District Court Judge Charles Lovell, friends
wrote that Schmidt, 57, only became a caregiver after seeing how
medical marijuana helped his adult son deal with debilitating, chronic
pain and deserved little, if any, prison time.

"When the drug was found to significantly help (his son) find some
relief, they discussed cultivating the marijuana themselves to help
not only (his son) but others as well," wrote William Sackman, who
served with Schmidt in the U.S. Coast Guard. "In all instances when
Paul discussed his business with me, he referred to everyone coming
into his place of business as patients. This was no idle affectation.
He was truly interested in helping others."

Sackman added that before Schmidt took any steps toward forming his
dispensary, he approached the Missouri River Drug Task Force to ensure
that the new endeavor was legal. He also offered tours of his
facility, and Sen. Mary Caferro wrote that after seeing the business,
she was impressed with his professionalism and commitment to quality,
efficiency and patient care.

"It was made clear to me that Paul had made all efforts to conform to
state laws," Caferro wrote. "But most important, I was inspired by
Paul's primary motivation for investing in the business - his son's
health condition."

Sleeping Giant Caregivers was raided by federal agents on May 20,
2011. During the search, law enforcement seized 289 marijuana plants;
three gallon-size bags of marijuana plus other marijuana ready for
distribution; $913 in a cash register; assorted marijuana-based
edibles, including brownies, Rice Krispies treats, oatmeal bars and
oils, lotions, soaps and creams; a ledger and a log book of items
sold; and receipts for marijuana transactions.

He initially was charged in March 2012 with manufacturing marijuana,
and two counts of distribution and possession with intent to
distribute marijuana. In May, four additional counts involving money
laundering - four transactions totaling $28,000 - were added.

Schmidt faced a mandatory sentence of at least five years in prison,
and possibly up to 40 years, as well as more than $2 million in fines.
Federal prosecutors dropped the two distribution counts and three
money laundering counts after Schmidt agreed to plead guilty to
manufacturing marijuana and one count of money laundering, but he
still faced the mandatory minimum of five years in prison.

However, his attorney, Mayo Ashley, argued that a federal statute
known as the "safety valve" allowed a downward departure in sentencing.

"There was some question regarding this because Schmidt owned a
business (Sleeping Giant Caregivers) in Helena that employed several
people," Ashley wrote in court documents. "The business supplied
medical marijuana to patients who belonged and were in possession of
valid medical marijuana card. The business paid its employees a
regular salary from which it withheld state and federal taxes; paid
other fees incurred by a regular business, held a business license and
conducted itself as any other small business.

"Schmidt had the opinion when he opened Sleeping Giant and until he
was raided by federal agents that he was conducting a legal business."

Ashley argued that like other medical marijuana providers in Montana,
they based this belief on information including a U.S. Justice
Department legal memo that told prosecutors to pay scant attention to
people operating legally under state laws and statements made by
Justice Department attorneys throughout the country.

"It was only after the raid (one of a series throughout Montana) that
Schmidt discovered the law in Montana, which gave his business the
legal right to operate, was trumped by federal law and, given a strict
interpretation, he was in violation of the federal drug laws," Ashley

He added that numerous other medical marijuana providers who have been
sentenced received little or no jail time.

"Courts have recognized that people caught up in this conflict between
state and federal law would be better served, and the country would
benefit more, by being out of prison and contributing members of
society," Ashley wrote.

Federal prosecutor Paulette Stewart didn't agree with Ashley's
assertions. She said it's noteworthy that the search warrant for
Schmidt's business wasn't executed until after two months after other
medical marijuana facilities were raided in Montana, so he should have
been aware that his business was illegal under federal law.

She said he also was cited by the Helena Police Department for
operating without a proper business license, and that by buying
$750,000 worth of marijuana from another distributor to resell it, he
wasn't in compliance with Montana state law - even though a ruling on
that aspect of distribution didn't come until after he was arrested.

Stewart also argued that Schmidt wasn't eligible for the "safety
valve" sentencing departure because he was considered a leader or
organizer since he employed seven people and he didn't provide a
complete truthful statement to the government about his offenses. She
said he used marijuana "socially" for almost 40 years, and had $1.2
million in his bank account in May 2011.

Stewart recommended a sentence of 70 months, followed by four years of
supervised release to reflect the seriousness of the offense, to
promote respect for the law, to deter further criminal conduct and to
protect the public. 
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