Pubdate: Wed, 16 Apr 2014
Source: Denver Post (CO)
Copyright: 2014 The Denver Post Corp
Contact:  http://www.denverpost.com/
Details: http://www.mapinc.org/media/122
Author: Eric Gorski

COLORADO MOVES TO SHUTTER POT SHOP AFTER RAID

In October 2012, a state investigator discovered multiple illegal, 
after-hours sales of medical marijuana at VIP Cannabis in Denver.

Further inspections a month later and the following spring found more 
problems, from incomplete record-keeping to failures to track 
inventory and high plant counts that lacked documentation.

But it wasn't until last week - in the aftermath of high-profile 
federal raids on VIP and related marijuana businesses in November- 
that state regulators moved to shut down the business, sending 
notices of denial to VIP and three related medical marijuana operations.

The businesses also were ordered not to sell or transfer marijuana in 
their possession and control. VIP Cannabis promoted a 
marijuana-infused cookie sale on its Facebook page during the weekend 
and was open Tuesday, which a state official said would be investigated.

"With all situations, our primary focus is always going to bep ublic 
safety," said the official, Julie Postlethwait, spokeswoman with the 
state Marijuana Enforcement Division. "If we see a situation that is 
really egregious and very concerning, we can always take immediate 
action. But as with every regulated industry, there is an 
administrative process."

That means giving businesses opportunities to make fixes, and appeal.

The businesses have 60 days to request a hearing to challenge the denials.

If the state prevails - or the businesses withdraw their applications 
- - the companies' marijuana must be destroyed in the presence of state 
officials or the state will seize it, Postlethwait said.

The findings against VIP are outlined in a notice of denial that The 
Denver Post obtained in an open-records request.

On Nov. 21, federal agents executed search warrants on 14 businesses, 
including VIP, and two homes in the largest raid on Colorado's 
medical marijuana industry. Sources have told The Post that federal 
investigators are looking at possible connections to Colombian drug 
cartels, which the targeted individuals have denied. None of the 10 
named subjects has been charged.

The recent denials were part of a final batch of pending state 
license applications that date as far back as summer 2010.

The businesses were allowed to operate while the state processed 
their licenses, and only recently have officials cleared the backlog.

As of Monday, only eight businesses were operating without licenses.

The recent denials all involve businesses that share ownership or 
association with VIPCannabis:

VIP Cannabis at 2949 W. AlamedaAve. in Denver, three related 
growwarehouses and the license of owner Carlos Solano.

Grateful Meds in Nederland, one related grow and licenses of owners 
David Furtado and Robert Gimenez.

Kushism, at 2527 Federal Blvd. in Denver, and an associated grow.

Highlands Cannabis Company at 3355 W. 38th Ave. in Denver, a related 
grow and the license of owner John Esmeral.

Records connect those businesses to additional owners and individuals.

Postlethwait said other investigations are ongoing.

The violations in the denial letter overwhelmingly come from 
inspections conducted before the Nov. 21 federal raids. They include 
shortcomings involving recordkeeping, video surveillance, inventory 
tracking, product labeling and waste disposal.

Two of the dispensaries, Kushism and Highlands Cannabis Company, have 
been closed since the raids. The Nederland dispensary closed when its 
lease expired last month, Furtado said.

The denial notices - sent last week-included "administrative holds" 
that prohibit the businesses from selling or transferring marijuana 
in their possession or control.

Denver lawyer Sean McAllister represents Gerardo Uribe, one of the 
raid targets associated with VIP Cannabis.

McAllister said VIP has not sought a court order that would allow it 
to remain open. He suggested the administrative hold does not cover 
additional marijuana purchased from a wholesaler, a path VIP took to 
reopen after the raids.

McAllister declined to comment on the case involving VIP but said in 
general the state is making "broad-brush, vague allegations" that are 
impossible for owners to address. He said the state has shifted from 
working with the industry to moving to shut down dispensaries.

"The agency is going through a sham process without due process," 
McAllister said.

VIP's owners have expressed a willingness to get out of the business, 
including selling, he said.

Furtado said he is trying to sell Grateful Meds and is considering 
requesting a hearing or withdrawing his application. He said some 
violations were either fixed or minor. The denial notice cited 
failure to get a permit for changing locations or maintaining 
surveillance footage, among other items.

"If they can nitpick on stuff like this, they can deny every shop in 
the state," Furtado said. "Nobody is trying to commit any crimes here."

Another raid target, Laszlo Bagi, withdrew his license applications 
after receiving notices of denial.
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MAP posted-by: Jay Bergstrom