Chris Lindsey: Montana’s MMJ Struggles the Canary in Coal Mine for National Cannabis Industry?

Photo by Chad Harder.

By Chris Lindsey

To say it’s been a rough year for medical marijuana businesses in Montana is something of an understatement. During the heyday of the industry in the spring of 2011, there were 4,848 registered caregivers. A year later, we have just over 400: a precipitous decline of more than 90%.

Like so many abandoned mining towns dotting the Northern Rockies, the medical marijuana industry in Montana is a virtual ghost town.

Montana’s experience should serve as a warning to medical marijuana professionals, entrepreneurs and businesses across the country: You are not immune to prosecution.

To a certain extent, the situation in Montana is tied to the fact that the law significantly changed in 2011 because of the efforts of several reactionary state legislators who created a system in which few could participate.

But what has really killed medical marijuana in Montana are the aggressive tactics employed by the federal government.

The feds have engaged in a scorched-earth policy that has succeeded in scaring most operators away or underground. We saw an unprecedented series of raids on local businesses in March 2011, with a steady trickle of raids since then just to keep the population on edge. Combine that with the stricter requirements of the current state law, and it’s easy to see why we’ve seen such a huge drop in the number of caregivers.

The government has been liberal in handing out indictments following the raids, and both the charges and penalties are staggering. The problem for those in the industry is that simply doing the things any typical business does in the course of normal operations creates a cascade of federal charges when that business is about medical marijuana. The laws that were created specifically for drug cartels are now being aimed squarely at legitimate businesses trying to provide a much-needed service to patients. This abuse of the law creates mountains of liability for those people trying to conduct themselves like regular business professionals.

Creating a business plan with prospective partners – common sense in any other type of business – is considered “Conspiracy to Manufacture, Distribute and Possess with Intent to Distribute Marijuana.” It carries a mandatory minimum of 5 years in prison and up to 40. It also includes a fine of up to $5 million, plus years of probation to follow.

Actually growing marijuana is its own separate “offense,” called “Manufacture of a Dangerous Drug.”  It also has a mandatory minimum of 5 years and up to 40 and another $5 million fine.

Following a harvest, a person is exposed to a charge of “Possession with Intent to Distribute Marijuana,” a bargain compared with the previous two charges. It carries a maximum of 5 years (no minimum) and a fine of $250,000.

Any money made, or assets bought with the proceeds, is subject to forfeiture to the U.S. government and is yet another felony offense. Using a bank to deposit sales proceeds is “Money Laundering,” and, you guessed it, another felony. And don’t expect your bank to be on your side: It just might freeze your account and hand your money over to the government even before the raid starts.

Taken together, planning a business, growing, harvesting, providing marijuana to patients and using a bank can expose owners to a staggering amount of mandatory prison time and financial penalties.

The federal government has only so many resources to throw at medical marijuana. Accordingly, it has to decide where to focus its attention.

From what we’ve seen in Montana, it concentrates on two types of operators. First, it picks the low-hanging fruit: businesses that appear sketchy and could be engaged in black-market operations. The thinking is that if the initial people busted look like bad individuals, the entire industry looks bad. The second type of businesses it targets are those run by high-profile activists (think Oaksterdam University). Take out the symbolic leaders and the feds get some great media coverage.

Ironically, success can be a business owner’s biggest liability. It creates a high-profile company with assets to take, employees to flip and turn against their employer, and lots of press following raids. Like the metaphorical canary in the coal mine, when the feds decide that it’s time to roll back or even eliminate medical marijuana in a particular jurisdiction, it’s the businesses that are the first and easiest targets.

Is there a magic formula to avoid prosecution? Not that we have seen in Montana. There were no warning letters in advance of raids here like the ones sent in California, Washington and Colorado. Distance to schools or serving non-patients made no difference here. Compliance with state law has been irrelevant, except where the fed can trumpet state violations to sour public opinion. Even our own law enforcement agencies turned against us for fear of losing federal funds, and our right-wing politicians applauded federal prosecution of those who were operating under the very laws they created.

It is all too easy to operate in a bubble in this business. Your patients love you, your employees love you, your local government loves your money and the public generally likes medical marijuana. But never forget you are an Enemy of the State and a top priority of the DEA. The war on drugs, like coal mining, is a dirty business. And sometimes the biggest casualties are the ones doing everything by the rules.

This business is not for the faint of heart, and it is a serious commitment in more ways than one.  Our society is in the midst of changing its long-ingrained bias against marijuana, and those of us who are part of that business often find ourselves bearing the brunt of the government’s resistance to that change.  Keep the faith!  History is written by the victors, and we will be the victors regardless of the battles fought against us now.

Chris Lindsey is a medical marijuana attorney in Montana and serves on the boards of the Montana Cannabis Industry Association, the Montana Medical Grower’s Association and Patients and Families United. Lindsey was indicted by the federal government for his involvement in a Montana medical marijuana business, with the government alleging many of the charges discussed here. Photo by Chad Harder.

3 comments on “Chris Lindsey: Montana’s MMJ Struggles the Canary in Coal Mine for National Cannabis Industry?
  1. Doug Banfelder on

    Great overview of the situation.

    I fully believe, as Chris stated, that history is on our side: too many Americans have first or at least second-hand experience with marijuana to believe the fear-mongers; the population knows the “War on Drugs” has utterly, demonstrably failed to reduce supply OR demand; and, the internet means no one lives in ignorance of events happening elsewhere.

    We have all the ingredients needed for success. Now it’s up to the community and it’s supporters to apply unyielding politcal pressure on policymakers, constantly and in every forum, including the ballot box.

    Reply
  2. Paul Mueller on

    Hey Chris,
    One question I have is why are the arrests only happening to the people who are the providers? Why not the people at the state office of licensing like Roy Kemp not being prosecuted since they are the ones that issued the State licenses to provide these services? Aren’t they just as guilty of participating in the production and manufacturing of MMJ? After all, they are receiving a profit from the licensing process. What in the federal law gives them an excemption from prosecution? Why not the Governor too, he’s the one that is responsible for the program. Selective procecution or equal justice?

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  3. Chris Lindsey on

    Well, I agree with you on a certain level. I think the outfit that most clearly fits is Northwestern Energy. It’s not like they didn’t know exactly what was going on. I understand they were even doing some of the wiring for the larger operations. I’d say if anyone really benefited from the money made, it was them, simply because every single provider in the state paid them and I don’t see how they can claim ignorance. But you also have the legislature who had numerous chances to change the law and didn’t. Plus there are the accounting firms, the state Department of Revenue, the hardware stores and supply companies. I have a website I created for medical marijuana political satire (ala the Daily Show) and I did a couple of bogus news stories poking at this issue. One was a story where the Fed indicted the hundreds of thousands of voters who voted for the law, and another was a fake story on a raid of the Department of Public Heath and Human Services offices in the state capitol. I just think the fed is going to protect companies like NW Energy, and they aren’t dumb enough to go after state agencies who were required by law to be involved in the state program. Of course, this isn’t about crime, its about politics, and so the fed will be careful who it goes after so they can keep up the momentum. I find it particularly offensive that the fed only looks at the gross deposits at banks when it seeks money damages from providers, and not the fact that most of money went right out the door for taxes, power bills, etc. It is truly damned if you do, damned if you don’t.

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