The inside story of how regulators took down a successful marijuana company

Sweet Leaf store

The Sweet Leaf marijuana store in Federal Heights, Colorado, was allowed to remain open temporarily after Denver regulators shuttered most of the chain’s other storefronts. (Photo by Matt Staver)

(This story appears in the April issue of Marijuana Business Magazine.)

New details have emerged from both sides in the high-profile flameout of Denver-based cannabis company Sweet Leaf, one of the most talked-about falls from grace in the regulated marijuana industry to date.

A brief background: In 2017, the company boasted 400 employees and was on pace to become one of the largest retail chains in Colorado. It held 26 marijuana cultivation, processing and dispensary licenses in Denver alone, with more in surrounding communities as well as a cannabis business in Portland, Oregon.

Then the wheels fell off.

By the end of that year, the Denver police would raid the company’s stores, arrest more than a dozen budtenders, destroy roughly 7,000 pounds of cannabis and sentence the three owners to a year in prison each for their roles in an illegal, multimillion-dollar sales scheme.

In 2019, owners Matthew Aiken, Christian Johnson and Anthony Sauro each pleaded guilty to violating the Colorado Organized Crime Act. Local authorities found them to be fostering the practice of “looping,” in which one customer would buy the maximum amount of marijuana allowed (an ounce) multiple times during the same day.

The Denver prosecutors said some consumers “looped” up to 40 times per day, leading to almost 2.5 tons of marijuana diverted to the illicit market.

But there’s a lot more to the story, says Nichole West, who was vice president of sales for Sweet Leaf before the raid and arrests. West pleaded guilty to felony drug charges and served a 30-day jail sentence for her role in the sales plot.

Nichole West of Sweet Leaf

Nichole West

In an exclusive interview with Marijuana Business Magazine, West explains why she believes the company was targeted by police and what she would have done differently.

(An interview with the former regulator involved in the Sweet Leaf investigation is available here.)

Why do you think law enforcement went after Sweet Leaf?

My biggest statement about this is 60% of the industry was practicing the same practice.

Sweet Leaf had made an effort to (offer) the lowest prices in town. That was literally our goal: to be the best price. “Working man’s weed” was our goal. We wanted to be weed for the people.

With as many stores as we had (operating), we had buying power. We had huge volume and the ability to buy a lot of product. We greatly affected the price point of the (Denver cannabis) market.

Based on our ability to buy so much more, we would get discounts. If I said, “I will buy all of it,” I would get a better price.

We were drastically busier than a lot of the other facilities around the state based on the fact that we (had) the best prices. Regardless (of whether) people were coming back multiple times, sometimes we would have lines out of our store.

We were in a lot of these really cute neighborhoods around Denver. We would end up with disrespectful customers that pissed off the neighbors, and so the city of Denver wasn’t stoked with us. We had become somewhat of
a nuisance based on how busy we were—and we weren’t in neighborhoods where that was OK.

In the Highlands, they didn’t want to see people out the door when they’re walking their children to the park. The neighborhood still had a very NIMBYian view of cannabis.

We had shifts where we would go clean up trash because customers were disrespectful. People would go buy weed and leave papers on the ground in these neighborhoods. We would be chasing these papers around.

But at a certain point, we had so much business that it was hard to keep up. It was hard to keep up with maintaining everything in the neighborhood properly while growing at the rate that we were.

The city was receiving nuisance reports from neighbors that the customers were leaving trash and weed jars all over the ground. That was a problem.

 Was there anything Sweet Leaf could have done differently?

Taken a more conservative approach. We were pushing the limit. We were trying to change things.

Realistically, how should you read the law? It never once said you can’t let somebody come back twice in one day. Never. It never said we were responsible for knowing how much someone had purchased in one day.

From our understanding, it was, “Regulate like alcohol.” You don’t track people’s beers, so why would we track your weed?

 What happened to the inventory during the raids and seizure?

Everything got taken. When the raid first happened, because this was a Denver issue, the stores that were not in Denver were not shut down.

The city of Aurora wasn’t willing to even shut them down. They were like, “That’s not against the law.” The city of Aurora did not understand (Denver’s rationale), and the same thing with Federal Heights (another Denver suburb).

So (Sweet Leaf was) able to operate in those two cities. In the city of Denver, which is where their grows were, everything got shut down.

I’m assuming the plants rotted. I wasn’t there, though.

 You were generating tax revenue. Did that seem to matter to prosecutors?

The state. The city. Jobs—we had 400 employees. Think about how much money that is for the economy.

The owners are the most kind, salt-of-the-earth, good, working people I’ve ever known in my life. We thought we were all on the same team. That’s where we went wrong.

It turned out to be Sweet Leaf versus the world.

Why weren’t you able to fight back more?

On a city level, we would have been able to, and on a state level, we would have been able to. But the state Attorney General’s Office was going to be the next court that we hit. We were terrified of federal court.

That’s where I tapped out. I ran out of money. My lawyer said, “It’s a $150,000 retainer to go to a federal trial.” Federal trial was a big deal and terrifying, and we would have faced 10 years in jail—federal prison.

We were out of options. … I had nothing left.

The Denver Police Department worked on the case for a year and a half. Their budget was endless and ours was pennies. None of us had the money. Every penny I had was going to pay my lawyer. It was exhausting.

I wish every day that I was rich. I wish every day that I had the ability to do this for the industry, to fight harder. I wish I had it in me. But I didn’t.

(The police) had invested so much. They’d sunk their teeth into us. At that point, there was no going back.