Sunday, April 9, 2017

What would you do for $2 billion?

Yahoo reports confidently that The Way People Buy Legal Marijuana will Change in 2019. It is an intriguing headline that belies the fact that there is no "legal" marijuana in the U.S. Marijuana is a Schedule I drug, and according to Federal law has "has no currently accepted medical treatment use in the U.S." 

The U.S. has a federalist constitutional government structure. According to "the Supremacy Clause," the U.S. Constitution, and the laws of the United States are the "the supreme law of the land," "anything in the Constitution or laws of any state to the contrary notwithstanding." If some substance or action is against federal law, states can not "legalize" that. If Florida passed a law legalizing the printing of currency or Georgia's legislature established restrictions on travellers from Tennessee, their actions would clearly violate the construct of American governance. Federal law would override. 

The phrase "medical marijuana" is no less an oxymoron than "jumbo shrimp," "seriously funny" or "constant variable/" Likewise, there is no "legal marijuana." As the government has decided marijuana has no medicinal function, it is against the law to grow it, possess it, sell it or use it. Until that changes, people can be penalized for their involvement with it, whether states elect to enforce the laws or not. 

And, some states have elected to no longer have parallel state laws regarding marijuana. This is not "legalization" under state law, but a "decriminalization" under state law. These states have elected not to prosecute the cultivation, possession, and sale of certain amounts of the drug. Those decisions have come with revenues. Colorado takes in over $70 million in tax revenue from pot, more than it does from alcohol according to Time. Sales of pot in Colorado have topped $1 billion, according to Fortune

There is evidence that it has not been a trouble-free decision. Law enforcement in Colorado has been shocked to find that people are unlikely to obey the limits and parameters that state law has set. I recently noted the issues with "grow houses" and pot production in Marijuana Headaches in Colorado. Essentially, having been told that the state will not prosecute for possession of "x" plants, it appears a fair number of Coloradoans are growing substantially more plants. Law enforcement in Colorado ignores federal law, and appears unable or unwilling to enforce it's own laws. The legislature there appears poised to "fix" that problem by passing new laws for the growers and police to ignore. 

A recent post titled Treat Her Like A Lady: Civil Forfeiture’s Lack of Chivalry by blogger Chandra Bozelko details the pervasiveness of "civil forfeiture" in the U.S. She notes that "annual deposits from forfeiture reached $4.5 billion," which represents a "a 4667 percent increase from 1986." What is "civil forfeiture?" In effect, a state may seek to keep people's property because it is connected with some crime, and so can the federal government. 

Ms. Bozelko notes that forfeiture does not require conviction of committing a crime in most states (the exceptions are Nebraska and North Carolina). In the remaining states, it appears that there is no requirement that the owner of property need even be charged with a crime in order for the government to seize and sell their property. Even when "innocence is as likely as guilt," the "state still gets to keep the property." Ms. Bozelko argues that this process is "no way to treat a lady," lady justice that is. 

And, it is not just the states that engage in this process. The U.S. Department of Justice has an Asset Forfeiture Program also. It can seize "assets that represent the proceeds of, or were used to facilitate federal crimes." That could be land, buildings, tractors, trucks, cars, computers, furniture, almost anything. According to law enforcement, quoted in the WAPO, the concept of civil forfeiture is "a tax-liberating gold mine.” And legal luminaries such as former U.S. Attorney General Loretta Lynch have embraced it. 


Of course, the challenge of this process is finding the people from whom property can be seized. The WAPO reports Millions of dollars have reportedly been spent training police across the U.S. to spot those engaged in potentially criminal activity, and to engage this civil forfeiture option. And there are many examples

That training has resulted in the $4.5 billion in annual forfeiture reported above. But what if the police did not have to look for the criminals? What if the criminals literally put up neon signs that read "come and get us, here we are?" And, as ridiculous as that sounds, that is precisely what a great many have actually done. 

I have not been in Colorado in a number of years. But, it turns out that there are over 600 "recreational" pot stores in Colorado. According to the ColoradoPotGuide.com, "there are more dispensaries in Colorado than Starbucks, McDonald’s and 7-Elevens combined -- and the numbers keep growing. If you want to find them, just search the Internet for where are pot stores in Colorado. While police across the country sit in cruisers, attempting to spot the next forfeiture contestant, the Colorado contestants are essentially in plain site, with neon signs and Internet advertising. 

According to Business Insider recreational marijuana is "legal" in Colorado, Oregon and Washington. That report also notes how possession is "legal" in California, Maine, Massachusetts, Nevada, and Washington D.C. But, it does not appear that these other states have the volume of ready drug dealers, the "dispensaries." In Oregon, there are 418 dispensaries. In Washington state there are at least 99 dispensaries. 

These recreational point-of-sale locations, though apparently a significant number, are dwarfed in some instances by the number of locations in which pot is grown. Among states that do not prosecute possession of marijuana, Washington state is alone in not allowing "home grows," according to The Stranger. But, that may change this year, according to a Fox affiliate there. 

In Colorado, residents may grow various quantities of pot plants in their homes. It is a booming business, of which police are fully aware. Knowing where the growers are and their non-compliance with state grow limits, Colorado police do little if anything to police the cultivation. A local news source in Colorado, the Gazette, reports that the U.S. Drug Enforcement Administration "is aware of of about 250 illegal operations within city limits" in El Paso County, Colorado. 

Oregon allows people to grow illegal marijuana in their homes, but only four plants each, according to ilovegrowingmarijuana.com. Thus, there are likely significant volumes of "home grows" in Oregon, but they are not as likely to be as obvious as the larger operations, which are well-known to authorities, in Colorado. But, in Oregon, there are 282 commercial known cites growing pot, according to OregonLive.com

So, what if the Federal Drug Enforcement Agency (DEA) decided to enforce federal law. It has become a seemingly alien concept in recent years, but the last few months have illustrated that there may be an inclination toward enforcing federal laws again. And, before objecting based on the cost of incarceration or punishment, remember that this post is about civil forfeiture, not criminal incarceration. Prosecuting, housing and feeding inmates is expensive. What if the DEA simply went to the open, obvious locations and seized property? It has been reported that the new U.S. Attorney General "is a major supporter of civil forfeiture."

In El Paso County, Colorado, there are 663,519 people, and 250 known illegal grow operations. There are 5,300,000 people in Colorado, so El Paso County represents about 12.5% of the Colorado population. Extrapolating, there are possibly about 2,000 illegal grow houses in Colorado. The median home in Colorado is valued at $324,600. So, if each illegal grow house was forfeited, (2,000 x $324,600) it might yield $650 million. 

If the raid on each grow house also yielded one vehicle that had been involved in transporting related material (marijuana, seeds, cash, fertilizer, equipment, etc.), that would be 2,000 cars. In Colorado, the average used car sells for about $15,000, according to the Denver Post. Those cars might bring another $30 million at auction. 

The recreational "dispensaries" that are clearly known and easily located currently numbers at least 1,117 in Colorado (600+), Oregon (418), and Washington (99). If each of these commercial properties was worth what the Colorado median home value ($324,600), that would be $362 million. If each of these dispensaries yielded a single vehicle that had been used in the criminal enterprise, that would yield another $17 million. These figures of course are thought of in terms of seizing pot stores, but in at least some instances it is possible entire malls or apartment complexes might be seized for their role in the pot store co-conspiracy. 

Do these dispensary owners and employees purchase anything with their earnings and profits? Perhaps one home and one car could be seized from the store manager or owner of each dispensary, another $379 million. 

It is entirely possible that about $1.5 billion ($650m, $30m, $379, $379) could be seized with little to no real effort. The locations are known and even advertised. 

Remember Colorado had sales of over $1 billion last year. There was another $1 billion in Washington State. Oregon was another $160 million. That $2.16 billion equates to a daily revenue stream of about $6 million ($2.16/365). When each of the dispensaries is raided and seized, that seized cash alone could yield $6 million. That figure alone would easily pay the time and overtime for the DEA agents effecting this enforcement. 

First offense penalties (Federal) for possession of marijuana is $1,000 fine and selling marijuana can carry a minimum fine of $250,000 (up to $4 million for large volume dealers). Assuming that each dispensary (1,117) and "home grow" (1,997 in Colorado alone) yields one person that can be fined for possession, that generates $3 million in fines (how many stores of any kind have you visited with only one person employed?) And, each dispensary could be fined at least $250,000, yielding another $280 million. 

Each "commercial grow" (282 in Oregon alone) could be fined at least $250,000, likely generating another $187 million. These potential fines total $470 million. If the Racketeer Influence and Corrupt Organizations Act (RICO) were engaged, perhaps each employee of each company or enterprise might eventually be fined for their involvement. 

With virtually no investigation (locations are either known or reasonably simply discerned), federal law enforcement could generate $1.5 billion in property forfeiture and another $470 million in fines, a total of $2 billion. 

What would you do for $2 billion? 

If it involved looking and hunting, perhaps you would be disinclined, but does the term "shooting fish in a barrel come to mind? 

The total annual seizure forfeitures are estimated at $4.5 billion. And these minimal efforts in Colorado, Oregon, and Washington could easily increase that total by 33% in a single year in seizures alone, with another $470 million minimum in fines. 

It is possible that these estimates would not come true. Possibly the homes, stores and cars involved are either overestimated in volume or overvalued. But, it is as possible that the figures could be even higher. 

And, across the country, there are literally thousands of "medical marijuana" dispensaries. Ignoring that the supreme law of the land declares that marijuana has "has no currently accepted medical treatment use in the U.S.," there is nonetheless "medical marijuana." And each of those dispensaries could yield a $250,000 minimum fine, a $350,000 building and a few $15,000 vehicles. These could quickly add up to another $1 billion. There is no investigation necessary, the locations, names and business hours are published on the Internet. 

What would you do for $2 to $3 billion? Maybe I will drop by the White House and suggest I be appointed "Federal Agent at Large?"  Maybe work on commission? What is 10% of $3 billion, what is 1%?  Thank you very much!

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