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Marijuana businesses searched as city struggles to shut down gray market industry

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The Family Joint was one of three cannabis clubs in town to get licensed. - NAT STEIN
  • Nat Stein
  • The Family Joint was one of three cannabis clubs in town to get licensed.

Rumor had it that some marijuana businesses were raided over the past few weeks, and now CannaBiz has confirmation that the Metro Vice Narcotics and Intelligence Division (Metro VNI), the local multi-agency drug task force, executed four search warrants relating to possibly illegal marijuana sales.

On May 2, officers paid visits to both locations of Hoppz' Cropz (one is on Hancock Expressway and one is on East Boulder Street) to search the head shops, which are believed to give free marijuana to customers who purchase things like lighters or rolling papers. KOAA News5 investigated the controversial business model right before a November raid.

At the time, KOAA reported, "During our first visit to Hoppz' Cropz, we were asked to sign an 'agreement' which asked for the last four digits of a social security number and sign that we were over the age of 21, which was confirmed by a driver's license which they photocopied. And with that, our undercover 'buyer' was now a member of the 'giftee' program. The employee then sold us a small glass pipe for $20 and 'gifted' us just more than a gram of the green stuff."

According to Metro VNI Commander Sean Mandel, who is with the Colorado Springs Police Department, VNI seized evidence during both the November and May operations, but still hasn't made any arrests. He did indicate that if charges are brought, they're likely to relate to the shops' alleged "gifting" model that's now illegal under both state and local law.

Last summer, Gov. John Hickenlooper signed a retail marijuana bill that contained a provision stating "it is unlawful for a person to transfer marijuana or marijuana concentrate at no cost to a person if the transfer is in any way related to remuneration for any other service or product." A violation of that clause is a Class 1 misdemeanor.

And in March, Colorado Springs City Council passed two ordinances that make the practice of gifting marijuana to a customer who paid money for some other product without a proper marijuana business license a violation of both the city's public safety and zoning codes.

As we've reported, the city's Medical Marijuana Working Group recommended those ordinances to Council specifically to address businesses like Hoppz' Cropz, which got name-dropped plenty in discussions.

About a year ago, City Council also passed a ban on the so-called "reimbursement model" widely used by the city's cannabis clubs, in which the private social clubs give marijuana to members in exchange for a reimbursement.

That ordinance also created a license that most clubs chose not to pursue, opting instead to sue the city over the ban's constitutionality. In December, a district court judge granted the city's request for injunction in that case, effectively ordering the end of on-site consumption and the private clubs' membership-based business model.

After law enforcement found the clubs were still operating, the city filed a motion to hold them in contempt on March 3 and enforce the injunction by requesting authority to close the businesses. That motion is set for hearing on June 27, and a tentative trial date is set for July 24.

NAT STEIN
  • Nat Stein

Ironically, one of three clubs to actually get licensed, the Family Joint — a Grateful Dead-themed cannabis club on the Westside at 125 N. Spruce St. — also got raided recently. Mandel says CSPD's warrant for searching the Family Joint was based on "information there's some shenanigans going on there." A sign now hanging outside the Family Joint says "today will be our last day."

By the way, the fact that unlicensed cannabis clubs are still operating in the Springs is curious, considering how easy it was for Denver to shut down similar clubs using combinations of nuisance abatement laws, indoor smoking laws and state laws defining legal marijuana sales.

Colorado Springs is the only local jurisdiction in the state to have a cannabis club ban on the books. Even so, the Springs can't seem to do what other cities haven't had much trouble doing.

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