‘Era of uncertainty’ as feds continue marijuana dispensary prosecutions 3 tied to dispensary chain indicted federally as state prepares to launch legal marijuana market

The Capitol Hill site formerly home to the Seattle Cross marijuana dispensary is now Star Buds. Two former owners in the Cross dispensary chain are now under federal indictment in a move their attorneys say runs counter to Justice Department marijuana guidelines. Star Buds is pictured Tuesday, March 4, 2014. less The Capitol Hill site formerly home to the Seattle Cross marijuana dispensary is now Star Buds. Two former owners in the Cross dispensary chain are now under federal indictment in a move their attorneys say ... more Photo: JOSHUA TRUJILLO, SEATTLEPI.COM Photo: JOSHUA TRUJILLO, SEATTLEPI.COM Image 1 of / 36 Caption Close ‘Era of uncertainty’ as feds continue marijuana dispensary prosecutions 1 / 36 Back to Gallery

Three men linked to a Western Washington marijuana dispensary chain now face years in federal prison as their attorneys claim the Justice Department has gone back on pledges of restraint.

While federal prosecutors claim the Green Cross dispensary group operators were violating state and federal law, defense attorney Michael Schwartz said prosecutors have arbitrarily targeted a licensed business operating under the state medical marijuana scheme.

Representing dispensary operator Lance Gloor, Schwartz said the prosecutions – launched more than two years after the investigation began – have helped to usher in an “era of uncertainty” as Washington’s legal marijuana market comes online.

“The government is sort of picking and choosing who they want to prosecute without any sort of coordination,” Schwartz said Tuesday.

“At the time that these allegations arose, the dispensaries were in fact legal under state law,” the defense attorney continued. “Quite frankly, I think they just don’t like the idea that these dispensaries were doing very, very well financially.”

Defense attorney Sunni Ko, who is representing dispensary owner and Lake Tapps resident James Lucas, said her client was paying taxes and abiding by state laws when federal agents came calling in 2011.

Lucas and Gloor were indicted in November alongside Matthew Roberts, who is alleged to have taken over several of the dispensaries after federal agents raided them in 2011. Filed under seal, that indictment was made public Friday after the men surrendered to authorities.

Linked by prosecutors to four dispensaries – Seattle Cross, Tacoma Cross, Lacey Cross and Key Peninsula Cross -- the men are alleged to have, well, run dispensaries. U.S. Attorney for Western Washington Jenny Durkan previously claimed the dispensaries "present a danger to our community."

Lucas claims through his attorney to have cut all ties with the businesses after the 2011 searches. Ko said federal prosecutors agree her client did so but are pursuing him nonetheless.

Prosecutors contend Gloor operated dispensaries in Lacey and on Pierce County’s Key Peninsula. Lucas is alleged to have owned the dispensaries in Seattle and Tacoma, as well as those Gloor operated; Roberts is alleged to have run the Tacoma and Seattle dispensaries after the operations began to draw federal attention.

While all three men have been charged with drug offenses and money laundering, Gloor is also charged with possessing a gun in connection with a drug operation. If proven, that count alone would mean a five-year prison term for the Puyallup man.

State charges previously dismissed

Thurston County prosecutors initially charged Lucas and Gloor in 2011 but dropped those drug charges in January 2013, 10 months before a federal grand jury indicted the pair and Roberts.

Beginning in August 2011, detectives with the Thurston County Narcotics Task Force bought small amounts of marijuana at Lacey Cross. That investigation was ultimately handed over to the Drug Enforcement Administration, which obtained search warrants for the Green Cross chain.

Lucas was previously raided in April 2010, when Pierce County investigators came to believe he was growing more marijuana than state medical marijuana law allowed. Lucas and Gloor purportedly used the proceeds of the grow operation to build and launch a coffee stand.

The Cross dispensaries were searched in November 2011. Raiding the Cross dispensaries in Seattle, Lacey, Tacoma and Lakebay, DEA agents also searched Lucas’ home and a hotel room where Gloor was staying.

According to state court records, the Lacey Cross dispensary alone served more than 1,900 customers. About 15 pounds of marijuana and 91 marijuana plants were seized from the dispensary, later known as the Bayside Collective, as well as customer records.

At the time, investigators claimed employees managed by Gloor were selling marijuana to customers without demanding to see their medical marijuana authorization cards. Investigators claim to have recovered five pounds of marijuana from Gloor’s motel room, as well as four ounces of hashish.

The November 2011 raids saw federal agents seize more than $128,000 from four dispensaries and their two owners. Agents also confiscated several pounds of marijuana, more than 110 plants and various pot-laced snacks.

Durkan: These dispensaries ‘threaten public safety’

Those searches coincided with three other federal investigations into Washington dispensaries. Two of those investigations netted multi-year prison terms for King County dispensary owners.

In a statement issued following the raids, Durkan said her office was hoping to punish “brash criminal conduct that masquerades as medical treatment.”

“In determining how to focus our drug enforcement resources, we will look at the true nature and scope of an enterprise, and its impact on the community,” Durkan said in November 2011. “We will continue to target and investigate entities that are large scale commercial drug enterprises, or that threaten public safety in other ways.

“Sales to people who are not ill, particularly our youth, sales or grows in school zones, and the use of guns in connection with an enterprise all present a danger to our community."

The Green Cross dispensary chain operators were not among those initially charged in federal court. Instead, they faced state charges that were ultimately abandoned two months after Washington voters approved Initiative 502.

Meant to decriminalize and regulate marijuana, I-502 prompted state officials to create a framework to sell the drug. Pot is expected to arrive on state-licensed store shelves later in 2014.

I-502, like the medical marijuana law before it, does nothing to change the federal position on marijuana. The drug remains entirely illegal from a federal standpoint, and the success of Washington’s fledgling marijuana market appears largely dependent of the discretion of the Justice Department.

Ko and Schwartz said the dispensaries were operating legally, paying taxes and properly licensed when the federal investigation began. Each attorney said separately that the Justice Department is violating its own guidelines meant to respect legitimate medical marijuana dispensaries.

Schwartz said prosecutions like the one his client now faces must raise concerns among those preparing to stake their lives and money in Washington’s new marijuana market.

“If you look at this, it seems to be they’re going to be at significant risk,” Schwartz said.

“It would seem to me that the best policy would be for (the Justice Department) and the local county prosecutors to come together on what the policy is going to be on this going forward,” the defense attorney added.

Supporters say the legitimacy of that regulated trade and the openness they hope will accompany legalization are key to killing the marijuana black market, and the violent crime sometimes associated with it. The threat of federal prosecution, they say, could keep growers and sellers in the shadows.

Second raid after dispensaries remain open

Having hoped to close them in the 2011 searches, federal agents again raided the Cross dispensaries in July following allegations they violate federal and state law.

Writing the court, a DEA special agent said the dispensary operators had been hiding profits from the state while selling marijuana.

Targeted in the 2013 raids were Seattle Cross, located on Capitol Hill, Tacoma Cross, Pierce County’s Key Peninsula Cross and the Lacey dispensary. Agents also served search warrants at homes in Lacey and Tacoma as well as two vehicles and a 57-foot boat.

Agents had hoped the earlier DEA action and threatening letters from the U.S. Attorney’s Office would prompt the dispensary owners to close down. Instead, investigators contend Lucas handed over the dispensaries to Roberts and another man who continued to run them.

In an affidavit filed in U.S. District Court, a DEA special agent described a series of undercover buys conducted by agents at each of the dispensaries targeted in the 2013 raids.

Writing the court, the agent contended the undercover DEA agent was able to buy marijuana at each store. The agent went on to allege that most dispensaries deal primarily in cash, much of which he contended is not reported to the state. By the agent’s estimation, the Seattle and Tacoma dispensaries both have annual gross revenues in the millions.

Search warrant returns show agents seized patient files in the most recent series of raids, as well as an unspecified amount of cash, numerous pot-laced snacks and several marijuana plants. Computers were also seized from the dispensaries. Federal prosecutors have asked that the dispensary owners be forced to forfeit $289,000 seized during the investigation.

Gloor, Lucas and Roberts have been charged with conspiring to distribute marijuana, conspiring to launder money and manufacturing marijuana.

Gloor is also charged with possessing a gun in furtherance of a drug trafficking crime; that count stems from a Sept. 20, 2010, incident when a pistol was recovered from a marijuana grow.

All three have since pleaded not guilty to the charges. Gloor remains jailed pending a hearing Thursday, while the other two men have since been released on bond.