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Disclaimer: This column is written for educational purposes only. It does not provide specific legal advice and does not create an attorney-client relationship. This column should not be used as a substitute for competent legal advice from a licensed attorney in your state.
It’s an exciting time right now for many cannabis businesses. More and more states are legalizing marijuana and the public appetite for cannabis is huge. But with the uncertainty of marijuana’s legal status at a federal level and states continuously tweaking their laws, business operators are right to remain concerned about the possibility of raids.
It’s incumbent upon business owners to know their rights, understand how raids work, and take appropriate steps to prepare in case the authorities come knocking. Raids can come from a variety of different authorities with jurisdiction over your dispensary or grow house. The federal government has the authority to raid any cannabis business at any time, thanks to marijuana’s “contraband” status under the Controlled Substances Act. While federal raids were less common during the Obama Administration, the question of whether the Trump Administration will crack down on cannabis is a big unknown.
Raids are much more common at the state and local level, particularly where cannabis laws are conflicting or ambiguous. For example, your cannabis business may operate in a state that has legalized medical or recreational cultivation and sales. However, if your city or county has banned these activities, local authorities may seek to shut you down even if you are otherwise appropriately operating under state laws.
So, what happens during a raid? Typically, law enforcement authorities will show up unannounced and serve a search warrant showing their authority to conduct the raid and seize potential evidence. Be aware that sometimes search warrants are filed under seal, so details about why the raid is happening may not be immediately available. Officers may also serve arrest warrants, depending on the alleged violations. The search warrant allows them to search the premises and seize cannabis products, cannabis plants, cash, and even patient/customer records as evidence. Sometimes, search warrants are executed on personal property and assets as well.
What are your rights in the case of a raid, and how should you handle it?
First and foremost, when authorities arrive, all employees and business owners need to remain as calm and quiet as possible. Law enforcement officers may show up in a rather aggressive fashion and it’s best not to do anything that could escalate the situation.
It is your right to remain silent. You don’t need to explain yourself or tell your story to the officers, and doing so could actually end up hurting you. If you have a lawyer (and I hope you do), now would be the time to call them. They can speak to authorities on your behalf, seek out more information about potential charges, and find out whether the business will be allowed to reopen when the raid is complete.
Make sure to comply politely with all law enforcement requests. They may ask you to direct them to where cash, product, plants, and records are stored. They may also ask for security camera footage that may provide evidence of cultivation and/or sales being made.
Know that when items are seized, it can be very difficult, if not impossible, to get any of it back. Asset forfeiture laws allow law enforcement to hold onto contraband indefinitely. Even if charges are dropped or you win your case, you will not get this property back automatically.
How can you prepare for a raid or unannounced inspections?
1. Don’t make yourself a target. It’s easiest for law enforcement to go after the “low-hanging fruit.” For example, selling other illegal drugs in your dispensary or growing marijuana without a license are sure-fire ways to gain the wrong kind of attention. Keep in mind that even if you are fully licensed and believe you are fully compliant, seemingly small mistakes such as building code violations or failure to pay taxes can make you a target.
2. Build relationships with state and city officials. Attend state legislative and city council meetings, and get to know the officials in your area. Officials represent community interests and you’ll want to assure them that you are a responsible business operator. Show that you are a conscientious member of the community by contributing in meaningful ways, such as supporting local organizations and charities. It helps to have allies within the community who can back you up if something unexpected goes down with the local authorities.
3. Work with your lawyer or a compliance professional to develop a “Raid Procedure.” Seeking out professionals who are familiar with investigations and raids can be invaluable. For example, a former detective offers classes in LA specifically about how cannabis businesses can handle raids. Make sure to keep impeccable records of all licenses and permits, sales data, accounting, employee, and customer information.
If law enforcement requests any of these records, it’s helpful to keep a binder that can be provided immediately. It shows that you are a responsible operator who is diligent about meeting your obligations.
Establish a procedure for how all operators and employees should behave during a raid. Designate a point person who has access to business records and will know to alert the business owners if law enforcement arrives.
4. Practice smart hiring and provide continuous training for employees. One bad employee can make your business vulnerable, whether they are merely sloppy in their record keeping or sneaking product out the door. Invest in a thorough hiring process and robust background checks to alert you to any potential issues.
It’s also essential to implement comprehensive ongoing training for employees that includes “Raid Procedure” training. Oftentimes, lower level employees may be the first to come into contact with law enforcement during a raid. If they’re trained to handle the situation, both you and they will be in a much better position should one occur.
While there is no way to prevent a raid completely, these tips should help you reduce the likelihood that you’ll be a target. When in doubt, talk to your lawyer!
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