Seven Years After Legalization, Colorado Battles An Illegal Marijuana Market

Aug 14, 2019

Earlier this spring, police in Fort Collins seized 420 marijauna plants (yes, 420) that had been illegally grown inside area homes. Also recovered: processed weed, weed concentrate, guns and approximately $110,000 in cash.  

It’s part of what state and federal officials are calling the largest illegal marijuana market Colorado has even seen. It’s a puzzling situation considering that back in 2012, proponents of Amendment 64 promised a regulated market would do away with the illegal dealers and drug cartels. 

In fact, it appears to have done just the opposite.  

Understanding the size of this illegal industry is complicated. The federal Drug Enforcement Agency has seen the number of illegal marijauna plants they seize each year steadily climb since 2014. But that’s not including the countless investigations led by local law enforcement, which often cross county lines and involve multiple agencies, making data analysis difficult.    

For Colorado’s 18th Judicial District, attorney George Brauchler says the number of black market  marijuana cases in his office continues to grow; there’s been 51 just this year and they now have two investigators dedicated to the issue. 

In 2014, police in Douglas County discovered hundreds of marijuana plants growing illegally inside a private residence.
Credit Douglas County Sheriff's Office

“I’ve only been doing this for 25 years and I have never seen the black market as robust and as complicated and as expertly cultivated as this one right now,” he said.

Brauchler’s district, which includes Arapahoe County and Douglas County, sees more of these cases than any other district. That includes one of the biggest busts on record, in which 80,000 plants were seized from a network of 41 houses — and these weren’t rundown places either. Brauchler says these days, illegal growers tend to set up shop inside unsuspecting suburban homes. He recalls one such bust that took place in an upscale retirement community. 

“(Investigators) were pulling 1,100 plants out of these relatively small homes in these nice neighborhoods. That’s incredible,” he said.  

Data from the Denver division of the U.S. Drug Enforcement Administration

The cannabis flowers and concentrates from these illegal grows are typically transported to states like Florida and Texas, where Brauchler said Coloradan weed has its own brand recognition. It also sells for three to four times the local price, which is an added incentive considering illegal growers already avoid paying costly state regulations, like product testing, licensing and a 15% excise tax. 

But dodging the rule book is perhaps most insulting to those who work in Colorado’s legal marijuana industry, like Scott Brady, who manages Smokey’s 420, a marijuana grow and dispensary in Weld County. 

“Each time somebody in the black market sells a gram they’re taking that right out of my people’s pockets at the end of the day,” he said.

The state requires companies like Smokey’s 420 to document every gram of marijuana from seed to sale. Everything from the specifications of the facility to the pesticides and soils used must be documented and approved by the Marijuana Enforcement Division or Colorado Department of Agriculture. Brady says staying compliant in this industry is more than a full-time job, but he insists it ensures public safety, something he’s certain black market growers care nothing about.   

“They’re going to be all about making a buck. They don’t care whether or not a person comes back next week, next month,” he said.  

Staff at Smokey’s 420 carefully roll marijuana cigarettes wearing sterile gloves and lab coats.
Credit Esther Honig / KUNC

Whenever Colorado weed is seized by law enforcement in another state, Brady says it gives the whole industry a bad reputation ⁠— as if businesses like his are the ones feeding this illegal supply chain. Not only that, but when black market weed is sold in Colorado, it diverts sales away from law-abiding businesses. Illegal growers can offer lower prices than legitimate dispensaries can afford.    

“I don’t think those guys understand the damage they do to our industry,” said Brady. 

How an underground market managed to take root around the same time that Colorado moved towards legalization is unclear. Brauchler believes the answer lies in early marijuana legislation, when in 2000 voters passed Amendment 20. The bill gave medical marijauna patients permission to grow as many plants as their physician recommended. Brauchler says illegal growers exploited this loophole to operate out of law enforcement’s reach. 

According to the Colorado Department of Public Health and Environment, in 2016 there were 8,210 people with permission to grow between 50 and 99 plants.

“If each patient grew 50 plants, that equals 410,000 marijuana plants,” Brauchler said.

Last year, a new law curtailed the official number to no more than 12 plants in a private residence, but at this point it’s hard to put the toothpaste back in the tube. The question now is how to effectively thwart a thriving industry?

Scott Brady at Smokey's 420, a dispensary and grow operation in Garden City.
Credit Esther Honig / KUNC

Brauchler and Brady agree that if more states legalized cannabis, it would deal a heavy blow to illegal growers, though it wouldn't put them under entirely. 

Legalization seems to be the one solution everyone can agree with. Even Lloyd, who asked that we only use his middle name because he works in the illegal marijuana market, sees it as “the biggest threat.” 

Lloyd says he doesn't physically transport anything across state borders. Instead, he likes to think of himself as a concierge, connecting growers in Colorado with major sellers in states where marijuana is still illegal, in particular the Bible Belt.  

“Anywhere marijuana is not tolerated at all is usually where the price is going to be the highest,” he said. 

He boasted there are entire cities that wouldn’t have access to marijuana were it not for him, and while his criminal record includes charges of marijuana dealing, KUNC couldn’t confirm this claim. 

Thanks to the state’s central location, Lloyd calls Colorado a “trafficker’s dream.” Ever since legalization, he says public perception of cannabis has changed dramatically and that’s made his job easier. Dealing marijuana used to be risky and confined to dingy and dark alleyways, but Lloyd says that’s all changed. 

“Those days are over,” he said. “Most of the kids that I’m correlating with here in Denver look like Justin Bieber.”

At first blush, Colorado’s illegal marijuana trade may appear harmless, but the DEA stresses these operations are often linked to more nefarious criminal organizations. Lloyd, for example, currently faces 13 charges of human trafficking in Arapahoe County. 

Even if marijuana became legal on a federal level, it’s likely that a black market would persist, similar to how cheap cigarettes are illegally trafficked into cities with high tobacco taxes, like New York. But as more states vote to accept recreational weed — there are 11 plus the District of Columbia — Lloyd says his work has become less profitable than it once was. He’s seen many of his peers “succumb to getting a 9-to-5.”  

Meanwhile, Colorado’s regulated marijuana market continues to grow. It brought in $1.5 billion in sales in 2018. Had it not been for growers and sellers on the black market, it might have been even more.