(by Joseph J. Kolb, FoxNews) – Taking over a trade once ruled by drug cartels and turning it into an all-cash business could make pot shops prime targets for extortion, black-market competition and robbery. One veteran border narcotics agent told FoxNews.com Colorado’s legal pot industry will find it hard to keep the criminals from horning in on a lucrative business they once controlled.
“Mexican [drug cartels are] already in Colorado without the risks,” the agent, who requested anonymity, said of the state’s heavy pre-existing cartel presence. “Legal businesses will likely see a rise in extortion attempts while law enforcement will see a lot of backdoor deals being made.”
Cartels, especially the Juarez and Sinaloa, who have a strong presence in Colorado, could not have been happy with the estimated $1 million in sales Jan. 1, the first day of legalized retail sales. In 2012 the think tank Mexican Competitiveness Institute issued a report saying that Mexico’s cartels would lose as much as $1.425 billion if Colorado legalized marijuana. The organization also predicted that drug trafficking revenues would fall 20 to 30 percent, and the Sinaloa cartel, which would be the most affected, would lose up to 50 percent.
Faced with such losses, the violent cartels could force their way in as black market wholesalers or simply rob pot dispensaries, which take only cash and have not been able to establish accounts with banks because of lenders’ fears of violating federal laws. But the general consensus is that the Mexican cartels will not quietly relinquish the Denver market.
The owner of the Colorado Springs dispensary told the Denver Post he is planning to get a concealed-weapons permit, for protection when he has to move money out of the store. “Any way you plan it out, there’s going to be a large amount of cash around,” he said. “And that’s extremely scary.”
Denver police are taking a wait-and-see posture as to what may emerge. “It’s only been a week, so we still have to sit back and see how this will play out,” Denver Police spokesman Sonny Jackson told FoxNews.com. “We’re a police department, we’re always concerned about what may happen.”
Jackson said he would not speculate as to if or which cartels may decide to infiltrate the legitimate businesses or how. “We’re concerned with the public consumption right now,” Jackson said.
The Marijuana Enforcement Division of the Colorado Department of Revenue, the primary enforcement office responsible for overseeing the production and sale of the retail marijuana, did not return repeated attempts by Fox News.com for comment.
Denver DEA office spokesman Albert Villasuso said with some 50 retail outlets in operation, the agency can only monitor if, how and when the cartels decide to move in to the legalized retail industry in Colorado.
“What is quite possible is that cartels will hire straw owners who have clean records who can apply for a license, then sell large quantities both legally and on the black market,” Villasuso said. “We still don’t know what the fallout will be but when there is this much money involved the potential is great for groups to want [to] capitalize.”
Villasuso also said that even if legal stores do face extortion efforts by cartel groups it is unlikely law enforcement will even be made aware of it if merchants are too frightened to come to police. Extortion has proven to be a lucrative ancillary enterprise for cartels in Mexico resulting in thousands of businesses closing rather than pay the quota, as it is called, or the store owners face the threat of death, which too has occurred.
One group who hopes to mitigate any risks is the Blue Line Protection Group, which specializes only in security for the marijuana stores.
Seeing a growing market, Ted Daniels started the company and uses ex-military and law enforcement to provide security for the stores’ money and supply shipments, and the growing operations. The highly-trained and combat-experienced guards are heavily-armed with assault rifles and protective vests.
“This was an industry here that created a lot of challenges,” Daniels told WDVR television news in Denver Jan. 7. “This group I put together is designed specifically to protect product, people, and money.”
Reprinted here for educational purposes only. May not be reproduced on other websites without permission from Fox News.
1. What are drug cartels?
2. How will the legalization of recreational marijuana affect cartel sales in Colorado?
3. How are the cartels expected to react to the loss of business?
4. a) How does the Denver police department plan to address the potential threat posed to recreational marijuana stores?
b) What will the Denver DEA do?
5. In addition to potential threats from cartels, what is another huge problem marijuana store owners face?
6. How are the store owners responding to these potential threats against their businesses?
7. This article describes problems for store owners and law enforcement that have arisen due to the legalization of recreational marijuana. List a few of the potential problems this law will most likely create for society/the community.
Banks afraid to give accounts to marijuana businesses:
- Legal marijuana merchants – mainly medical marijuana outlets but also, starting this year, shops that sell recreational marijuana in Colorado and Washington – are grappling with a pressing predicament: Their businesses are conducted almost entirely in cash because it is exceedingly difficult for them to open and maintain bank accounts, and thus accept credit cards.
- Though 20 states and the District of Columbia allow either medical or recreational marijuana use – with more likely to follow suit – the drug remains illegal under federal law. The Controlled Substances Act, enacted in 1970 classifies marijuana as a Schedule I drug, the most dangerous category, which also includes heroin, LSD and ecstasy.
- As a result, banks, including state-chartered ones, are reluctant to provide traditional services to marijuana businesses. They fear that federal regulators and law enforcement authorities might punish them, with measures like large fines, for violating prohibitions on money-laundering, among other federal laws and regulations.
- “Banking is the most urgent issue facing the legal cannabis industry today,” said Aaron Smith, executive director of the National Cannabis Industry Association in Washington, D.C. Saying legal marijuana sales in the United States could reach $3 billion this year, Mr. Smith added: “So much money floating around outside the banking system is not safe, and it is not in anyone’s interest. Federal law needs to be harmonized with state laws.”
- The limitations have created unique burdens for legal marijuana business owners. They pay employees with envelopes of cash. They carry bags of cash to supermarkets to buy money orders. They are able to open bank accounts sometimes – under false pretenses .
- The all-cash nature of the business has also created huge security concerns for business owners. Many have installed panic buttons for workers in the event of a robbery and have set up a constellation of security cameras at their facilities beyond what is required, as well as floor sensors to detect break-ins. In Colorado, Blue Line Protection Group was formed a few months ago, specializing in protecting dispensaries and facilities that grow marijuana, and in providing transportation security. The firm largely uses military veterans who have Special Operations experience. (from nytimes)
NOTE: Drug cartels are criminal organizations developed with the primary purpose of promoting and controlling drug trafficking operations. They range from loosely managed agreements among various drug traffickers to formalized commercial enterprises.
The term (drug cartels) was applied when the largest trafficking organizations reached an agreement to coordinate the production and distribution of cocaine. Since that agreement was broken up, drug cartels are no longer actually cartels, but the term stuck and it is now popularly used to refer to any criminal narcotics related organization, such as those in Colombia, Guatemala, …Mexico, Afghanistan, and Pakistan. (from wikipedia)
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