Politico

The Mystery of the Brazen Pot Heists

SEATTLE—Regina Liszanckie was about to head to work when she got the text from the owners of the business next door to hers: The razor-wire-topped chain-link gate and front door to her building were swinging open, and a single jar of marijuana lay on the ground beside the gate. She had been robbed.

Four months earlier, in September 2017, Liszanckie’s business, Plantworks, had joined the thousand-plus other “producer-processors” licensed to supply Washington’s burgeoning trade in recreational marijuana. She and her partner set out to grow high-end “craft” weed in 2,500 square feet of an anonymous industrial strip in Seattle’s North End. On the night of the break-in in January 2018, Plantworks had a full crop—26 pounds of high-quality dried, cured flower, worth about $52,000—ready to deliver to local cannabis shops.

The thieves, recounts Liszanckie, bypassed the live plants and headed straight for the ready-to-sell stock, cleaning it out. It was devastating.

Liszanckie asked around and discovered she was just one in a rash of growers in and around Seattle who’ve suffered similar break-ins, six of whom consented to be interviewed for this article. Their accounts followed a pattern: The burglars came in the wee hours and speedily cut the electricity to the security cameras and alarms. Sometimes they smashed through walls to get in, avoiding the alarms on the doors. Because even the legal grow operations tend to be unsigned and inconspicuously located in small warehouses and industrial strips, the noise went unnoticed. And the burglars chose their targets well: Bypassing large grow operations with highly secure, purpose-built facilities, they hit smaller, more vulnerable growers producing high-end, easy-to-move weed.

The robbers also showed an uncanny sense of timing, striking just as the growers had amassed inventories of cut, cured, ready-to-sell product worth thousands, even tens and hundreds of thousands of dollars.

The growers began posting news of the heists on Instagram, swapping conjectures as to how the burglars knew where and when to strike. Two hypotheses emerged. The first: that an employee at a retail pot shop was either involved in the break-ins or telling the burglars whom to hit.

But as the burglaries continued, the growers came to suspect that the criminals had found another way of getting the information they needed to target vulnerable businesses offering big payoffs: The government was giving it to them.

After Washington’s residents became the first in the nation (together with Colorado’s) to vote to legalize recreational marijuana sales and possession in 2012, the state liquor board, newly renamed the Washington Liquor and Cannabis Board (WLCB) adopted exhaustive rules and regulations to govern the new trade. These require that cannabis producers and processors provide much more detailed information about their activities to the state each month than other businesses are obliged to provide—things like exactly how many plants they grow and harvest by batch and strain, how much inventory they hold and how much they sell, when, to whom, for how much. Whenever they transport product, they must file cargo manifests with detailed vehicle information. “We plant a seed, we report it,” Liszanckie says. “You take a cutting, you report it. How long you dry. What the final weight was. How soon did it go out door? What did you sell, who did you sell it to, for how much? What did they mark it up to? Easily 25 percent of our time is given over to tracking.”

The state and state-licensed data firms then post much of this information online, where it is available to the public.

In other words, Liszanckie and other growers fear that this system, put in place to ensure transparency and accountability in the newly legalized industry, may also leave a data trail that leads thieves straight to their doors, right when the pickings are fattest.

“If you are a crook, it’s a veritable laundry list of targets,” says Andrew Marris, a partner in the Seattle cannabis grower Fire Bros., which lost what it says was $200,000 worth of weed to burglars last summer.

Liszanckie and other growers complain that while Washington is busy policing them, state officials aren’t paying nearly enough attention to catching the actual criminals, or tracking the marijuana that is being diverted to illegal markets out of state. For all the state’s talk of transparency, local law enforcement and the WLCB told me they don’t track cumulative data on marijuana thefts. My ongoing public disclosure request for case files from thefts and robberies at licensed cannabis businesses in Seattle has so far turned up 54 from 2016 to 2018, but this list is far from complete. It includes only crimes against retail vendors, not growers, so it does not include about one dozen burglaries suffered by growers interviewed for this story, all of whom say they called the police and have yet to see any perpetrators apprehended. Last year, in a disclosure not intended for public consumption, Seattle Police detective Nick Kartes attested in a sworn certificate of probable cause filed against one of the few local cannabis burglars to be caught and prosecuted that in 2017 alone, “Seattle Police had more than 65 reported burglaries to marijuana shops.” (Kartes and Seattle Police burglary- and narcotics-unit commanders declined requests for comment.)

Meanwhile, the thefts have continued into this year—and Washington is grappling with a puzzle that will haunt other states as legal marijuana expands: How to bring transparency, accountability and security to an industry that has been covert and illicit for most of its history—and that still fuels a lucrative black market in most of the country. Washington regulators say they are committed to enforcing transparency in a trade that is still illegal in the eyes of the federal government. But in the process, the state might be turning its legitimate vendors into targets for bad actors who have a huge incentive to exploit the rules and just grab the goods.

***

Washington officials knew they were charting new territory when they opened up a legal market for an expensive product that was still illegal under federal law and in most other states. “Clearly, the world is watching the states of Colorado and Washington as their initiatives are implemented,” Governor Jay Inslee wrote to U.S. Attorney General Eric Holder in February 2013. “We intend to do it right.”

“We wanted to have the federal government let the legislation go forth,” recalls Alison Holcomb, the ACLU of Washington’s political director, who played a central role in passing the legalization initiative and drafting the legislation that implemented it. “We did not want to create an antagonistic relationship between the state and the federal government.” And so, at the legislature’s direction, the Washington Liquor and Cannabis Board set out to draft stringent rules, eliminating the ambiguities and loopholes that had dogged the state’s 14-year experiment with legal medical marijuana.

“Traceability” and “transparency” are the watchwords of the state’s “seed to sale” system. These regulations are intended to ensure that consumers know what’s in their weed and where it comes from, and that producers, processors and retailers safeguard quality, pay the state’s 37 percent cannabis excise tax (plus sales tax of about 10 percent) and don’t sneak product out to sell it on the untaxed black market. Toward that end, growers are also required to install video cameras around their premises—not for security but to monitor their own activities—and save recordings for 45 days.

Much of this information is not only reportable to regulators but also available to the public. The state posts the locations of all marijuana vendors and producers and detailed monthly sales data. Private data-aggregating firms such as 502 Data and Top Shelf Data (slogan: “Know Everything About Any Cannabis Business in Washington”) assemble that information, obtain additional harvest and inventory data via monthly public disclosure requests, add maps and other publicly available data, and post it all in easily digestible and searchable form. The full results, available to paid subscribers, make it easy to track the growers’ planting, growing and processing cycles.

The growers use these services to track market trends and check up on customers and competitors. But some have come to realize that, like Facebook users, they’re the product as well as the customers, and they should worry about who’s tracking them. “I used Top Shelf Data,” Liszanckie says. “I was shocked how much information I could find. It’s linked to Secretary of State records, Department of Revenue records, personal information you could glean.” Top Shelf Data did not respond to requests for comment.

Washington also collects data that are not posted online, either by the WLCB or by private firms, but that can be accessed with a public information request—for example the models of vehicles used to transport cannabis and their license and vehicle identification numbers.

Detailed floor plans showing where plants are grown, inventory is stored and security cameras are located as well as delivery-route manifests—a potential road map for robbers—are collected but not released, not even with a public disclosure request.

Not deliberately released, anyway. In February 2018, hackers broke into the state’s then-new marijuana traceability system, LEAF Data Systems, operated by the contractor MJ Freeway and adopted after technical issues dogged WLCB’s first traceability system and the next contractor selected to design a system bowed out of the project. The hackers, who weren’t caught, disrupted the transfer of required shipment information, temporarily paralyzing the trade, and stole the traceability database, including vehicle identifications and route maps. Even after this leak was stanched, implementation of the reporting system has remained rocky; more than a year later, the Liquor and Cannabis Board acknowledged that there were still about 150 known bugs in the Leaf software. Last month, a botched attempt to update the complicated software made it collapse, paralyzing the industry. An official assessment found that MJ Freeway insisted on proceeding with the update even though WLCB feared it wasn’t ready, causing elevated risks and “significant functional, data-integrity, and system-performance issues.” Smith says the LEAF system crashed for just “three to four days,” but Liszanckie says her operation “lost 21 days of total revenue in July” because of the “hopelessly, utterly, maddeningly broken” traceability system.

Theft-shocked growers have seized on this system—even without the hack—as a huge vulnerability, exposing them to unwanted attention from criminals. “Shout out the #WSLCB for making our addresses public,” one Seattle producer, Alex Prindle, posted on Instagram, together with alarming security-camera footage of a masked, machete-wielding burglar in the process of plundering what he says was about $200,000 worth of weed from his company, Fire Bros. “A quick Google search will give any solicitor and criminal the location of every cannabis business in the state. Why? I’m guessing that’s how this crew has knocked down so many Seattle spots.” Fire Bros. went on to offer a $20,000 reward, still unpaid, for information leading to the culprits.

“It still baffles me why [regulators] post that information,” says Spencer Schrote, whose Tacoma grow business, Royal Tree Gardens, got hit by burglars who came through a roof and cut through a wall but fled after an alarm went off. “It’s a huge security risk for us to have that out in the public domain. It puts a target on our backs. It makes things less safe.”

If following the law turns growers into targets, then they have an incentive to not follow the law, or at least fudge some reporting requirements. There’s no known evidence that any Washington growers have done that. But James Schwartz, a licensed grower in neighboring Oregon, worries about supplying the detailed delivery-route manifests, “with every single stop and time,” which his state, like Washington, requires of growers but does not release to the public. “That could just sit on some desk where the wrong eyes could see it,” he says. So instead of supplying the required route details, “I just refer them to Google Maps.”

“He’s probably wise to do that,” says Philip Dawdy, a veteran marijuana business consultant in Seattle, recalling the panic in the trade last year after the hackers stole Washington growers’ route manifests.

***

When they decry the disclosures of their information, the aggrieved growers are setting themselves against not just what they see as detached and unresponsive regulators but against a state that prides itself on open government and strong public disclosure laws. “Washington is a sunshine state, perhaps the most open in the nation,” says Brian Smith, the WLCB’s public information director, who has worked at the commission since the dawn of legalization. “When we started out, we were bombarded with public disclosure requests by reporters, by people concerned about marijuana in their community,” and by those trying to get into the industry who wanted to know what others were up to.

The growers’ addresses, sales and other data are “all public information for which there is a lot of public interest,” Smith explains. “People in communities want to know if there’s a grow operation near them. Cities want to know where they are. To go forward under a federally illegal product, Washington has to demonstrate that it’s carrying out a system that is responsible to the needs of the state, not just to the businesses involved.”

Smith brushes aside the growers’ fears that they’re being targeted through the information the state collects and posts. Burglary “doesn’t happen very often,” he says. “I just don’t think there’s much there.”

He notes that the WLCB also posts the locations of alcohol vendors. He suggests that the growers have no basis for complaining about the state posting their addresses and sales data when they have websites promoting their products: “I don’t know if you can draw any correlation between an address being known and a business becoming a target. These are businesses. They want to be known. They put themselves out there”—just like the liquor vendors the state also regulates. The growers counter that they promote their products to others in the pot business, not the public, and don’t disclose their locations. And supermarkets and distillers don’t carry a highly desirable, easily transportable product that sells illicitly for $3,000 a pound or more in the 39 states that have not legalized recreational marijuana.

Furthermore, says Smith, providing the sales data is a requirement of local banks—which are allowed to serve the Washington cannabis industry, unlike their counterparts in most other states that have legalized cannabis—in order to make sure deposits match reported sales and receipts from illicit sales don’t get laundered. (It’s a requirement, along with higher fees, that banks impose on cannabis businesses but not others.) Smith argues that the transparency is one of the reasons Washington banks were more receptive to serving this businesses—and why their counterparts in other states with legal sales haven’t lobbied for that right—a trend confirmed by Dylan Sheji, legal team manager at CannaRegs, a Denver firm that compiles and analyzes states’ cannabis-industry regulations.

“Federal prohibition and the lack of traditional banking services have created the largest security risk for cannabis businesses” nationwide, says Sheji: Lacking bank accounts, growers and retailers are forced to hold large stashes of cash on premises, a magnet for thieves and robbers. This appears not to be the case in Seattle, where growers can use banks. In nearly all of a sample of 40-plus burglaries documented at local growers and retailers, cannabis rather than cash was the target.

Still, Sheji notes that “Washington is an outlier” in the amount of information it collects and releases about cannabis businesses. Other states get by, and seem to escape the wrath of the feds, with less “transparency”—in the case of neighboring Oregon, much less.

Colorado posts the addresses of cannabis growers as well as vendors, but does not release individual sales data or business and security layouts, even with a disclosure request. Oregon, likewise, does not release individual sales data—and posts addresses only for cannabis retailers and testing labs. According to Mark Pettinger, a spokesperson for the Oregon Liquor Control Commission, legislators opted to exempt producers, processors and wholesalers because “we heard from them and from law enforcement that releasing that information could make them targets.”

When burglaries do happen in Oregon, says Pettinger, they seem to involve insiders—angry ex-employees or partners, or casual workers hired to trim buds. Law enforcement figures in Washington often suggest that heists there are also inside jobs, with the imputation that the owners are partly to blame for trusting the wrong people. Liszanckie heard it when she reported the burglary at Plantworks but says it doesn’t wash: Insiders “would not spend the time to bust through doors to the live plant rooms, then leave the rooms untouched in search of finished product.” And there are no susceptible insiders anyway: “The only workers are the owners.”

***

Ripoffs aren’t a new phenomenon in the weed trade, in Seattle or elsewhere. Illicit grow operations have long been plagued by robberies. But legalization was supposed to make things safer, for producers as well as consumers, by bringing the industry out of the underworld and into the legal light of day. Some supporters of legalization, including two former U.S. attorneys in Seattle, argued that legalization could even spur a drop in overall crime as police reallocated resources spent enforcing marijuana prohibition to solving other crimes. Others contended that making marijuana more readily available would reduce violent crime by drawing users away from drugs such as methamphetamine and cocaine, because marijuana users are less prone to violence than meth and crack users are.

Early research post-legalization suggested these promises were panning out, at least at a broad level. A 2018 study in Police Quarterly suggested that legalization has led to more cases of some types of crime being solved. Another study found “a significant reduction in rapes and property crimes” in Washington state after legalization, even before the first retail stores opened. And another concluded that legalizing medical marijuana in many states starting in the 1990s led to a general reduction in violent crime in the U.S. states bordering Mexico, apparently by undercutting traffickers there.

The picture is rather different for burglaries and robberies within the marijuana trade, though—and not just in Washington. The Atlantic recently reported that “dope rips,” thefts of processed marijuana, have actually increased after legalization in Northern California’s pot-growing “Emerald Triangle.” In Colorado, Denver saw its own surge in crime. “In 2017, we saw seven homicides directly related to illegal sale and cultivation,” Lieutenant Andrew Howard of the Denver Police Department’s Vice and Narcotics Section said in a 2018 video. “In 2016, we had well over 100 burglaries at licensed retail and grow locations.” In response, said Howard, Denver police prioritized crimes at the licensed businesses, assigning two detectives to them and working closely with owners to improve lighting and security systems. As a result, the number of burglaries declined “by more than half.”

Data on marijuana-related crime are much harder to come by in Seattle. While Denver maintains and posts a comprehensive database of marijuana-related crimes, excluding illegal possession and sale, the Seattle Police Department says it does not track these separately from general burglaries and robberies.

When I asked law enforcement and crime-analysis agencies, from city police departments to the Washington State Patrol and state Office of Financial Management, for this sort of data on cannabis thefts, all referred me to the state Liquor and Cannabis Board. But the WLCB doesn’t cumulatively track this data either. The board does require that growers immediately report any of their production that gets lost, ruined or stolen. But, says its spokesman Brian Smith, it treats burglaries and other diversions to the illicit market as “one-offs.” They’re “reported to our traceability system. But we don’t tabulate any cumulative data on them.” In other words, theft and loss reports are digitally filed away, rather than compiled to provide data that might help law enforcement and policy makers assess and address such crimes—or to tally how much and what kinds of marijuana are diverted to illicit markets in other states. Staffing levels may have something to do with this inaction. The WLCB has a team of just 18, including six enforcement officers, to monitor more than 1,000 cannabis growers WLCB rules require that they report the loss immediately (formerly 1,400, before a market shakeout began); a larger cohort oversees alcohol and cannabis vendors. The producers say the inspectors assigned to them are overwhelmed and, in the words of one grower, “over their heads.”

“It’s a heavy workload,” Smith acknowledges. “We’re always looking for more resources”—despite the fact that the state collected $367 million in marijuana taxes and fees in the last fiscal year, 74 percent more than it collected for alcohol and tobacco together.

***

On Christmas Eve, 2018, Larry Perrigo, who operates Saints Joints in Seattle’s Georgetown industrial district, got a call from his alarm company. He says he called the police, raced down and scared off two or three intruders who’d smashed through his building’s back door, ripped out the alarms and pulled up a few plants. Later that night, with the alarms still disabled, the thieves returned, burrowed through a wall, and took a full crop, about 40 pounds of cured weed worth a little less than $60,000.

In February, what Perrigo believes was the same crew returned. They smashed through a different stucco wall, spray-painted the security cameras, and stole another 40-pound crop. In May, thieves struck in similar fashion across the state, at a Spokane producer called Panoptic, which did not respond to a request for comment but posted video of the heist on Instagram. Others in the trade commiserated. “Time to move location,” one self-described “greenhouse guru” posted. “Thanks lcb for making [cannabis growers’] addresses public record.”

On July 5, thieves broke into Seattle’s Fire Bros. yet again. “It seems to be a more professional bunch, as they were in and out in under four minutes,” says Marris. It did not seem to be an inside job: “We have a pretty tight-knit group of employees. The burglars broke into areas that did not contain anything valuable. That would indicate they were coming in blind.” Nevertheless, he says, they escaped with 14 bins of weed at various stages of production.

Theft losses put smaller growers like Marris, Perrigo and Liszanckie at further disadvantage against the larger operations that are seizing an ever bigger share of the market. These can afford 24-hour security and isolated, hardened facilities, unlike the frame and stucco warehouse units the smaller ones typically occupy. The state’s largest, Northwest Cannabis Solutions, co-founded by the scion of a wealthy Russian fishing clan, has national ambitions and what the trade journal Marijuana Venture describes as 100,000 square feet of production space with 44 grow rooms tended by “a small army of white-suited workers.”

The small growers also typically lack insurance against theft. The few companies that will insure cannabis businesses—Lloyd’s is one—require that they store their product in safes. “You’d literally have to have a bank vault,” Marris says. “Some of the big companies can afford them—they spend $500,000 to build them.”

And now, there might be some hope for frustrated growers who have yet to see any burglars apprehended. Despite the WLCB’s and Seattle Police’s lack of interest or capacity for tracking cannabis diversion, one agency seems to be paying attention. The Washington State Patrol recently established two specialized Marijuana Enforcement Teams with 10 officers between them for the stated purpose “of controlling the potential diversion and illicit production or distribution of marijuana and marijuana-related products.” Their commander, Lieutenant James Prouty, says the teams are “in the process of creating databases that will allow us to accurately track [diversion] activity.”

But even so, the legal growers fear theft losses will remain a cost of doing business. “We’ve just accepted it’s going to happen,” says Royal Tree’s Spencer Schrote, “because of the state of industry and the amount of public data that’s available.”

The Washington Legislature could follow Oregon’s lead and adopt an exemption from public records law limiting the data released on producers and processors. The ACLU’s Alison Holcomb thinks it’s time to look at that: “The legislature should give serious consideration to whether some appropriate exemptions from the Public Records Act should be implemented”— as it would “anytime public safety is at risk.”

Even if Washington followed Oregon’s lead and tried to shield the growers, Larry Perrigo fears that thefts and diversions would continue: “It’s going to happen in every single state [that legalizes marijuana]. As long as it’s illegal somewhere, people will steal it to sell there. As soon as there’s full legalization nationwide, this will all go away.”

Article originally published on POLITICO Magazine

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