Tuesday, March 21, 2023
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Feds to Return Seized Dispensary Funds

Settlement is A Win For Pot Companies


In a shocking turn of events, the U.S. Department of Justice (DOJ) recently agreed to return funds it seized from an armored car company that was hauling cash for a legal cannabis dispensary on the condition that the company drop a lawsuit it filed against the agency. Advocates say the agency’s response to the suit is a positive sign for similar cases.

In January, Colorado-based armored vehicle company Empyreal Logistics filed a lawsuit against the government for five asset seizures that occurred in California and Kansas, claiming they had been done illegally.

The suit claimed that local law enforcement officers were coordinating with federal DOJ agents to manufacture reasons to pull over the company’s vehicles. The suit alleged that these stops were made entirely for the purpose of taking the cash that Empyreal was transporting from legally operating medical cannabis dispensaries to banks. According to the company, none of the traffic stops resulted in citation.

“Highway Robberies”

The string of stops began last May when a Dickinson County sheriff’s deputy pulled over an Empyrial Logistics van in Kansas for driving with an obscured license plate tag on May 17, 2021. Information gathered during the stop was shared with California police and the DOJ. It was allegedly used by these agencies to coordinate “the repeated and continuing highway robberies of armored cars by government agents,” according to the suit. The company’s tags were entered into a national database that would allow officers to identify them quickly.

On the following day, the same Dickinson County sheriff’s deputy once again pulled over the van, this time seizing more than $165,000 in cash. The Kansas U.S. Attorney’s Office claimed the cash was collected through the sale of illegal drugs.

The stops continued. On Nov. 16, an Empyreal armored car was stopped by the Sheriff’s Office in San Bernardino County, Calif. This time police seized nearly $700,000. San Bernardino officers once again stopped an Empyreal vehicle on Dec. 9, seizing about $350,000. In all, the company claimed it lost $1.2 million to asset seizures. No employees ever received a citation during any of these stops, and no charges were filed against the company.

It might seem like the kind of practice you’d hear about in other parts of the world, but civil asset forfeiture is alive and well in the United States. Many law enforcement agencies employ policies around the nation allow officers to seize property and cash if it’s suspected of having been involved in a crime without ever having to file charges or arrest a suspect. Any property seized in this manner can be sold or used by police agencies while its rightful owners struggle to prove that the property was gained lawfully. These cases—in which the protesting individual seems to be treated as guilty until proven innocent—can often last for years and are sometimes never resolved.

Changes On the Horizon?

Advocates have been fighting to kill asset forfeiture policies for decades, and many states (including New Mexico) have passed laws specifically banning the practice. But agencies across the nation continue to employ it.

Last week the firm representing Empyreal Logistics announced in a press release that the DOJ had agreed to return the money that was seized by San Bernardino County police if the lawsuit was dropped. The company accepted the conditions, but the firm said the settlement doesn’t affect the separate lawsuit in Kansas.

The DOJ’s decision to return Empyrial Logistics’ money speaks volumes about the changes that can be felt in the political climate surrounding cannabis policy. Agreeing to settle the case before it went to court could indicate that the agency was worried it would lose. “Empyreal was operating legally under California law, but with current federal civil forfeiture laws, even compliant businesses can be targeted,” Dan Alban, a lawyer for Empyreal, said in a statement.

A Need For SAFE Banking

While the settlement is certainly a win for cannabis companies—in that it indicates that the DOJ doesn’t seem willing to allow any legal precedents to be set around the forfeiture of cannabis funds—the whole episode once again highlights the great need for regulations that allow financial institutions to work with cannabis companies.

Federal law bars banks and credit unions from knowingly working with criminal organizations to make it more difficult for cartels and gangs to move their money around. In conjunction with asset forfeiture policies, these groups can effectively be crippled by law enforcement without ever having to suss out individuals within the organizations.

Unfortunately these laws also apply to cannabis companies—including state-legal operations—since the drug is still illegal at the federal level. Some banks have decided to take the risk and have so far been left alone by the DOJ, but that can change at any time. This has left many companies in a lurch, cutting them off from electronic payment options and forcing them to depend on armored vehicle firms like Empyreal Logistics to safely transport their legally gained cash from their businesses to distant banks that will work with them.

Federal lawmakers are once again looking at the SAFE Banking Act, which would protect banks against prosecution if they choose to work with state-legal cannabis companies. The bill has passed in the House six times over the last decade, but it’s never been able to gain traction in the Senate. The bill’s sponsor, Rep. Ed Perlmutter (D-Colo.), is reportedly retiring from Congress at the end of this session and said he’d be a “real pest” until it’s passed. If made law, the bill would make it easier for pot companies to use local banks like everyone else.


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