From behind the wheel of an SUV, Ryan watches the rear of a nondescript office building in the Denver suburbs, waiting for his partner to emerge. Tall and well-built at 48, he sports a neatly trimmed goatee, and tattoos peek out from beneath his shirtsleeves. Dog tags dangle from the rearview mirror, and a combat medic’s kit hangs off the back of his headrest. I’m seated in back, beside a black tactical vest loaded with six 30-round ammo clips (no longer legal to purchase in Colorado, they’re relics of his career as a cop). There’s also an extra bulletproof vest—for me, in case of an ambush. “If shit goes bad,” Ryan tells me over his shoulder, “you’ll come with me. We’ll leave Phil to deal with the threat.”
When Phil appears, Ryan backs the truck as close as he can to the exit: Less distance for his partner to cover means less time to draw unwanted attention. Like Ryan, Phil wears a navy blue polo shirt stretched over a Kevlar vest, which he tugs down to hide the Glock 21 on his hip. He pops the hatch and slides a long black soft case forward until it’s inches from my ankle. It contains an AR-15 rifle positioned upside down, its forward grip sticking out of the open case, in easy reach from the front seat.
“You’ll notice it doesn’t say weed delivery on the side of our vehicle,” Ryan says. “Our pedigrees are high, but we’re very discreet.” An employee of Blue Line Protection Group, a firm of former law enforcement and military personnel hired to secure big shipments of cash and “product” for Colorado’s legal marijuana industry, Ryan knows that clients value his discretion. “The government spent millions of dollars training us. Now we’re taking that training to the marijuana industry.”
While Ryan takes us down a side street and onto a main boulevard, Phil monitors the side mirrors to make sure we’re not being followed. Because they’ve been here only a few weeks, and because BLPG uses a dummy address on its website, they assume no one yet knows where to find them. But it’s part of an effort to stay sharp, Phil explains, and not get complacent.
The list of who might be following us runs the gamut from organized crime to street-level opportunists. In the worst-case scenario, it’s a cartel. Mexico has plenty of military-trained professionals, Ryan tells me. “It would be almost our counterpart they might send to make a statement—to attack us and say, ‘Hey, you’re taking away part of our business. We’re gonna do something about it.’” Armored transports are robbed all the time by lesser adversaries such as thugs and career criminals, and on any given run, Ryan and Phil may be transporting as much as $1 million in cash and weed stuffed into bags piled so tall it’s hard to see out the back window. The odds of an eventual violent confrontation, says Phil, are “extremely likely.”
“Anything can happen,” he says. “We just always assume that today is the day. It’s the same as when we were cops.”
That was at the Jefferson County sheriff’s office, where the pair worked together for years on the Special Operations Response Team. They received SWAT training, executive-protection training from the U.S. Marshals Service and the Secret Service, and hostage-rescue and vehicle-assault training—generally not a transferable skill set in the civilian economy. But since Ryan left the sheriff’s office last year to invest with others in BLPG, it’s a skill set they’ve found a use for.
Their clients were, understandably, a bit edgy at first, unaccustomed to mixing casually with agents of the law. But Ryan, who smoked pot as a teenager on the beaches of southern California, was more than at ease. He talks about the parallels between the present moment and the end of Prohibition—he recently watched a Ken Burns documentary on the subject. “This is a unique time in Colorado and the nation. Now you’ve given back to the people something the government had taken away.”
Before he became a cop, Ryan served five years of active duty with the Air Force military police before joining the reserves. “I’ve been to Afghanistan, Kuwait, Qatar, all over the desert,” he says. “I’ve done some good things over there, and I’ve seen a lot of bad things over there.” Deployed to the mountains of southern Afghanistan in 2005, he began to feel that politicians were not allowing him to do his job. “I’m thinking to myself, Okay, what is my life worth out here in this environment? What am I actually doing here?”
It’s a common thread at BLPG: disillusionment and an attendant desire to tap into their inner entrepreneur. Phil explains it more succinctly. He loved his first four years as a cop but hated the last four. “It wears on you after a while,” he says.
Phil had been around pot in high school and college but never tried it. When he began working at BLPG, a client mused that it must be surreal for Phil to find himself on the other side of the drug war. It didn’t feel strange until a month later, when he took $22,000 in cash to pick up 10 pounds wholesale for a client. “I had my surreal moment,” he tells me. “I felt like I was in Scarface.”
About 90 minutes outside the city, through pure cowboy country, Ryan turns onto a weathered blacktop of patched-up potholes and slows to a crawl. “Everything clear?” he asks. The most vulnerable point along their route is just ahead, inside the grow operation, a confined space that affords no easy escape, where he worries most about getting hit. But the road is empty, and Phil nods him onward.
At the entrance to the compound, a rancher type with a short gray beard and a denim shirt tucked into his jeans emerges. He waves at us and slowly swings open the gate. Ryan pulls forward into a cluster of about a dozen hangar-like tents. Each looks big enough to house three small Cessnas and is outfitted with industrial-size fans churning at the rear. Phil cracks the door, letting in a potent, disorienting breeze of skunky sweet tang.
Ryan waits behind the wheel while a hefty middle-aged worker in blue overalls and a ball cap greets Phil and leads us inside. A small forest of potted marijuana plants blankets one side of the room like a Christmas tree lot. On the other side nearly a dozen workers are busy separating buds from leaves into big cardboard boxes. The 1970 classic rock track “All Right Now” blares from a stereo.
We make our way to a row of wheeled baker’s racks. Each holds six shelves, and each shelf is covered with giant bags filled with weed. Nearby, the industrial-size fans are blowing a mountain breeze off the Hindu Kush through the tent. The big man kneels down and begins to hand up bags to Phil. He explains how he tries to keep each bag as flat as possible, with the weed evenly distributed, so it doesn’t bunch up and lose the identifying sticker slapped on top—part of the state’s effort to track every marijuana plant from “seed to sale.” The bags contain strains such as Sour D, F Place, Space Queen and Flo. “I don’t know where they get the names for this stuff,” the man says, flashing me a smile as he pinches his finger and thumb around an imaginary joint and takes a hit.
Any debate over legalizing marijuana quickly becomes a discussion about many things: crime, cultural values, failed policies, science, public health and safety, black markets, supply and demand. In this part of Colorado, much of that discussion centers on a more basic component: jobs.
“We got people working here who are allergic to marijuana, breaking out in all sorts of problems,” drawls the large man in the blue overalls, tracing a hand up and down his forearm. “But there’s hardly no work around here. We had the coal mines, but they closed ’em because they say it’s dirty energy.”
As the big man hands over each bag, Phil places it on a red bucket atop a scale to weigh it. A patina of professionalism coats the legal marijuana business. Old-school dispensary owners refer to marijuana as “medicine.” Industry professionals use the term cannabis. The Blue Line Protection Group calls it “product.” Phil scribbles a note on his clipboard after weighing the product and lays it flat in a black hockey bag on the floor. They quickly fill two bags and resort to using garbage bags for the remainder of the shipment, about 50 pounds—nearly $500,000 worth—in all.
The profitable niche that Blue Line Protection Group and its competitors are exploiting is the result of a rift between federal and state drug laws that emerged in 1996, when California first voted to legalize marijuana for medical use. Other states soon followed California’s lead, including Colorado in 2000.
Although 21 states and the District of Columbia have since legalized marijuana for medical use, the federal government still considers it illegal. In fact, the Controlled Substances Act classifies marijuana as a Schedule I drug, along with heroin, LSD and ecstasy.
That didn’t stop Colorado and Washington from voting to legalize recreational marijuana use, with hopes of bringing a surge in business and tax revenue. In 2012 Colorado voters passed Amendment 64 with 55 percent of the vote, and as of January it is legal for Colorado residents over the age of 21 to purchase up to an ounce of marijuana (out-of-state buyers are limited to a quarter ounce) and grow up to six pot plants in their homes. Smoking is restricted to private residences, and motorists with more than five nanograms of THC in their system can be ticketed for impaired driving.
With state legislatures forging ahead, the Obama administration was pushed to act, and last summer it began issuing a series of memos and guidelines to address the situation. In August one memo from the Department of Justice announced it would not try to block the state laws as long as states establish regulatory systems in line with recommended marijuana-enforcement priorities. But the nebulous legal rift persists, particularly when it comes to money.
Under federal law, banks are barred from handling drug money. Because banks fear punishment for breaking federal regulations—most important, regarding money laundering—they have largely refused to provide services to marijuana businesses, even if those businesses are legal under state laws. Credit card processing services have been similarly reluctant, making it difficult for dispensaries to accept debit or credit cards, so the entire system operates mostly in cash: Dispensaries take cash from customers; owners use that cash to pay taxes and employees and to purchase product from growers, who in turn use cash to pay their expenses.
But carrying tens of thousands of dollars around for these purposes invites a high-level security risk. (As a New York Times editorial put it, “where there are piles of cash, there’s armed robbery.”) So in January, members of Colorado’s congressional delegation sent a letter to the Department of the Treasury and the Department of Justice, requesting that they expedite federal guidance on the banking issue. The next month, those agencies responded with a memo that only added to the confusion.
The memo purports to “enhance the availability of financial services for…marijuana-related businesses.” But the next line reminds financial institutions that marijuana is, in fact, illegal. The memo goes on to spell out a complicated prescription of due diligence measures that a bank would have to undertake to ensure that any business it wants to take on as a client is not violating the Department of Justice’s recommended priorities for marijuana enforcement, including contributing to drugged driving, use by minors or on federal property, funding criminal enterprises, being used as a front or to divert marijuana to other states, mixing guns and weed, or growing on public lands.
Bankers were underwhelmed by the news. On the heels of the announcement, Don Childears, president of the Colorado Bankers Association, fired off a press release complaining that “after a series of red lights, we expected this guidance to be a yellow one. This isn’t close to that. At best, this amounts to ‘serve these customers at your own risk’ and it emphasizes all of the risks. This light is red.… No bank can comply.”
A tall, hulking figure, Blue Line Protection Group founder Ted Daniels carries himself with the air of a man accustomed to always being the largest in the room. He’s seated behind his desk, wearing a blue T-shirt with a red pullover, on the third floor of the company’s headquarters, the precise location of which he would prefer remained a secret. On the walls are framed diplomas and commendations documenting his career in the service of law and order, as well as certification for his training for a task force on clandestine drug labs in Baltimore; certification as a police instructor in the use of force, handcuff techniques, batons and risk management in undercover operations; and certification from Top Gun: Undercover Drug Investigation Training (“There’s a three-year waiting list to get in there,” he says). A Baltimore policeman’s nightstick is mounted on the wall—an instrument that his brother, a former officer of the year in Havre de Grace, Maryland, was notorious for using to clear drug dealers off street corners. (“There were guys on the corner who used to call him Stick Time,” he says. “Somebody would get in his personal space in a threatening manner—boom. He’d get dropped.”)
Daniels’s career as an antinarcotics supercop followed a football career cut short by a (future Super Bowl MVP) Ray Lewis blitz. Daniels was a starting guard at West Virginia when Lewis charged his left gap, taking Daniels’s arm with him. He heard a sound like bubble wrap twisting. It was an injury from which he never fully recovered.
He wanted to join the Marines, but his torn shoulder prevented him, so he went through the police academy instead. His police days are characterized by wild stories from the front lines of the drug war: staking out a suspected crack den from a van disguised as a plumber’s and sifting through the trash for coke straws, pipes or plastic bags to justify a warrant.
In 2011 Daniels pulled an unlikely career change, enlisting as an Army infantryman. He was on his way out of a marriage—his second—and had been suspended as deputy police chief of Minersville, Pennsylvania for 60 days after he and other officers clashed with the boss. He was eager for a change.
At 35 he was too old for the Marines. But he nailed the aptitude test, and an Army recruiter said he could have his pick of career paths—bomb tech, military police, intelligence, whatever he wanted.
Daniels wanted to be an infantry grunt.
“He looked at me like I was crazy,” he recalls. But Daniels wanted to be able to stick his chest out. “The code for infantry in the army is 11B. A friend of mine told me there are two jobs in the Army: 11B and 11 wannabe.”
Deployed to Afghanistan, he was drawn into a firefight that turned him into a viral internet phenomenon. He opens his laptop to show me the helmet-cam video, which has been viewed more than 27 million times on YouTube and covered extensively by the media since he uploaded it in 2012. In the footage, Daniels exchanges fire with an unseen enemy, tumbles down a hillside and has his rifle shot out of his hand. He caught a round off his helmet, half a round in his thigh, half a round in his ass and other bits of shrapnel in his jaw, elbows, knees, forearms and shoulder. He shows me a pea-size lump beneath the skin of his knuckle and pulls down a sock to show me where a big piece recently emerged from his shin. He also broke his foot. Convalescing stateside in July 2012, he was rear-ended by a minivan in standstill traffic on the highway—the final straw in his military career.
A year later, on his way out of the military, he saw on the news that a marijuana dispensary had been robbed. It was a lightbulb moment. While some of his buddies wanted to team up and go after contracts to provide security at bars, Daniels knew he wanted to work with marijuana. “I told people when you think of marijuana security, I want it to be right on the tip of their tongue, Blue Line Protection Group. That’s what I want.” Friends told him the fledgling industry would never pan out. Others thought the national market was too big to capture, his plans too grandiose.
He went at it full time, printing up flyers in his Manitou Springs apartment and going door-to-door to pitch his services. He quickly landed so many contracts that he found himself working 100-hour weeks and struggling to catch up. In January he joined forces with Dan Sullivan, a sometime cop turned real estate broker who had started a competing company.
“We’re still putting drug dealers out of business,” he says. “We’re just doing it in a different way now. We’re here to support and help the legal industry. And every dispensary that opens puts at least 10 street dealers out of business.”
It is cop’s logic artfully framed in the service of public order. And Daniels, who gets about 30 résumés a day and recently had to turn away a “full-bird colonel” from the Marine Corps, has found a wealth of experienced applicants eager to embrace it. Before long we’re joined by one of them, Donald, who sits across the table from Daniels, wearing a suit and tie and displaying a slightly obsequious smile.
Asked what he knows about the company, Donald says BLPG is probably the premier security group in marijuana—a niche made all the more essential by the failure of the federal government to reassure bankers they won’t be prosecuted for doing business with what’s still, federally, a criminal industry. “So RICO laws,” he continues, referring to the Racketeer Influenced and Corrupt Organizations Act, “are scaring the pants off of anybody in the banking industry.”
Daniels tells his prospective hire that BLPG is working on that, trying to create a compliance division that would verify whether dispensaries are operating in accordance with the conditions spelled out in the federal memos, an ambitious plan to become the indispensable agent for banking marijuana. They’re working with lawyers to patent their compliance measures now. They’ve brought in outside investors. They have “boots on the ground” in various states. One of their partners is in California, purchasing armored trucks. He’s had requests to come to Spain and Canada as an advisor. “We just started up in September, and we have a higher growth rate than Apple Computer did when it started,” Daniels says. “Look at my desk. It has been crazy.”
Donald explains he spent 20 years as a Green Beret. He also worked for eight years as an “industrial contractor,” he says cryptically, nodding in my direction. “We can talk a little bit more on that one-on-one if you don’t mind. You quite probably, I would think, ran across our organization when you were over in Afghanistan. The pictures I saw of you were at some of our current active bases over there.”
Daniels nods, impressed.
Donald sees alarming similarities between BLPG and one of the companies his organization contracted with while he was interim country manager in Iraq: Explosive growth can attract the type of personnel who may ruin a company’s reputation. (Here I’m reminded of the CIA-linked security firm formerly known as Blackwater, whose personnel were involved in, among other incidents, a 2007 shooting spree at a Baghdad intersection that killed 14 Iraqi civilians; and DynCorp International, involved for years in training Afghanistan’s notoriously corrupt police force, whose personal security detail to Afghanistan president Hamid Karzai made waves for drinking and whoring.) “I saw some real buffoonery, especially in Iraq,” Donald says. “Let’s face it, there are people out there, probably like in the illegal elements of the drug world, who want to see this experiment fail.”
“Exactly,” Daniels responds. “A lot of people out there want to see it fail.”
“So that means these people are looking for an opportunity to do something that is going to make—let’s just say at some point in time you’re probably going to make headlines. And it won’t be for a magazine article,” he says. “I watched a company that had more potential than anything I’ve ever seen in my life—and probably ever will again—flush itself down the toilet through arrogance, bad management and bad decisions.” Hence the importance of hiring the right people for the job up front. He’s practically reciting Daniels’s own sales pitch. And Daniels is loving it.
“How do you think you would fit in a counterintelligence position?”
“That’s something I have a very strong background in,” Donald replies. “Surveillance, countersurveillance, intelligence, counterintelligence—that’s something we did a lot of.”
Then Daniels has another idea and asks if Donald would be interested in sales (prospective clients are always impressed with Special Forces types). Donald, who is currently a regional manager for a chain of high-end dealerships out of state, is very happy he asked. “It is clearly one of my strong suits,” he says. “Obviously working in Pakistan, Afghanistan and Iraq, I am a road warrior. Getting on a plane doesn’t bother me in the least.”
“We’re talking about Nevada, Washington, California, Utah, Oregon,” says Daniels. “Even New York is going to be coming online soon. So is Florida, and I want to get established and get a foothold in every single state that is at least medicinal right now.” BLPG has been working with investors from New York who have advised him “to take it by storm,” he explains. “They said you’ve got to invade a state like Normandy Beach. Go in there and take it.”
An hour later, seated in the front passenger seat of his Porsche Cayenne en route to a dispensary, Daniels gushes about his new hire to the driver, Mikey, a 21-year-old who went knocking on doors with Daniels when he launched the business. “That guy from today, he’s definitely coming on,” Daniels tells him. After Donald’s decade with the Special Forces, he worked for “a large three-letter government agency,” Daniels explains. “Let’s put it this way: He pulled out three passports with three different identities.”
The “green rush” in legal marijuana has also created a new ecology of competition, attracting a cast of what seem to be relatively clean-cut, rule-abiding, taxpaying professionals who stand to rake in millions…as long as the skeevy Scumbag Steves of the industry don’t screw it up for everyone else.
One of the most successful of this new generation of marijuana professionals is Andy Williams, owner of Medicine Man, a Denver dispensary. Williams has brown hair, glassy eyes and a baked expression when he meets me one Sunday morning for a tour of his massive on-site grow operation and retail dispensary. With him is Elan Nelson, an attractive redhead in charge of Medicine Man’s business strategy and development. She opens the door to “the Green Mile,” an industrial garden containing a sea of neon-green potted plants that contains about 70 different marijuana strains. She explains that each plant is tagged with a chip—blue for recreational, yellow for medical (same product, different tax rates)—that allows state inspectors to automatically register how many are in the room.
A former Army scout, Williams bounced between corporate jobs as an industrial engineer until 2009, when he and his brother Pete, a stoner horticulturist who ran a successful tile-flooring business while making six figures legally growing medical marijuana on the side, decided “to go big” and convinced their mom to loan them $150,000. Now they have secured $1.3 million in angel investments and are doubling the size of their 20,000-square-foot grow operation into a shiny new wing designed to resemble an Apple store.
Medicine Man is expanding into Illinois and probably Nevada and New York after that. Williams has given tours to Coors, he says, and has more than a dozen of the biggest beer brewers coming for a tour in a few weeks. “That will be interesting, because these are the guys who, when it comes time, will be buying up companies like mine.”
But success has its downsides. Having so much cash around makes Williams nervous for his family and employees. Earlier, Dan Williams (no relation), owner of Canna Security America, a security firm that aims to become the Pinkerton agency of the marijuana business, showed me a series of security-camera clips of break-ins at several clients’ dispensaries, mostly inside jobs in the middle of the night. But does the pot industry’s banking issue translate into a physical threat for anyone?
When I ask Andy Williams about this, he spells out the scenario he fears most: Somebody thinks he has a trove of cash, follows him home, tragedy ensues. “Like that guy in California who got his penis cut off,” he says.
“One of his employees believed he had a stash of cash buried out in the desert or whatever. He got a couple of henchmen, and they took him, tortured him with a blowtorch and other things and then cut off his penis, only to find out he didn’t have any buried cash.” (According to press accounts, the victim survived, but his attackers took his severed penis with them so it could not be reattached.) Was it related to heroin trafficking? Cocaine? The cartels?
“Marijuana,” says Williams.
Opinions diverge on whether banks could be doing more to take on marijuana clients at this point. Aaron Smith of the National Cannabis Industry Association says he sees the federal memos as “a road map to banking marijuana.” And though he can understand why some might see a yellow light, he feels CBA president Don Childears’s claim that they are a red light is “absurd.” (Childears declined my requests for an interview.)
But Smith’s assessment seems uniquely optimistic. A source working on the issue at a big out-of-state bank tells me the memo does not go anywhere near as far as it would have to go to convince bankers (risk-averse bean counters by nature). Multiple federal agencies are already involved in regulating banks, and banks are “so used to being reamed by the government” that a memo from any one agency would not provide much reassurance. The amount of liability the memo puts on banks for due diligence of marijuana customers is “almost laughable,” he says.
Most people I spoke to in Colorado say they can see why the banks would consider them too much of a risk. Michael Elliott, executive director of the Marijuana Industry Group, is one of them. He represents 24 owners with a total of about 200 licenses for retail and growing. “The problem here is the banks now have more of a burden to affirmatively report this, to admit they’re breaking the law,” he says. “Our number one biggest outstanding issue is banking. We’ve tried to fix banking here, but we’re really seeing that the solution is a federal solution.” Elliott wants to see action from Congress or, failing that, from President Barack Obama. But on the legislative front, there has been little traction on a bill introduced in the House last July by Colorado’s Ed Perlmutter and Washington’s Denny Heck (both Democrats) that would allow banks to do business with marijuana firms in states where it’s legal.
For the legalization movement, the battle is largely over perception. “Cash-dominant industries are not known for paying all their taxes,” says Elliott. Marijuana activists worry about the industry becoming associated with narratives of violence, tax evasion or money laundering—the very enforcement priorities the Department of Justice is focused on.
A few years ago, Elliott says, things were easier. Marijuana businesses routinely used big national security companies such as ADT, contracted merchant-services companies to process credit card transactions and hired armored transport companies such as Brink’s, Dunbar and Loomis. Then, nearly simultaneously in several states, those companies began to drop their marijuana clients. “There was no formal position put out there, but all the whispering and people talking off the record to employees of these companies basically said the same thing—that they got calls and threats from the DEA,” he says. “When you put it all together it looks like they want a cash-only industry that can’t protect itself. That’s part of their game plan—to make our businesses unsafe, to basically terrorize us and create public safety issues that they then try to blame on us. But if someone gets killed here, which is going to happen, the people to point the finger at are the federal government, which is ignoring this problem.”
ADT, Brink’s, Dunbar and Loomis declined to comment or referred me to the DEA. A DEA spokesman, Lawrence Payne, told me the agency never “ordered” companies not to deal with the marijuana industry. He referred me to a statement that the DEA had issued, stating the agency “conducted voluntary meetings with concerned businesses” on the matter. When I asked if the agency had reached out proactively, sending letters or making calls to any businesses that had not sought their advice, Payne said he’d look into it and get back to me, but he never did.
In the meantime, Elliott says, there is some hope that banks might open up of their own accord. “If a bank does open up, something tells me you’re not going to know about it,” he says. “I think some banks have been open to doing business with us; they just haven’t wanted to talk about it. As soon as somebody finds out about it, it’s done. As soon as you say it out loud, it’s no longer true.”
Near the corner of Broadway and Asbury sits Walking Raven, a quaint turquoise storefront that resembles a music store. The sun has just set behind the Rockies, casting a thin band of gold against the purpling sky. Inside, co-owner Luke Ramirez stands behind the counter, riffling through a three-inch-thick stack of $100 bills. He wears sunglasses pushed back into his short black hair. The walls are decorated with posters of local bands, a Native American motif and the testing results of his signature Hong Kong Diesel (maximum cannabinoids: a whopping 31.38 percent). Ramirez tells me his customers come for the product, not the aesthetic. “We’re the best mom-and-pop shop in the state,” he says. “We keep it true to the people.”
He counts his money quickly, his fingers a fluttering blur—a sign he has handled his share of cash. Ramirez sorts the smaller bills into two stacks totaling $3,000 and $5,000—part of an elaborate nightly ritual to help him skirt reporting requirements for two branches where he has managed to secure an account as an “alternative retail store,” even though his banker knows it’s a marijuana business. The remaining $8,690 from his safe goes into three stacks of no more than 40 bills, all of which he plans to feed into an ATM where he has deposited more than $1.3 million in 40-bill increments so far. After he’s done, he checks to make sure the bills all face the same direction, which shows “you don’t really mess around with your money”—an important trick he learned as a black-market drug dealer—before counting through the whole sum once again. Directly above the counter are the watchful eyes of the authorities—an overhead camera that feeds to the Marijuana Enforcement Division.
Ramirez strikes me as friendly and honest to the point of self-incrimination. I like him immediately. He was 21 when he started this shop in 2009, and he thought it was cool to be surrounded by cash. “It’s not! It’s scary and it’s dangerous,” he says. “I’ve known people who would shoot you for $5,000, let alone $30,000.” One of his friends just laid out $250,000 in cash to his supplier the other day. The same guy was recently robbed by “professionals” who blasted the hinges off his safe with an explosive charge, he says.
Walking Raven had a theft the other night when someone broke into the safe and stole nearly four pounds of weed. “It could have been a lot worse, of course,” he says. He goes through the stacks again, taking out the crinkled bills and flattening them on the counter.
“We have to be so careful because we of course want to avoid money-laundering charges.” He chuckles nervously. “When you flat-out lie to a bank to conceal funds made from selling a controlled substance on the Schedule I drug, that’s a serious crime. I mean, by the letter of the law, you can be staring down the barrel of 20, 25 years for that. We know we’re breaking the law. It’s just that we’re trying to do it in such an honest way that if shit hits the fan, we’d have some sort of defense.”
The state’s legal codes and marijuana-tracking system are decent, he says, and much better than the anarchy that existed here in years past or today in California—“the Wild Wild West,” he says. But the system still has holes. For instance, even though the state requires each plant to be tagged in order to track it from seed to sale, there is a loophole: Some of the product is lost when the plant dries, shedding water weight—a percentage that varies. “I could just say, ‘I lost half a pound. Sorry, I suck! My growers suck! I’m terrible! You know…oops!’”
Ramirez suspects that people are using this loophole to sell out of the back door to dealers who move the product out of state. “That was one of the ugly things in the medical market that people didn’t want to talk about. But we did cater to people who resold our product and made a living off it. If we didn’t cater to them, we would have to go out of business.” He was glad to see a lot of those people priced out of the market by the higher cost of recreational marijuana (though one of his clients, a black-market dealer, threatened Ramirez’s life when his prices doubled). It works the other way too, with dispensary owners buying their supply from the cheaper black market even though it means losing their license if they’re caught.
Ramirez puts one of the stacks of cash in each of two clear plastic bank deposit bags and writes his banking info on them. Then he folds them meticulously, places them in a locked black briefcase and stuffs the thick wads of remaining cash into his pockets. “Okay, this is probably the most dangerous part of the entire thing,” he says, closing up shop. “If anyone were to follow me and hit me, it would be now as I am leaving the store.” He leans over a desktop computer screen by the door, carefully scrutinizing the honeycomb of exterior security-camera angles before heading to his car.
As soon as he slides behind the wheel, he locks the car doors. Along a two-block stretch of Broadway, we pass about a dozen (mostly medicinal) marijuana dispensaries with names like Little Green Pharmacy, Evergreen Apothecary and Ganja Gourmet. (“Back before the regulations you could go into Ganja Gourmet and get a piece of medicated pizza and eat it there,” he says. “That was their business model.”) Today, regulations prohibit opening a dispensary within 1,000 feet of another. But these were grandfathered in. Locals call the neighborhood “Broadsterdam.” (I also heard the owner of a dispensary situated elsewhere refer to it as “Retard Row.”)
As Ramirez turns the car toward the upscale neighborhood where his banks are, he tells me that the first time he smoked pot, something clicked. His friend had a connection, and they went in on an ounce together to sell. It was a rough learning curve. “I’ve always said I was a really good drug dealer”—a people person—“but a really bad criminal. I’m good doing business with people most other people are scared to do business with. But I’m not good at thinking about who is going to maybe do something mean to me or lie to me.” Like that one time during the dry season—midsummer, before the California outdoor is harvested and there is a severe shortage in the market—when he desperately called everyone he knew for two pounds of weed, essentially begging to be set up and robbed…which then happened.
Still, he was undeterred. He knew marijuana would be legal one day. He knew it, no matter what his parents or anyone else tried to tell him. Not that he didn’t lose faith. By 2007 Ramirez was burned out on living as a criminal. At his peak he was making $2,000 to $3,000 a day, but he grew tired of carrying a gun and feeling his heart race every time he saw a cop in his rearview. He stopped selling marijuana and started selling insurance.
Then, in 2009, with $6,000, he launched what he believes was Denver’s first dispensary with a license to sell medicinal marijuana. The barriers to entry were low, and the market was soon flooded. In 2011 the market bottomed out, with a pound of marijuana selling for $2,200 wholesale, $3,200 retail. There were months when he did only about $8,000 in total sales.
But when Amendment 64 passed, Ramirez was granted a limited monopoly. “I have one of the 80 licenses to sell marijuana,” he says. “I mean, it’s macroeconomics. The demand is off the charts. The supply is just trying to get there.” Today a pound retails for $8,500, and Ramirez clears about $10,000 a day. (He, like others, is quick to point out that with $50,000 a month to maintain his grow operations, almost $50,000 a month in taxes, plus rent, the public perception does not equal the reality.) But today, in contrast to the lean early days, his business is “killing it.”
As things stand, recreational-marijuana dispensaries are required to be vertically integrated—that is, to grow what they sell. That will end in October, and Ramirez expects to see the entry of wholesale dealers who will eventually bring the market equilibrium down to a lower price again—a two-year consolidation that will leave only those with the best quality, best branding and most efficient process standing.
He also expects legalization to spread. Activists normally push legalization measures during presidential elections, when a higher percentage of young people and minorities turn out to vote. But Alaska will be voting on it this November—“an off election year and not even the right month, and they are going to crush it.” He expects Florida to follow in November and, hopefully by 2016, California. He expects to see recreational marijuana legal in more than a dozen states and possibly legal at a federal level in a decade.
Still, Ramirez sees what’s happening in Colorado as unique—before all the guys with deep pockets and serious political connections corner the market on licenses. “This is the last free market for legal marijuana that will ever occur,” he says. “Come one, come all. If you have the courage to do it, do it. If you have the best product to sell for cheaper than your neighbor, it’s capitalism. Let’s go.”
He turns the car into an empty parking lot and drifts to a stop. The banker who helped Ramirez land his account here gave him two rules: Never step foot inside the bank and never deposit more than $5,000 at a time. That’s why he’s here at night, under cover of darkness, and about to drive to another branch to make another deposit. The lot is empty, but Ramirez locks the doors behind us anyway. I watch him cross the secure perimeter of white light illuminating the pavement. He’s already relaxing, eager to pass the money—a burden he carries at physical risk—to the bank, which, with plausible deniability, assumes a legal risk. It takes only a second. He pulls out the clear plastic bag of cash, feeds it into the chute and watches it disappear. Then he hurries toward the car without looking back.