(AAron Ontiveroz, Denver Post file)

Colo. pot shop owner under indictment sues over store shutdowns

A Colorado medical-marijuana dispensary owner who is under criminal indictment sued state regulators Friday for closing down his shops.

The Colorado Marijuana Enforcement Division issued notices of denial this week to two Denver medical-marijuana dispensaries, Higher Health Medical and Jane Medical, according to exhibits included with the lawsuit. The notices list a number of alleged violations, including growing more plants than allowed, not having adequate security camera coverage and failing to ensure the supply of marijuana from the business’s growing facilities went only to the shops.

The notices also allude to owner Conley Hoskins’ legal trouble.

“Your criminal history indicates that you are not a person of good moral character and you therefore cannot hold a license,” the notices state.

But that, according to the lawsuit, is the opposite of what state regulators told Hoskins’ lawyer last year after he was indicted on charges accusing him of using his marijuana businesses to run an investment scam and illegally distribute pot. The lawsuit claims that Hoskins’ lawyer was told regulators “would not shut down his facility unless and until there was a criminal conviction.”

Related: Feds move to seize $850,000 from Colorado medical pot business

On Friday, according to the lawsuit, division agents “physically shut down the facilities and ordered the facilities not to conduct any more business.” According to the notices of denial, the stores’ inventory has been placed on an “administrative hold,” meaning the stores can continue growing and processing marijuana but cannot sell or transfer it.

The lawsuit contends that Hoskins should have been granted a hearing before the closure and that he should be allowed to keep his businesses open while he requests one.

Jane Medical and Higher Health Medical were two of several medical-marijuana businesses considered to be “operational pending,” meaning they had not received an approved license but were allowed to do business while their application was being reviewed.

The criminal case against Hoskins, filed last year, is still pending. In a related investigation, federal prosecutors have moved to seize more than $850,000.

Hoskins has denied the allegations.

John Ingold: 303-954-1068, jingold@denverpost.com or twitter.com/john_ingold

This story was first published on DenverPost.com