Sweet Leaf Marijuana Center at 2609 Walnut St in Denver, displaying a Notice of Suspension from the City of Denver Department of Excise and Licenses. (Alex Pasquariello, The Cannabist)

Inside informants, loopers and the undercover investigation that led to Sweet Leaf raids

A budtender’s six-month stint at the Sweet Leaf Marijuana Center in Aurora came with no incidents — no activity recognizable as illegal or suspicious.

The same couldn’t be said after that employee was transferred to the Sweet Leaf location off 38th Avenue and Clay Street in Denver, according to a Denver Police Department affidavit obtained by The Cannabist.

“Things are a little different here,” an assistant manager allegedly told the employee during his first work shift at 2647 W. 38th Ave., “you’ll get used to the Loopers.”

The affidavit, one of several filed as a request for search warrants in the case, provides some glimpses into the year-long investigation of alleged illegal marijuana sales at the Denver-based Sweet Leaf chain.

The investigation, which is ongoing, zeroed in on alleged incidences of “looping,” in which individuals would make repeated purchases of 1 ounce of recreational marijuana — the maximum allowed for purchase and possession, per Colorado law — several times a day.

On Dec. 14, police raided several Denver-area Sweet Leaf locations, executing search warrants and arresting 13 budtenders, employees involved in the sale of marijuana. As of Thursday, 10 employees have been charged with either misdemeanor or felony distribution of marijuana.

The court-approved search warrant for Sweet Leaf’s headquarters, 1475 S. Acoma St., revealed the sweeping nature of the inquiry: Officers had the OK to look for and seize money; plants; business, employment, training and customer records; documentation on operating procedures; video surveillance recordings; computers, thumb drives and passwords; and any evidence related to money laundering.

Police also requested access to the safety deposit boxes and storage spaces held by Sweet Leaf’s owners, Christian Johnson, Matthew Aiken and Anthony Sauro. Police requested their bank accounts be frozen. The owners have not been charged in the case.

The language and narrative included in the affidavit for the headquarters search warrant was mirrored in the seven additional search warrants executed for the six Denver and one Aurora locations, said Ken Lane, spokesman for the Denver District Attorney’s Office.

A tip from a neighbor

According to the affidavit, police detectives got wind of potential illegal activity in November 2016. The following is a synopsis of allegations in the affidavit:

A Denver resident who lives near the Sweet Leaf location at 2647 W. 38th Ave. contacted police, expressing concerns about neighborhood impacts and potential criminal conduct.

On a daily basis during the months leading up to his call, the neighbor noticed a certain pattern of customer traffic: Numerous people would park near his home, walk into Sweet Leaf, return to their cars with purchased marijuana products only to then immediately return to Sweet Leaf and continue the “loops” several times.

Police followed the tip by sending a couple of detectives to conduct surveillance.

On the afternoon of Nov. 28, 2016, they saw the “looping” pattern in action with at least four other people, one of whom conducted more than 10 separate transactions.

The man, driving a car with Kansas plates, left the vehicle with a rolled-up fleece blanket and walked into Sweet Leaf. He’d leave the store, open the rear passenger door of his car, place the purchased item on the seat, grab another blanket and re-enter the store.

An hour and a half and more than 10 transactions later, the man left and then was stopped by police. Identified at the time as Cornell Ellis, a 26-year-old man from Missouri, the customer initially told officers he bought 2 ounces from the store but later admitted to having as much as 2 pounds of marijuana in his car.

Ellis told police that Sweet Leaf employees said he could purchase more than 1 ounce of marijuana if he parked his car “off camera” and put the marijuana in his car and came back. The store was offering a “coat and blanket drive” during which customers could get a 10 percent discount for bringing in a blanket.

Several people made multiple purchases at Sweet Leaf every day, Ellis said.

“And this is the crazy part for me, I only bought two pounds — I’ve seen people buy 10,” he told police.

And everyone at the Sweet Leaf store, he added, was “cool with it.”

Ellis was arrested with charges including possession with intent to distribute marijuana and possession of marijuana.

When he was booked in the Denver jail and fingerprinted, it was revealed he was Joseph Scott, a 28-year-old man with felony drug charges in California, Kansas and Missouri, the affidavit said. Officers executed a search warrant and found 7.46 pounds of marijuana at Ellis/Scott’s house. That was in addition to the 35 containers, totaling 2.16 pounds, of Sweet Leaf marijuana in his car.

The investigation picks up

On Dec. 6, 2016, the investigation went into full-swing.

Detectives mounted a surveillance camera to record activity outside the store. They saw about 10 different people conducting “looping” transactions.

The next day, a plainclothes detective entered and exited the store seven times between noon and 1:24 p.m., buying one ounce of marijuana flower each time.

On some instances, his shopping bag contained a Sweet Leaf advertisement: “Just a little Sweet Leaf RECREATIONAL Friendly Reminder! Recreationally it is illegal to possess more than 1 ounce of cannabis at a time! So we recommend you only purchase in a day what you are allowed to have on you. If we feel like you are abusing the system, we will ban you from shopping with us. We reserve the right to refuse service to anyone.”

The note then detailed the possession and transfer provisions of Amendment 64.

At no time, the detective noted, was he confronted or questioned by Sweet Leaf employees, including Chris Arneson who sold him product in back-to-back transactions that occurred within six minutes of each other, the affidavit said. At no time, the detective said, was he refused service or told he was abusing “the system,” or violating Colorado law.

By the end of his undercover stint, the detective had 188.832 grams, or 6.6 ounces, of marijuana — possession that would trigger a level 1 drug misdemeanor violation.

A week later — as plainclothes vice detectives conducted surveillance in an unmarked car to observe ongoing “looping” activity — the same detective went back to the store, this time asking Arneson if he could buy more than 1 ounce of marijuana and whether there was a medical marijuana discount. Arneson said a customer who is a “medical member” registered with Sweet Leaf can get discounted pricing; the recreational store can sell only 1 ounce.

“Cause we are a recreational store and that is all they legally allow recreational to sell … You just have to leave the premise with the weed and come back without it, your possession is up to you,” Arneson said, according to the affidavit.

Other undercover operations played out with similar results during the next 12 months at Sweet Leaf locations across the city.

On Dec. 7, 2017, a week before the raids, police conducted undercover investigations at seven Sweet Leaf locations. On each instance, which lasted typically less than an hour, the undercover detectives conducted five consecutive transactions.

Along the way, police arrested several customers, many of whom drove rental cars or vehicles with out-of-state plates

Adama Njie, who drove a Hertz rental car with Oregon license plates, spent $4,300 in one day and bought 3 pounds of marijuana purchased from a Sweet Leaf dispensary. In his car were two Oregon driver’s licenses and one from New York, all with his picture, along with two Walmart receipts showing the purchase of 115 fleece blankets for $287.50.

Joshua Reid, who had 44 Sweet Leaf containers in his white Chevy Camero, made 35 trips to and from a Sweet Leaf dispensary in five hours’ time, the affidavit said.

De Mario Garner had 10 Sweet Leaf containers in his rental car, a digital scale in the passenger compartment of the car and three Pringles containers that were filled with eight individual, 1-ounce bags of marijuana, the affidavit said.

Another customer, a resident of Carlsbad, N.M., who “came to party and have a ‘smoke break,’ said he was told Sweet Leaf was a good place to conduct multiple consecutive purchases in a day.

He had tried buying from places like Liv Well, but was turned away when he tried to make multiple purchases. He said he never was given trouble by Sweet Leaf.

He would take the marijuana back to New Mexico and sell it for $320 per ounce.

An insider passes information

Along the way, police received additional information from a confidential informant, a former Sweet Leaf budtender who later worked as a security guard for a company that contracted with Sweet Leaf.

The employee told police of several instances where he questioned or challenged officials for Sweet Leaf and the security firm. The employee said he was rebuffed or reprimanded.

He was told that “as long as you give them that paper on the recreational ounce laws and they leave camera view, you cannot get in trouble.”

The former employee noticed that when word spread that a customer got arrested near the Clay and 38th store, the looping activities shifted to another location.

Undercover officers found that other employees or security guards appeared to be aware that looping was occurring. In some instances, employees or the security guard on duty asked the undercover detective whether he left the property and whether his car was out of view of the security camera.

At one point, the undercover detective was told to take more time before returning, as it could be suspicious enough for an officer to pull him over.

“Yeah, I don’t need that,” the officer said.

The security guard replied, “And we don’t need that either.”

Other customers arrested during the investigation

  • Joseph Scott, 29, pleaded guilty in November 2016 to possession of marijuana and sentenced to a year in prison.
  • Adama Njie, 37, pleaded guilty in September to possession of a controlled substance and was sentenced to three years of probation.
  • Joshua Reid, 27, pleaded guilty in March to possession of marijuana concentrate and was sentenced to two years of probation.
  • Sergio Montero, 25, pleaded guilty in June to possession of marijuana concentrate and received a deferred sentenced of one year of probation.
  • Young Lee’s charge of possession of marijuana concentrate with intent to distribute is pending in Denver District Court.

The Denver Post’s Noelle Phillips contributed to this report.