Organized Crime in the Cannabis Industry

Organized Crime in the Cannabis Industry

Organized crime is a global problem and can be problematic for retailers and non-retailers across multiple industries. In retail, organized crime often occurs through planned thefts or robberies and can cause businesses to incur substantial losses and evidence indicates that retailers may lose an estimated $30 billion each year. Between 2015 and 2020, rates of organized retail crime increased by 60% and will likely continue to rise if businesses do not take steps to reduce the risks. 

Preventing Organized Crime in the Cannabis Industry

Preventing organized crime in a cannabis dispensary is a similar process to many other “high-risk” retailers. Cannabis business owners should strategically set up their business so that it is easy for employees and video surveillance to track customers throughout the dispensary, as well as ensuring that no shelving, displays, or other elements create blind spots. Using an age verification system that confirms that the customer is of legal age and checks for excessive purchases, is another way to prevent organized crime from operating out of the business disguised as customers. 

Though there are less risks of organized theft through external theft in a non-retail cannabis operation, these businesses still face the risks of internal diversion. To prevent organized employee theft, cannabis business owners should properly screen and monitor employees. Cannabis business owners should ensure that a criminal background check is conducted on any prospective employee and that video surveillance and access control systems monitor and track their actions and movement through the facility at all times. 

Examples of Organized Crime in the Cannabis Industry

Since organized crime can occur in any market, the cannabis industry is not exempt. In June 2021, 21 individuals were indicted in Colorado in connection with an “international black market cannabis and money laundering scheme.” The individuals were caught growing illegal cannabis across Denver and then channeling the profits back to China via tools, such as Chinese social media apps that have sharable wallets and QR codes. Ultimately, thousands of cannabis plants, hundreds of pounds of packaged cannabis, and approximately $1 million were confiscated and the individuals were charged with racketeering, conspiracy, drug cultivation, and distribution, as well as money laundering.

Another recent instance of organized crime in the cannabis industry was uncovered over the summer in Haskell County, Oklahoma. In a joint effort with participation by the local sheriff’s department, the Oklahoma Bureau of Narcotics, and the Drug Enforcement Administration, multiple individuals were arrested in connection to an illegal cannabis drug ring in that operated across several states. A search warrant was conducted at a licensed medical marijuana cultivator in Oklahoma where firearms, currency, 10,000 cannabis plants, and about 100 pounds of processed cannabis were confiscated. The individuals were arrested for money laundering, possession with intent to manufacture or distribute marijuana or marijuana concentrate, and tax evasion, as well as other charges. Additionally, 14 arrest warrants were executed in Colorado in association with this organized drug trafficking ring.

Future of Organized Crime in the Cannabis Industry

While organized crime impacts every industry and can be difficult to uncover, there are still ways for retail and non-retail business owners to mitigate the risks. To further reduce the risks, cannabis business owners can collaborate with local law enforcement, other cannabis businesses, and regulatory authorities to take a stand against organized crime. By ensuring compliance and making efforts to mitigate the potential for theft and diversion, businesses across the country can limit the growth of organized crime in the cannabis industry. 

How Can Sapphire Risk Help?

Tony Gallo and the team of application writers and consultants at Sapphire Risk Advisory Group have worked with hundreds of retailers and non-retailers in the cannabis industry to reduce the risks of external theft and internal diversion. Follow us on social media to stay up to date with more security best practices and cannabis industry updates!