COVER STORY: The mystery of Colorado black-market pot

Authors: Kaitlin Durbin, Tom Roeder, The Gazette - June 5, 2018 - Updated: June 7, 2018

El Paso County Sheriff Deputies Scott Brettell (left) and Jeff Schulz load cut pot branches to a trailer from an illegal pot grow in Yoder, Colo. on April 6, 2017. Carol Lawrence, The Gazette

Colorado has a legislative mandate to track and regulate the state’s legal marijuana industry, which various agencies meticulously do through 15 reports published throughout the year.

But no state agency has oversight responsibilities for the illegal or black market, Colorado Department of Public Safety spokeswoman Patricia Billinger said. The task falls to individual law enforcement agencies to keep their records, which are not universally shared.

“Due to Colorado’s home-rule organization and other factors, there simply isn’t a ‘real-time’ statewide database of this (black market) data from the various local, state and federal law enforcement agencies that operate in Colorado,” Billinger said in an email.

It’s an issue that baffles some Colorado lawmakers who assumed, because a shrinking black market was a key argument to legalize recreational marijuana, that one agency or another would keep track.

“I have a sense that the black market may have grown, but it’s anecdotal and I think it’s something where there should be measures,” said Democratic state Rep. Pete Lee of Colorado Springs.

The sale and use of recreational marijuana in Colorado was approved by the state’s voters via a constitutional amendment in 2012 with the first stores opening in 2014. Sale of cannabis for medicinal purposes was legalized years earlier.

The Rocky Mountain High Intensity Drug Trafficking Area — an organization of police groups whose goal is to reduce drug use — reports that the amount of illegal marijuana seized by law enforcement has increased tenfold since the advent of legal recreational marijuana, from 1,400 pounds in 2013 to 14,000 pounds in 2017. Seized plants are up 600 percent during the same period, the agency reported.

Those numbers suggest prolific growth in illegal pot, even as the agency’s data collection methods are criticized by industry advocates. But they’re also the only numbers that exist attempting to define Colorado’s black market. There is no state database aggregating how many illegal grows are uncovered by law enforcement and where, and there is no full count of plants seized.

The Rocky Mountain drug agency says it compiles its data from dozens of member law enforcement departments in its three-state region of Colorado, Wyoming and Utah. Each of those departments track seizures made by their squads alone, or by multiagency task forces in which they participate.

No one can say, of course, what percentage of black market marijuana was represented by the 14,000 pounds seized in Colorado last year.
Agency director Tom Gorman said the numbers represent “probably the majority of what goes on … as far as investigations,” but they aren’t a complete picture. They don’t include data from every law enforcement agency. They don’t stipulate whether the numbers of illegal grows are spiking or whether it’s an increase in plant counts at individual grows.

The state, meanwhile, reported that about 200,000 pounds of marijuana were sold legally in Colorado during the first six months of 2017.
A cloud of confusion

Politicians, meanwhile, have wildly divergent numbers for the black market.

Gov. John Hickenlooper this year told a Colorado Springs audience that the illicit pot trade is down to a $50 million industry and shrinking.
Colorado Springs Republican state Sen. Kent Lambert, a leader of the legislature’s powerful Joint Budget Committee, said the black market could be a dozen times larger than the governor’s estimate.

“Somewhere between 40 and 60 percent of the marijuana that’s sold is illegal,” Lambert said.

Hickenlooper’s office issued a statement saying they want better numbers.

“The Governor’s Office takes the concerns of black market activity very seriously,” Hickenlooper’s press office said in an email. “We are working to see what it will take to collect data, to the extent that we can, on this issue.”

As they exist, numbers for the black market represent a hazy outline of a problem that some officials say is worsening by the day and others claim is receding.

For Gorman, a self-proclaimed marijuana “prohibitionist,” the black market is “flourishing in Colorado … and it’s gotten worse.”

Fourth Judicial District Attorney Dan May, also a staunch opponent of legal recreational marijuana, echoed that opinion recently May 1 at a Colorado Springs Chamber of Commerce event in downtown Colorado Springs, calling the black market “uncontrollable” and law enforcement “overwhelmed.” Local law enforcement agencies repeatedly estimate the number of illegal grows in El Paso County at about 650.

Colorado Springs Republican state Rep. Larry Liston says the lack of data on the black market adds to a wider confusion that allows illegal growers to thrive.

“Under that cloud of confusion, they have their grows and export it,” Liston said.

But Hickenlooper — who also opposed the constitutional amendment approving recreational marijuana — has said the black market is in decline and “will be largely gone” in a few years.

Some objective measures up

Billinger, the state Department of Public Safety spokeswoman, said “the best indicators” of what’s happening with the black market can be estimated using figures that some state entities do keep, such as plant seizures on public lands or court filings for marijuana-related arrests, the latest numbers for which are due out this summer.

But, she warns that “it is not possible to extrapolate the total size of the black market based on those figures, as we do not know what percentage of the black market those seizures and arrests represent.”

Analyses of those two data sets, though, indicate the black market is not shrinking. In February, Colorado Politics reported that arrests for the production of black market pot increased by 380 percent during 2014-16. In April, we found that the number of marijuana plants found in illegal grows on U.S. Forest Service lands had increased 95 percent from 2014 to 2017.

The federal Drug Enforcement Administration also reported to Hickenlooper in 2017 that the number of plants and pounds of processed weed seized during DEA-involved search warrants at black market indoor grows spiked from about 4,400 in 2015 to 20,000 in 2016 and 2017. The numbers are not official, since the DEA does not have a system that accurately counts seizures of marijuana plants, but they represent a general count from individual reports, a spokesperson said.

Hickenlooper diverted more cash this year to law enforcement agencies to fight illegal marijuana cultivation. He’s also proposed $1.2 million in funding to allow the Colorado Bureau of Investigation to create an interdiction force that can “parachute in” to rural communities with smaller police forces to bust illegal grows.

Hickenlooper’s office said that team will help pinpoint the size of the black market.

“We continue to work with lawmakers to strengthen law enforcement, putting additional money where we can have the biggest impact on black market activity,” the statement said. “We are looking forward to the information we will get from the new interdiction team as they work with those on the front lines.”

Billinger said that before legalization, 100 percent of marijuana cultivation and consumption was black market. “ … We did not have a definitive measurement of the black market prior to legalization and do not have a definitive measurement today, so at best we can say with certainty that the percent of black market activity in Colorado has gone down.”

That’s also the position of the Marijuana Industry Group, which represents the state’s legal marijuana sellers.

“That is the benefit of having a tax-regulated day-lit market,” said Kristi Kelly, the group’s executive director.

Gorman, the Rocky Mountain High Intensity Drug Trafficking Area director, said he’s not buying it. “I haven’t seen anything that would indicate a let-up, and here it is, we’re into five months of 2018,” he said. “It is at least a consistent major problem.”

Lambert, the Colorado Springs state senator, suggests that the state is turning a blind eye on illegal marijuana because it’s a black mark on the state’s booming legal marijuana industry, which he cites as a growing political power under the gold dome in Denver.

“They have such a strong lobby and they will get what they want,” he said.

‘Tip of the iceberg’

The leading point of origin in Colorado for black-market pot destined for other states is in dispute.

In March, El Paso County sheriff’s Deputy Jeff Schulz, who deals with marijuana enforcement, characterized the county as “by far” Colorado’s worst illegal distribution hub feeding black markets along the East Coast, placing it above Denver. He also said that 95 percent of marijuana grown in El Paso County was being shipped east. He later amended the statement to say that 95 percent of Colorado weed found by law enforcement in other states is traced back to El Paso County.

But he doesn’t have data to support his numbers, nor does anyone else.

The few diversion numbers being tracked in the state paint a different picture.

Interdiction seizures voluntarily reported to the National Seizure System by state highway patrol agencies involving vehicles originating from Colorado showed about 100 more busts in 2015 — 394 cases — than in 2013, but the most recent numbers from 2016 were trending down. Almost all of the vehicles had come from Denver, according to the reports, not El Paso County.

When considering diversion by mail, the Rocky Mountain drug agency reported the four-year average of Colorado weed destined for other states had increased 844 percent from 52 parcels in 2009-12 to 491 parcels in 2013-16. Interdiction experts believe the packages seized were the “tip of the iceberg,” the report said.

While the amount of marijuana leaving the state by mail may be increasing, actual seizure data provided to Colorado Politics by the U.S. Postal Service shows Colorado is not the worst offending state.

The Postal Service reported intercepting 5,706 pounds of Colorado pot sent to other states between 2012 and early 2018, ranking the state fifth in diversion behind California, Arizona, Texas and Oregon. Colorado ranked third in terms of number of parcels intercepted, with 2,735 pieces of mail, also behind California and Arizona.

Marijuana also consistently ranks low on the DEA’s National Drug Threat Assessment, which determines which substances and criminal organizations represent the greatest threat to the United States. Though agencies said in the 2017 assessment that they encounter marijuana more often, they do not consider the drug as destructive as opioids, which are reaching “epidemic levels,” or methamphetamine, which “has remained prevalent,” or even cocaine, which “appears to be rebounding.”

‘Rather have the data’

The lack of accurate and consistent data makes it hard for agencies such as the Colorado Information Analysis Center, which is supposed to be analyzing marijuana’s “threat picture” in the state, to do its job, director Capt. J.P. Burt said.

Agencies know people are illegally growing excessive amounts of marijuana in their homes and then either selling it without tax in state or taking it out of state, but “the collection of the information to support that is pretty difficult” because “there’s no statewide crime report … There’s not even a nationwide repository for this stuff,” he said.

“We all utilize our own record management systems. Sometimes you just don’t know who has what because there’s no real way to search for it,” Burt said.

The data the information center is using: Court filings, which can lag a year or more; reports from similar agencies in other states, which also have incomplete data; some anecdotal information, if heavily sourced, and Rocky Mountain High Intensity Drug Trafficking Area data.

“Time is really not a benefit to us in this particular case,” Burt said. “Like, you would rather have the data right now, but there’s nothing in the law that says there’s a mechanism to make it happen. It says we’re going to track it, it doesn’t necessarily say how we’re going to track it or give us the tools to track it.”

The state legislature’s Senate Bill 283 in 2013 did order the Division of Criminal Justice in the Department of Public Safety to conduct a study of the impacts of Amendment 64, particularly related to law enforcement activities. And the agency complied, releasing an Early Findings report in 2016 that looked at marijuana arrests, impaired driving arrests/deaths, adult and youth usage rates, school discipline reports, and medical visits, among other things. (An updated version is planned for release later this year, officials say.)

But the report was weighted by caveats, warning “it’s too early to draw any conclusions.”

“The information presented here should be interpreted with caution,” the report’s executive summary said.

One impact noticeably missing from the report: the black market. Did legalization lead to enhanced criminalization?

Four years later, that question remains unanswered.

Data analyst Burt Hubbard contributed to this report.

What the state is tracking

Colorado Department of Revenue
• Market demand study
• Current licensee information, including number of licensed marijuana businesses and occupational licenses
• Marijuana sales
• Marijuana tax revenue
• Number of cultivated plants
• Volume sold to consumers
• Contaminant and potency testing data
• Underage sales and change of ownership investigations
• Fines, suspensions and revocations
• Marijuana Enforcement Division (MED) approved proficiency testing vendors
• MED approved responsible vendor providers

Colorado Department of Public Safety (CDPS)
• Marijuana legalization impact report, which has included marijuana arrests, impaired driving arrests/deaths, adult and youth usage rates, school discipline reports, and medical visits, among other things.
• Number of illegal grows found on U.S. Forest Service, Bureau of Land Management and National Park Service lands.
• Colorado Bureau of Investigation annual crime in Colorado report, which is not marijuana-focused

Colorado Department of Public Health and Environment
• Medical Marijuana data, including: patient totals, physician totals, demographic information, medical conditions, patients by county, plant count recommendations, distribution of medical plants, caregiver to patient distribution.
• Marijuana use trends and health effects

Colorado Department of Agriculture
• Formal complaints filed and violations found related to pesticide use on cannabis
• Number of pesticide samples completed
• Types of pesticides identified
• Worker Protection Standard inspections and violations

Kaitlin Durbin

Kaitlin Durbin

Tom Roeder, The Gazette

Tom Roeder, The Gazette