The Price of Pot Could Go Up? And Some Curious Bits of Information
I just watched the Frontline show, The Pot Republic, online. It is an excellent piece of intelligent reporting on the issues facing law enforcement and the rest of us in California. Connected to the show is Tom Allman’s interview– a must read. I came away much more informed on the breaking situation in the Mendocino National Forest. Allman says that is a three year operation. They’ve already arrested 77 people. How many more will be arrested? But more importantly Allman says, “The operation this year — and mark my words on this — is going to have an impact on drug trafficking organizations’ marijuana supply that affects the rest of the nation. You can take that to the bank.”
Will that mean the price of pot will go up? I doubt it but, it raised the possibility.
Frontline reporter Michael Montgomery also interviewed Rick Adams, a retired special agent. The whole interview is fascinating. Here is just a small excerpt.
So what you’re saying is that in these communities where a lot of marijuana is being grown, especially Northern California, there is an outflow of cash, that there is so much cash there that it’s being sent out by the banks back to the Federal Reserve.
That’s correct. They have a surplus of cash up in that area. And to get rid of it — you just don’t want it hanging around your bank, so you ship it to the Federal Reserve while, conversely, [in] similar-type counties in the central California area there’s no currency being shipped. In fact, they often have to request currency be shipped to them to pay the migrant workers or whoever is running through. So they’re actually asking for currency in, let’s say, Colusa County, while Humboldt County has plenty of currency that they need to then get out. So that’s one method of quantifying how much of the money [of] their economy is cash-based. …
Does the shipment of this bulk cash to the Federal Reserve raise any kind of red flag?
The shipment of all this currency to the Federal Reserve does not trigger any red flags. All it does is it tells us there’s a lot of currency up in Mendocino and Humboldt County, and then you can speculate as to where it came from, and we know that that’s their number one cash crop. So the correlation can be made. The inference is that it’s from marijuana, not from grapes. That’s not the way those industries work. There is no other industry up in that area that is cash-intensive other than marijuana trafficking.
So the cash is clean by the time it gets to the Federal Reserve.
Absolutely, yes. There’s nothing wrong with the bank shipping that money. There’s nothing wrong with the banks accepting that money from these large commercial enterprises. That’s completely legitimate.
And in fact there’s nothing wrong with spending cash. There’s nothing illegal about spending cash. I don’t want to tell anybody that. It’s if the cash is from an illegal activity, then obviously you have something to be concerned about.
Have you [found cases] where growers, they just can’t spend all the money? …
Yes,. I’ve recovered hundreds of thousands of dollars of cash during search warrants, even in safe deposit boxes. They want to put it somewhere that it’s secure, but like you said, sometimes if they’re generating enough profits, that’s where the money laundering kicks in. That’s where they need to use a business front, any number of methods, whether it’s structuring the currency transactions under the red-flag limits, structuring the purchase of vehicles, boats, real estate — that’s the big one. That’s where they have the most difficult time.
I mean, these guys want more land to grow more marijuana. How do you buy the land? You can’t qualify for any loans because you don’t have a job, so you have to pay cash. And when I say pay cash, you have to put the money down. They’ve got the cash. The real estate and escrow company, they’re not going to accept currency, so you need to convert it; you need to get it into the banking system.
And that’s where the money laundering kicks in. That’s the real big problem with the guys who make a lot of money. The guy with the 30, 40 plants in his backyard, he doesn’t have the problem. He gets paid, and then he just starts spending it. But it’s the bigger guys who are having the problems with the currency. They might hire, employ a money launderer, have a business where they can commingle the money into the account. …
... Is what we’re talking about with people paying with cash, is that kind of peanuts in terms of the larger picture of the amount of money that’s being made from this illegal growing?
No. Actually I believe that is where most of the currency is coming from. It’s these smaller growers who spend the money in the local community, which is then accumulated at the bank level and then sent to the Federal Reserve. … I don’t believe it’s from these large-scale guys making millions and millions and millions of dollars in currency and have that problem. They don’t live up there predominantly. They may grow up there, but they have multiple houses, multiple venues, multiple sites. …
Right. I can’t even tell you how many times I’ve taken off marijuana grows and you can see the property next door has a grow, and I can’t go there because I have to go back and get a search warrant, come back, and you would just go on. I mean, again, the Google Earth, every neighbor on the street. I would have to write so many search warrants, and that’s just one street. You just can’t do that. That’s not the best practice….
When you physically go to a home, someone’s property, are there any just obvious signs that you see visually that lead you to at least suspect that this person is perhaps a little bit more successful, a little bit further up the ladder in terms of the growing world?
Yes. When I go to a house, when we conduct a search warrant, usually before we even go, he’s already made kingpin status. And that can be detected by what you own. It’s just like anything else. What you own is indicative of how much money you make. The more properties you own, the more cars you own, the more toys you own, is indicative of your income potential or what you actually already have made.
It’s the same thing as if you went to an elite community, Blackhawk or wherever. They have beautiful houses, beautiful cars, boom! Same thing with the drug trafficker, and that’s across the board. Whether it’s marijuana, cocaine, whatever, it’s across the board. I look for the toys. I look for the properties, the things that you and I want, the great American dream. They’re just the green dream, both marijuana and money. …