By DAN MARGOLIES
Kansas News Service
An armored car company used by licensed marijuana dispensaries in Missouri and other states is suing the federal government, claiming law enforcement agents have illegally seized dispensary cash the company was transporting.
The federal lawsuit, filed in California last week by Empyreal Logistics, comes after a sheriff’s deputy in Dickinson County, Kansas, stopped one of Empyreal’s vehicles last year on Interstate 70 for an unspecified traffic violation and seized nearly $166,000 in cash it was transporting from marijuana dispensaries in Kansas City, Missouri, to a credit union in Colorado.
The U.S. Attorney’s Office in Kansas subsequently filed a civil forfeiture action against Empyreal, arguing the seized cash was traceable to sales that violated the federal Controlled Substances Act. (Cannabis is classified as a Schedule I drug under the act.) That case is pending.
In October, KCUR sought records related to the stop from the Dickinson County Sheriff’s Office under the Kansas Open Records Act. Doug Thompson, the Dickinson County counselor, responded by saying that the records were in the hands of the Drug Enforcement Administration.
KCUR then sought the records from the DEA in November under the federal Freedom of Information Act. The DEA has yet to respond to KCUR’s request.
Empyreal's lawsuit, however, alleges that Dickinson County Sheriff’s Deputy Kalen Robinson pulled over Empyreal’s vehicle, a Ford Transit van, as it was heading east on I-70 because the Colorado license plate tag was slightly covered by the license plate holder. Robinson stopped the vehicle a second time the next day as it was heading west toward Colorado and seized the cash.
Empyreal’s lawsuit accuses Robinson as well as sheriff’s deputies in California of acting in concert with the DEA to conduct "pretextual stops" of Empyreal’s vehicles, “searching them, and seizing the cash contents — covering up their surveillance cameras and sometimes damaging Empyreal’s vehicles to access the cash in their secured vaults — and are then turning the seized cash over to federal law-enforcement for forfeiture proceedings under the federal equitable sharing program.”
Under the federal equitable sharing program, the federal government shares assets seized in civil forfeitures with state and local law enforcement agencies.
Empyreal says that not a single traffic citation was issued to an Empyreal driver during any of the five traffic stops mentioned in its complaint.
It says federal and state law enforcement agencies are targeting its armored cars “because it is very profitable for those law enforcement agencies to seize the cash proceeds that Empyreal is transporting and keep that money using civil forfeiture.”
Dan Alban, an attorney with the Institute of Justice, which represents Empyreal, said Empyreal had initially viewed the Dickinson County stop as a one-off event. But since then, its vehicles have been stopped four more times in California, three of them in the last two months alone. The vehicles were transporting cash from state-licensed cannabis businesses in California.
“I think they began to become very concerned that this was an ongoing pattern of activity and that they were being targeted. And so they wanted not just to have to defend against these forfeiture actions after the fact” but to seek legal relief preventing future seizures, Alban said.
In addition to alleging violations of the Fourth Amendment and due process, the lawsuit seeks to block future stops, searches and seizures of Empyreal’s vehicles “based solely on the actual or suspected presence of cash earned by state-legal cannabis dispensaries without reasonable suspicion or probable cause.”
'Writing on the wall'
“Empyreal could see the writing on the wall,” Alban said. “They could tell they were being targeted — all of these stops and searches — five in total so far. And so in order to continue operating their armored car business, they needed not to be targeted by the feds or local sheriffs for these continued stops, searches and seizures.”
Empyreal is still seeking to recover the money that was seized in Kansas in the pending civil forfeiture proceeding. The U.S. Attorney’s Office has declined to comment on the case.
The forfeiture action is being prosecuted by Colin D. Wood, a retired KBI senior special agent who now serves as a federal contractor with the U.S. Attorney’s Office with the title of Special Assistant U.S. Attorney. He did not respond to a request for comment.
The traffic stop in Dickinson County took place last May. The U.S. Attorney’s Office filed the civil forfeiture action three months later.
Attorneys not involved in the case have questioned why it was brought, given that it doesn’t involve the seizure of marijuana but rather proceeds from its sale and given that the dispensaries whose money was seized are licensed under Missouri’s medical cannabis program.
During the Obama administration, the Department of Justice issued a memorandum stating that federal prosecutors would not enforce the federal prohibition against marijuana in states that had legalized it. And federal legislation enacted in 2014 prohibits the Justice Department from spending funds to interfere with the implementation of state medical cannabis laws.
The legislation, known as the Rohrbacher-Farr amendment, must be renewed every year. It was renewed last year and remains effective through Feb. 18.
In its lawsuit, Empyreal says it has been forced to suspend its operations in San Bernardino, County, California, has stopped transporting cash through Kansas, has lost customers and has been unable to roll out new services in multiple states because of concerns about the stops and seizures.
“If these incidents continue to occur — and there is every indication they will — it will threaten Empyreal’s business model and its ability to continue providing financial infrastructure for the state-legal medical cannabis industry by safely moving cash from business premises into the legal banking system for greater transparency,” the lawsuit states.
The lawsuit names as defendants the U.S. Department of Justice; Attorney General Merrick Garland; the FBI; FBI Director Christopher Wray; an assistant FBI director overseeing the bureau’s Los Angeles field office; the DEA; DEA Administrator Anne Milgram; and San Bernardino County Sheriff Shannon D. Dicus.