Police Seizure Of Marijuana Dispensary Cash Leads To Federal Litigation
“They knew it was medical cannabis and that they would be seizing medical cannabis proceeds, and they are not supposed to be spending any funds to do that.”
Robison suddenly pulls out into the left lane, accelerates rapidly and within a couple of miles pulls behind a white van, which immediately moves onto the shoulder and stops. As he walks up to the passenger-side window of the van, which turns out to be an armored vehicle, he tells dispatchers he believes the van has Colorado plates.
Robison tells the driver he pulled her over because the tag was partially obscured, then asks what she is hauling.
From this traffic stop, a series of events unspooled that resulted in more than $1.2 million being seized in what an attorney describes in a court filing as “the repeated and continuing highway robberies of armored cars by government agents.”
The next day, May 18, 2021, Robison again stopped the van, this time seizing more than $165,000. By that time, law enforcement officials had placed tag numbers of vehicles owned by Empyreal Logistics, the armored vehicle company, into a national database that allows high-speed computerized license plate readers to scan traffic and spot the vehicles.
On Nov. 16, the San Bernardino County, California, Sheriff’s Office stopped another Empyreal armored car and seized about $700,000. On Dec. 9, San Bernardino officers again stopped an Empyreal armored car, this time seizing about $350,000.
The basis for the seizures? According to Empyreal, the armored cars are transporting cash from state-licensed marijuana dispensaries to financial institutions, such as credit unions or banks.
“Shocked isn’t the half of it,” said Dierdra O’Gorman, Empyreal’s founder and CEO, describing her reaction on learning that the money from one of the company’s armored cars had been seized in Kansas. “I’ve been a banker my entire career—26 years in the banking industry.”
After the California seizures, Empyreal filed a federal lawsuit against several law enforcement agencies demanding the federal government stop these “highway robberies.” On Monday, the court denied Empyreal’s request for a temporary restraining order.
“The court is compelled to express its concerns regarding Empyreal’s litigation tactics,” District Judge John W. Holcomb wrote.
Holcomb advised attorneys for Empyreal to stop cutting procedural corners and reminded them of their obligation to be candid with the court.
Information gathered from interviews, court documents, police reports, and a viewing of the dashboard camera video expose conflict between federal and state laws regarding marijuana, and the eagerness of law enforcement officials to justify their urge to “smash” Empyreal into submission.
Handling marijuana money
O’Gorman established Empyreal in June 2018 in the Denver area. Today it operates in 28 states.
“I decided to start Empyreal with hopes of trying to fix some of the challenges that I experienced on the other side of the service model, being a financial institution working with armored car companies,” O’Gorman said. “I have prided myself on my career being focused on compliance and helping financial institutions with their Bank Secrecy Act and Anti-Money Laundering [Act] compliance. It’s been everything that we do and every part of the equation for us, making sure that we are following the rules.”
O’Gorman said many people think there are no banks or other financial institutions that will accept money from marijuana dispensaries. There are many that will—at least 700 nationwide, she said—but the banks impose rigorous reporting and record-keeping requirements.
“It’s a pretty hefty compliance list,” she said.
There are background checks, verification of where money comes from and where it goes, and monitoring of who gets paid.
“All of these things are scrutinized at a level that in my 26-year banking career I have never seen before,” she said.
O’Gorman said she is careful to work only with financial institutions that follow these stringent guidelines.
The seizures by law enforcement arise from the fact that while 18 states have legalized recreational marijuana use, and its medicinal use is legal in 36 states, the federal government still considers both medicinal and recreational marijuana use illegal.
So does Kansas.
Seizing cash, vehicles and weapons passing through Kansas has become a high-stakes activity. According to Kansas Bureau of Investigation data, Kansas law enforcement agencies since 2019 have seized $8 million, nearly all from motorists, with the Kansas Highway Patrol accounting for half of the forfeitures.
That’s from only the cases that have been resolved. It can take years for the disposition of seized cash and vehicles to be determined, and it is not until disposition that details are reported to the KBI.
Civil forfeitures are a process that allows law enforcement agencies to seize cash, vehicles, personal property, real estate and weapons they suspect have been involved in a crime. They don’t have to arrest the owner or convict them of a crime. Half the money seized in Kansas since 2019—more than $4 million—was forfeited without a criminal case being filed, according to data provided by the KBI.
Officials need only demonstrate a connection between the property and a crime. But they are supposed to have a legitimate reason for making a traffic stop.
“The Fourth Amendment requires at least reasonable suspicion or probable cause to stop a vehicle,” said Dan Alban, senior attorney with the nonprofit Institute for Justice, which is helping represent Empyreal in the California lawsuit. “The way highway interdiction works is you get behind the vehicle and you come up with the excuse to pull it over… If you follow someone long enough, they are going to commit some minor traffic infraction.”
Confusion over drug laws
A request filed under the Kansas Open Records Act for copies of reports and recordings made by the dashboard camera were partially granted. There was no offense report written for the May 17 stop, but a copy of the offense report for the May 18 stop and seizure was provided, and a reporter was allowed to view the recorded video.
During the first stop, it didn’t take Robison long to pull over the Empyreal van. And he wasted no time asking the driver what was in the van, and where she was going. The driver quickly explained she was on her way to pick up cash from marijuana dispensaries in Missouri and drive it back to Colorado.
She explained exactly how the money is stored and invited Robison to see the inside for himself. O’Gorman said all the company’s drivers undergo extensive training in how to interact with law enforcement. The company’s chief of operations is a former sheriff.
“We are very transparent about what we are doing,” O’Gorman said.
A fundamental goal is to help law enforcement understand the purpose of her armored cars.
“We know that it’s a complicated patchwork of rules and regulations,” she said. “We want to make sure that everybody understands.”
In this case, that effort was not successful. The driver’s candor set off a flurry of calls between Robison, the Drug Enforcement Administration and the U.S. Attorney’s Office in Wichita, which can be heard on the video recording.
After some initial head-scratching, Drug Enforcement Administration agent Bryson Wheeler admitted to be puzzled.
“I don’t think that’s necessarily illegal,” he told Robison. “It’s just strange as hell. It seems like they’re a bank operating as not a bank.”
The authorities are aware that medicinal marijuana is legal in Missouri, but a few minutes later Wheeler throws out a reason why the activity is prohibited.
“Wheeler calls officer Robison and claims that cannabis proceeds must stay in the state where cannabis is legal and cannot be transported across state lines,” said David Bass, a former deputy attorney general in California who worked in the Financial Fraud and Special Prosecutions Unit, in a declaration filed on behalf of Empyreal in the California lawsuit. “This is incorrect. Based on my professional experience, there is no law indicating that proceeds become illegal when they leave a state.”
In the phone call to Robison, Wheeler continues to try to come up with a way to identify exactly what is illegal about the armored car taking money from Missouri businesses to deposit in a financial institution in Colorado.
At one point in the conversation, “Wheeler claims that Empyreal’s operations are bulk cash smuggling,” Bass said in his declaration.
O’Gorman said the confusion by law enforcement is exactly what the training of the company’s drivers is intended to avoid.
“We only work with financial institutions…that offer services to cannabis businesses,” she said. “We’ll have Empyreal go pick up the funds after they have been validated by the bank or credit union, and then we bring those funds back to financial institutions. So we’re working with them only after all of the due diligence has been done to make sure that those funds came from lawful…sales.”
She was baffled by the money laundering speculation.
“If they thought there was money laundering occurring, why wouldn’t they have contacted the financial institution?” she asked. “Why wouldn’t they have confiscated the funds at the business?”
‘Smash them into submission’
The conversations between Robison and Wheeler became animated as they reassured themselves this was a genuinely illegal operation, and it was clear Empyreal’s armored cars were ferrying cash in half the states in the country.
They discussed putting tag numbers from Empyreal’s armored cars into a national database that allows law enforcement officers to use high-speed license plate readers to spot Empyreal vans across the country.
“Smash them into submission,” Wheeler said.
Bass described some of the conversation in his declaration.
“After deciding to place all of Empyreal’s vehicles into the [license plate reader], agent Wheeler notes that Empyreal will fight the seizures, but law enforcement should ‘crush every one of their cars that they can identify,’ ” Bass said. “Agreeing with agent Wheeler’s plan, around the 36:50 mark of the recording, officer (Robison) states, ‘We’ll start taking them all down at once.’ ”
Robison then told the Empyreal driver she was free to go, but not before volunteering to remove the offending license plate frame.
The next day, as the van headed back to Colorado after making stops to pick up cash from Missouri dispensaries, Robison pulled the van over near the Enterprise exit on I-70. The traffic stop took nearly three hours. The sheriff’s office seized five bags of cash that, according to the offense report filed in connection with the case, contained $165,855.
Harming legal business
Alban, the Institute for Justice attorney, hopes to show the DEA failed to stay in its lane.
Federal law prohibits the U.S. Department of Justice—the parent agency of the DEA and FBI, among others—from spending money to prevent states from “implementing their own state laws that authorize the use, distribution, possession, or cultivation of medical marijuana.”
The prohibition was originally known as the Rohrabacher–Farr Amendment and became law in 2014. The restriction has been attached to DOJ funding every year since.
“I think in this case [Rohrabacher-Farr] presents a really serious problem for them because they knew from the time of the May 17 stop that the driver was going to visit medical cannabis dispensaries in Kansas City, Missouri,” Alban said. “They have the names of those dispensaries on the manifest. They should have known that Missouri does not have recreational cannabis. The only cannabis dispensaries operating legally with a state license in Missouri are going to be medical cannabis dispensaries.”
The Kansas City Star reported in November that the manifest for the trip lists four medical marijuana dispensaries in Missouri: BesaMe Wellness in Smithville and two From the Earth locations in Kansas City and another in Independence.
The fact that the stop was in Kansas, which has not legalized marijuana use, is of no consequence, Alban said, because no matter where the seizure takes place, it harms legally operating cannabis businesses.
After the May 17 stop, “they went and did the surveillance on May 18 in Kansas City of the Empyreal vehicle picking up the proceeds from those dispensaries,” Alban said.
“From the very get-go, they knew it was medical cannabis and that they would be seizing medical cannabis proceeds, and they are not supposed to be spending any funds to do that, including spending money on surveillance outside of medical cannabis dispensaries in Missouri,” Alban said.
On September 3, 2021, the U.S. Attorney’s Office filed a civil forfeiture case in federal court in Kansas City, asking the court to let it keep $165,620 taken from the Empyreal armored car.
Requests for interviews with law enforcement officials were refused. The Dickinson County Sheriff’s Office said the case has been turned over to the Drug Enforcement Administration. A DEA spokesperson directed all inquiries to the U.S. Attorney’s Office.
Danielle Thomas, public information officer for the U.S. Attorney’s Office in Wichita, declined to answer any questions.
“We don’t discuss open cases,” she said.
This story was first published by Kansas Reflector.
How a Kansas traffic stop led to a federal lawsuit over $1.2M in seized marijuana profits