Federal Officials Are Suddenly Seizing Marijuana From State-Licensed Businesses, Leaving Industry Perplexed

posted MarijuanaMoment

Federal officials have been seizing hundreds of thousands of dollars worth of marijuana from state-licensed cannabis businesses in New Mexico in recent weeks—detaining industry workers in what appears to be a localized escalation of national prohibition enforcement even as the federal government has largely refrained from interfering with the implementation of state legalization laws in recent years.

New Mexico marijuana businesses report that the more than dozen U.S. Customs and Border Protection (CBP) seizures, particularly at interior checkpoints around the Las Cruces area, are a relatively new phenomenon. Since adult-use marijuana sales launched in the state in 2022, the operators say they’ve generally been able to transport their products to testing facilities and retailers without incident.

Starting around two months ago, however, the agency has evidently taken a more proactive approach to enforcing federal prohibition, taking hundreds of pounds of cannabis at the checkpoints inside the state. CBP is able to carry out its activities within 100 miles of the U.S. border.

“There’s a lot of really successful important cannabis producers and cannabis manufacturers operating south of those checkpoints,” Ben Lewinger, executive director of the New Mexico Cannabis Chamber of Commerce, told Marijuana Moment. “Basically, every road that you could take from the southern to the northern part of the state, you have to go through one of these checkpoints—and it’s just bifurcating the industry and making it impossible for people in the southern part of the state to get their products to anywhere in the central or northern part of the state.”

CBP has made at least 13 stops and seizures of state-legal marijuana products since February, Lewinger, said adding that he “wouldn’t be surprised if it’s twice that number.”

“I’m certain that it’s underreported,” he said. “I think there’s lots of people who still have that fear and the stigma, and they don’t want to rattle cages.”

Matt Chadwick, CEO of the vertically integrated New Mexico marijuana business Top Crop Cannabis Co., told Marijuana Moment that his employee was transporting about 22 pounds of product valued at about $139,000 to their Albuquerque locations on February 14 when the vehicle was stopped at a CBP checkpoint and a dog alerted agents to the smell, leading to a secondary inspection.

“We’ve been doing this for over a year without any implications. Now, they ended up detaining him, put him in a cell, and he was there for over three hours,” Chadwick said. “They finally released him and gave him this vehicle back, gave him no documentation and didn’t give any of the products back. [The agent] said he would see something in the mail on how he could get reimbursed for the product that was taken. We’ve never seen anything.”

Other impacted businesses, including Schwazze, did receive documentation—though in some cases there’s nothing indicating a possible reimbursement for seized product.

Dan Pabon, chief legal officer at Schwazze and a former Colorado legislator, shared the document his employees received after they were stopped at a CBP checkpoint on March 22. After agents seized about five pounds of flower and edible products, the workers received a “custody receipt for seized property and evidence” that acknowledged the vehicle was “transporting THC products for a dispensary.”

Curiously, however, the actual itemized list of seized property only described the vehicle itself, without an estimated value. And the car was not actually seized, as the workers were eventually allowed to drive away, just without the cannabis intended for retail sale.

Pabon said there was an “interesting twist” to the situation, though. He said agents allowed the workers—both state-certified medical cannabis patients—to leave with their own personal supplies of marijuana.

CBP falls under the Department of Homeland Security (DHS), which is not bound by a congressional rider that prevents the Justice Department from using its funds to interfere in the implementation of state medical cannabis programs, offering patients a limited sense of protection from federal prosecution.

“Although medical and recreational marijuana may be legal in some U.S. States and Canada, the sale, possession, production and distribution of marijuana or the facilitation of the aforementioned remain illegal under U.S. federal law, given the classification of marijuana as a Schedule I controlled substance,” a CBP spokesperson told Marijuana Moment on Monday. ”Consequently, individuals violating the Controlled Substances Act encountered while crossing the border, arriving at a U.S. port of entry, or at a Border Patrol checkpoint may be deemed inadmissible and/or subject to, seizure, fines, and/or arrest.”

CBP “wants to remind the public that while traveling through any U.S. Border Patrol checkpoint, to include New Mexico, being in possession of marijuana is illegal under federal law,” they said.

CBP did not respond to specific questions about whether there’s been a policy change to explain the recent New Mexico seizures, why workers in one case were permitted to keep their personal medical cannabis or how the actions square with the Biden administration’s general policy of non-interference in state marijuana programs.

Another recent report published in The Paper details how CBP also stopped an employee with the cannabis producer Head Space Alchemy and seized products last week—the second time it’s happened to the business. In a video recording of the encounter, an agent said that the worker was “under arrest.”

“We’ve been instructed to seize all cannabis—all illegal products. It’s still federally illegal,” he said.

Despite claiming that the employee was being arrested, they were allowed to leave after being fingerprinted and placed in a federal database, the company’s managing partner, Rob Duran, said. The worker didn’t receive any citation or notice to appear in court; and CBP didn’t provide any documentation about the stop and seizure.

It’s unclear how widespread the trend is, but stakeholders say they haven’t heard similar stories out of states like Arizona and California, which also have regulated marijuana businesses operating near the U.S.-Mexico border.

For now, there’s no clear solution to the New Mexico cannabis industry’s CBP problem—or clear answers about why it’s happening two years after the state’s adult-use market first opened. In the meantime, businesses have been reaching out to members of New Mexico’s congressional delegation for support.

U.S. Sen. Martin Heinrich (D-NM) said in a statement to KRQE that DHS should focus is checkpoint enforcement activities on combating illegal fentanyl trafficking, “not seizing cannabis that’s being transported in compliance with state law.”

“New Mexicans are depending on federal law enforcement to do everything they can to keep our communities safe,” he said. “Our resources should be used to maximize residents’ safety, not distract from it.”

Rep. Gabe Vasquez’s (D-NM) office said the “issue has been raised with the Congressman and his office is looking into it.

“Congressman Vasquez believes that the federal government should respect New Mexico law,” they said. “Congressman Vasquez is also a co-sponsor of the SAFE Banking Act, which would support the legal cannabis businesses throughout our state.”

While targeting state-licensed businesses is a seemingly new trend, a 2022 report from the Government Accountability Office (GAO) did show that most CBP drug seizures at checkpoints actually came from agents taking small amounts of cannabis from American citizens—not large interdictions of illicit drug shipments from transnational cartels, as one might assume.

In 2019, a coalition of senators requested a review of Border Patrol immigration checkpoint actions, citing a past report that found a significant number of searches and seizures were executed against U.S. citizens for low-level marijuana possession.

Meanwhile, CBP has taken steps to revise its own internal cannabis policies, narrowing the window of employment ineligibility over past marijuana use from two years to three months.

Sen. James Lankford (R-OK) criticized the modest reform in a letter to CBP’s acting commissioner on Sunday, arguing that it “undermines the security and integrity of the Border Patrol workforce” and questioning the “trustworthiness” of recruits who used cannabis.

Last year, CBP cautioned employees, as well as their family members, against using even federally legal CBD products.

The federal legalization of hemp and its derivatives has also created complications for CBP’s enforcement activity, leading officials to seek out portable marijuana analyzers to quickly identify cannabinoid profiles and help distinguish between marijuana and hemp.

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