Pot bust in Mendocino County pits legit industry against law enforcement

After being pulled over Friday outside Ukiah in a truck hauling ?1,875 pounds of cannabis, employees with a Mendocino County marijuana distribution company showed a CHP officer a county-issued business license and documents for their medical marijuana collective.

Their bosses, the founders of ?Ukiah-based Old Kai Distribution, thought the documents were enough proof they were complying with new state and local laws for the cannabis industry, a phased rollout that began with local rules and is culminating in January, when the state begins handing out California licenses for marijuana businesses.

But law enforcement said those laws don’t yet apply, and during the Dec. 22 encounter near North State Street and Pomo Lane north of Ukiah, seized the truck and marijuana, citing the driver and a passenger with misdemeanor possession of cannabis for sale and unlawful transportation of cannabis.

The case illustrates the conflicts remaining between agencies trying to coax cannabis operators away from the black market and agencies trying to enforce anti-drug trafficking laws. It also shows the hurdles facing businesses aiming to survive and comply with a complicated series of fast-changing laws that began with the state asking local jurisdictions to be the first to legitimize cannabis businesses.

Old Kai founders Lucas Seymour and his business partner, Matthew Mandelker, say law enforcement investigators are operating on outdated rules and undermining California’s yearslong effort to get local cannabis operators to join the newly regulated market.

“We’re a licensed entity,” Seymour said. “We have all the paperwork. All of our employees are aboveboard. We have payroll, pay stubs, workers’ comp. We’re not trying to scam anyone.”

Officer Jake Slates, a spokesman for the CHP’s Ukiah office, said he couldn’t comment on the case because the investigating officer was out of the office. Speaking generally, Slates said there is no lawful avenue to transport commercial marijuana until 2018.

“Let’s say they went through and got all the documentation and it’s ?100 percent legal - it’s still illegal because it’s before Jan. 1, 2018,” Slates said.

But a spokesman for the California Bureau of Cannabis Control said Tuesday that medical marijuana businesses with local licenses and permits can operate before January.

At stake is 1,875 pounds of cannabis plants and the livelihoods of six cannabis farmers and one distribution business. The plant material was mostly trim and unmanicured dried flowers and was en route to Old Kai’s Ukiah warehouse where it would be weighed, broken down into batches, and tested for pesticides and fungus. Then it would be taken to various manufacturers, mostly to be made into concentrates used in vape cartridges.

Old Kai’s attorney, Joe Rogoway, issued a letter Dec. 25 to the CHP and several Mendocino County departments including the Sheriff’s Office and Mendocino Major Crimes Task Force demanding law enforcement preserve the evidence. Rogoway said he spoke with Mendocino County lawyers who said they would try to ensure the evidence is preserved and not destroyed.

Mendocino County Counsel Katharine Elliott learned about the incident Tuesday morning and was looking into the matter, but declined to comment specifically on the case. Her office is closed this week and the lawyer with most knowledge about the county’s cannabis rules was not available to comment on whether Old Kai was in full compliance, Elliott said.

Old Kai appears to have all the documents needed to lawfully operate in Mendocino County, according to the county ordinance and documents provided by Rogoway. Mendocino County’s rules for distribution companies went into effect in November. Old Kai has a zoning clearance and a business license dated Dec. 19, 2017, and signed by Mendocino County Treasurer-Tax Collector Shari L. Schapmire.

“The county says, ‘Come out of the shadows. We are here to support you. We will permit you. You’re safe.’ Then this happens,” Rogoway said. “That’s a terrible indictment to the county’s policy.”

Rogoway said the Old Kai employees were following all state and local rules for distribution. They were traveling in an unmarked truck with a manifest listing the materials as well as copies of the Mendocino County business license and state articles of incorporation stating the business was founded to “assist in the association of qualified patient members.”

Before founding Old Kai Distribution, Mandelker and Seymour had been cultivating cannabis since 2003 in Mendocino County. They founded Old Kai Distribution in 2016 to focus on getting cannabis from farms to other steps in the supply chain. The company’s name Old Kai means coyote in the Boontling jargon created in Anderson Valley.

Old Kai employs ?33 people, and many were at the warehouse Friday on Christy Court for a holiday party, waiting for the two in the truck to return and join the celebration. Seymour said he wasn’t worried when he first heard about the traffic stop because it was evident they were operating lawfully.

The driver and a passenger - who weren’t identified by Old Kai or the CHP - were pulled over about 4:30 p.m. by an Officer Ogden who said the truck’s running lights were off. Ogden then involved the Mendocino County Sheriff’s Office and the Mendocino Major Crimes Task Force, which seized the vehicle and marijuana.

Rogoway said he repeatedly tried calling the CHP Ukiah bureau to provide information and documentation proving the business was operating under Mendocino County rules but was rebuffed.

Officials with the Mendocino Major Crimes Task Force, a collaboration between law enforcement in the county, didn’t respond to messages Tuesday seeking comment. A Mendocino County Sheriff’s lieutenant said the department only assisted and was not handling the case. A spokesman with the Mendocino County District Attorney’s Office Tuesday said he couldn’t confirm whether the case had been received.

The bulk of the cannabis - about 1,000 pounds - came from Joshua Artman’s quarter-acre cannabis plot in Covelo. He said it would be difficult to estimate the monetary value of the crop before it was sold to the manufacturers, which was slated to occur early in 2018. As a distributor, Old Kai takes plant materials from farmers and brings it to a warehouse for sorting, with samples sent to a laboratory. Then, Old Kai representatives arrange for the cannabis to be purchased by manufacturers.

“If I lose my crop … my family, what do I tell my wife and kids?” Artman said. “It’s tough. Honestly, I’m not sure what to do. Hopefully some good will come out of this; we can set a precedent and it won’t happen again. But this has massive repercussions for the county of Mendocino.”

You can reach Staff Writer Julie Johnson at 707-521-5220 or julie.johnson@pressdemocrat.com. On Twitter @jjpressdem.