By now, you may have heard about the raids and arrests made at Sweet Leaf dispensaries in Denver. Whether you have or haven’t, here’s a quick recap from Cannabis Business Times’ (CBT) coverage of the situation: After a year-long criminal investigation into the alleged illegal distribution of marijuana, all 26 of Sweet Leaf’s Colorado state licenses (including retail and cultivation) were suspended Dec. 14, and eight Sweet Leaf locations were targeted by search and arrest warrants.

Denver Police have arrested 13 budtenders at Sweet Leaf, one of the largest vertically integrated cannabis businesses in Colorado. Nine have been charged with distribution of marijuana of more than 1 ounce, a misdemeanor charge in Colorado. Four were charged with distribution of marijuana of more than 4 ounces—a felony charge. If convicted, these four will face a prison sentence of up to two years and a $100,000 fine.

A former Sweet Leaf employee told CBT that Sweet Leaf had been allowing customers, allegedly referred to by the company as “loopers,” to make multiple 1-ounce purchases a day. At one point during the 12-month investigation, detectives purchased upwards of 15 ounces of cannabis in about a two-hour time frame from the same store, and oftentimes, the same budtender.

While Colorado law limits Colorado residents’ purchase (in a single transaction) to 1 ounce, or 2 ounces for medical patients, Sweet Leaf had issued an internal document, obtained by CBT, stating the company’s policy is that once a customer had purchased his or her limit on rec sales, he or she had to “leave our property before they are allowed to come back.”

The situation has raised questions about the lack of clarity in Colorado’s law. New retail rule changes (in effect Jan. 1) clarify that “a single transaction includes multiple Transfers to the same consumer during the same business day where the Retail Marijuana Store employee knows or reasonably should know that such Transfer would result in that consumer possessing more than one ounce of marijuana.” The new medical rule changes specify the same. (See all changes to existing rules on the Colorado Marijuana Enforcement Division’s website.) 

While Dan Rowland, director of public affairs at Denver’s Department of Excise & Licenses, said this is the first marijuana business to receive a summary suspension from the department, and the law seems to have left room for interpretation, it still reflects extremely poorly on the industry. Selling the ounce-limit to someone 15 times in one day is clearly not what the law intended.

I believe that serving “loopers” is the exception rather than the norm, but for any other vertically integrated businesses that do, the Sweet Leaf case serves as a severe cautionary tale. It’s also a lesson for cultivators to know your retail customers and their policies.

The image of a legal cannabis business, which so many of us are still fighting to legitimize to much of the population, can be tarnished in a heartbeat by bad players. It is not what the newly legalized industry needs.