White-Collar Crime

Lawyer charged in marijuana operation case says state and federal laws ban prosecution

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Arrested last year at his Denver law office, a Colorado attorney facing federal charges in connection with an alleged illegal marijuana operation says he shouldn’t be prosecuted.

That’s because state law permits him to do what he did and a federal budget amendment bans the use of federal funds to pursue the case, says attorney David Furtado. In fact, a motion filed last week by his counsel alleges, it is the Department of Justice that is violating the law, because the budget amendment effectively nixes federal prosecution of marijuana businesses operating legally under state law.

But the unanswered question is whether a federal budget amendment that went into effect after Furtado was charged protects claimed illegal conduct that occurred beforehand, according to the Denver Post.

“This is brand new,” law professor Sam Kamin of the University of Denver said of Furtado’s argument. “And, as with so much in marijuana law, we don’t quite know yet how it will play out.”

It is legal under Colorado state law to buy and sell small amounts of marijuana, and a government web page details applicable rules in the city of Denver. Retail and cultivation operations are permitted by state law, subject to state and local licensing requirements, as a state government web page summarizes.

However, longstanding prohibitions under federal law remain in effect and Furtado is federally charged with money laundering and trying to bank funds from an illegal enterprise.

He is accused of playing a role in funneling money from Colombia to trust accounts controlled by Furtado, via a bank account for a metals business owned by another defendant. The money was then used to purchase a massive warehouse that allegedly was intended to be used for a marijuana growing operation, according to earlier Denver Post and KUSA stories.

It is unclear whether the feds are alleging the marijuana was to be sold illegally, or in accord with state law.

The charges followed coordinated federal raids in 2013 on Colorado marijuana businesses, as KUSA reported at the time of Furtado’s arrest in 2014. He was a lawyer or co-owner of many of the raided companies, the station said.

An argument similar to Furtado’s was raised by Charles Lynch, who was convicted on federal charges in connection with operating a medical marijuana dispensary in California.

The Los Angeles Times (sub. req.) reported earlier this year on a briefing in the Lynch case in the 9th U.S. Circuit Court of Appeals.

Meanwhile, in another case, a federal judge in San Francisco last month said the federal budget amendment precludes the Department of Justice from using a civil court order to prevent a medical marijuana dispensary in California from operating. A San Francisco Chronicle article discusses that case and a copy of the decision can be found on Scribd.

Related coverage:

ABAJournal.com: “Colorado lawyers may advise pot businesses, new ethics comment says”

KUSA: “Lawyer tied to federal medical marijuana raids breaks silence”

See also:

ABAJournal.com: “IRS will refund $25K penalty imposed on medical marijuana business for paying taxes in cash”

Denver Post: “A Colorado marijuana guide: 64 answers to commonly asked questions”

News21: “Colorado profits, but still divided on legal weed”

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