The successful Stockton businessman reportedly employed 75 people at his seven legal medical marijuana dispensaries for which he had local and state business permits and paid state taxes. Davies supplied his shops with marijuana he grew and stored at warehouses around town and when stopped by police on the way to answer a burglar alarm at one of them, he freely told them where he was going.
A month after the September 2011 traffic stop, federal authorities raided his dispensaries and warehouses. They arrested Davies and his two partners and charged them with felonies. The partners pleaded out early, and last week Davies pleaded guilty to one count of conspiring to manufacture and distribute marijuana, two counts of manufacturing marijuana in connection with two separate indoor marijuana grow operations, and seven counts of distribution of marijuana.
California legalized medical marijuana in 1996 and authorized nonprofit cooperatives as dispensaries in 2004. But federal law criminalizes possession and sale of pot.
A press release from the U.S. Attorneys office for the Eastern District of California cited federal laws against marijuana, but zeroed in on why it went after Davies when there are hundreds, if not thousands, of people in the state participating in the state-sanctioned business.
“Despite all the claims about nonprofits and ‘cooperatives’ our investigation has shown that, in the end, it was all about the money,” the U.S. Attorney Benjamin B. Wagner wrote. “Matthew Davies, a Stockton businessman with an MBA, set out to build a lucrative marijuana empire in the Central Valley, even though he knew that his conduct was illegal under federal law.”
A few other recent successful California prosecutions include a South Lake Tahoe man who got five years for his pot business, a Bakersfield man who got four years for a storefront marijuana operation and Aaron Sandusky of Rancho Cucamonga, who received a 10-year sentence in January for running three dispensaries.
The judge in Sandusky’s case made clear in his written instructions to the jury that conflicting signals given by local, state and federal courts, legislatures and chief executives were not the issue. “Congress has defined marijuana as a schedule I controlled substance, making it illegal under federal law,” he wrote. “You must disregard any state or local law to the contrary.”
Davies’ plea bargain calls for a five-year prison sentence and has already cost him a $100,000 fine. The U.S. Attorney indicated the government would seek more fines. Sentencing is scheduled for September 13 in the court of U.S. District Judge Garland E. Burrell Jr.