https://cardinalnews.org/2024/05/16/search-warrants-claim-pattern-of-money-laundering-at-some-cannabis-related-stores/

Newly unsealed search warrants in Washington County allege that some of the cannabis-related stores that were targeted in a region-wide raid last fall were involved in money laundering.

Dozens of stores across Southwest Virginia were raided in September. While the ownership structure of many of the shops is unclear, the search warrants show that the homes and banking records of two people who owned multiple locations also were searched. Among the items that were seized were a number of guns — pistols, rifles and shotguns — as well as ammunition, computers, cellphones and vehicles, including two Rolls-Royces.

An investigator says in the documents that based on a review of the bank records received from grand jury subpoenas for 2023, the “pattern of money laundering into and out of the bank accounts continue as of the writing of this report.” He also said the money came from the illegal sale of marijuana.

The amounts of money “going through” the accounts far exceed the incomes reported to the Virginia Employment Commission, the investigator said.

“My review of the total bank accounts involved in this operation puts the amounts run through the banks in the neighborhood of $9 million dollars being run through the accounts as of this writing [and] continue to this date,” he wrote in two search warrant affidavits.

It’s not clear what period of time is involved, or the dollar amounts attached to each owner.

The search warrants also state that a network of Zarati shops was sold as franchises to several “parties,” and that one owner has 11 locations, which have been renamed the Good Vibes Shops and are located from Bristol to Woodbridge.

However, a separate list of shops says that the owner “branched out” and owns more than 20 locations, and all but one were registered under the same Saltville address.

The owners named in the search warrants could not be reached for comment. They are not being identified in this story because no charges have been filed against them.

On Sept. 28, two dozen search warrants were executed at stores, homes and financial institutions in nine counties in Southwest Virginia. In addition to a number of local law enforcement agencies and county prosecutors, the operation involved the Virginia State Police, the state attorney general’s office, the U.S. Postal Inspection Service and the federal Drug Enforcement Administration.

The operation was described in a state police news release as an “extensive, ongoing criminal investigation into allegations of money laundering and illegal narcotic distribution network by retail establishments.”

The search warrants and affidavits initially were sealed for 180 days. Some counties, including Lee, Pulaski and Scott, in addition to Washington County, have released the documents. Court officials in Montgomery, Roanoke, Tazewell and Wythe counties said the seals there had been extended or the documents will remain sealed until further notice. A Smyth County court official said no documents related to the searches were filed there.

Search warrants from Lee, Pulaski and Scott counties revealed weeks of undercover buys by police at stores there and the seizure of ATMs, thousands of dollars in cash, plant materials, computers, tablets, SD cards, cellphones, receipts and other records.

Virginia State Police spokeswoman Corinne Geller said last week that state police have not made any arrests in connection to the searches and noted that it is an “ongoing criminal investigation.”

Washington County Sheriff Blake Andis said that no charges have been filed in his locality. He also referred to the investigation as ongoing.

Last month, an investigator with the Scott County Sheriff’s Office said that charges connected to the searches have recently been filed in that locality, but he refused to release the names of those arrested and the charges they face until the case is adjudicated.

Similar stores have opened across the state over the last two years. They are sometimes referred to as “adult share stores” because some operate like clubs whose members “share” cannabis with new members who must buy something or pay for membership. Some of the shops “gift” marijuana when customers buy an item like a T-shirt, hat, sticker or CBD product.

In 2023, state Attorney General Jason Miyares issued an opinion that such gifting is illegal.

The stores opened amid much confusion over the state’s marijuana laws. Virginia allows adults 21 and older to possess small amounts of marijuana for personal use and permits home growing of up to four plants per household, but has yet to establish the legal framework for a retail market. Gov. Glenn Youngkin vetoed an effort to establish one during the recent session of the General Assembly.

In addition to the two Zarati shops in Abingdon and Damascus, search warrants were executed in Washington County at the Good Vibes Shop in Abingdon, which has since closed, and at Grounded in Abingdon, which also now appears to be closed.

The search warrants also detail the discovery of four packages at the Glade Spring Post Office that had a strong odor of marijuana. Officers waited in the post office parking lot until a woman arrived to pick them up. She said she was getting the boxes for her husband, who, in turn, told police he was picking them up for the owner of the Zarati Shop in Abingdon, the documents state.

A search warrant was obtained to open the boxes, and the suspected marijuana was sent to a forensics lab in Roanoke, where it tested positive for marijuana, according to the documents.

The search warrants also detail undercover purchases of plant material at the four Washington County stores by law enforcement officials in the months leading up to the searches. Much of it tested positive for marijuana, with more than the federally allowed 0.3% THC, the plant’s psychoactive ingredient.