A Hydroponic Gardening Supplier Was Selling to Pot Growers, So the Feds Nailed Him on Tax Charges
The hydroponic marijuana-growing community has suspected for a while that they're being watched, and for good reason. By the DEA's own account, law enforcement has turned its attention increasingly toward indoor growing operations as a quarter century of an aggressive eradication campaign has forced an increasing number of pot farmers to seek shelter.
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The feds' tactics vary, but their focus falls not infrequently on hydroponic gardening supply stores. Four years ago, a newspaper in Florida discovered that local police were tracking customers of Simply Hydroponics to their homes then, if they detected unusually high power usage or the smell of weed, obtaining a search warrant and conducting raids. And sometimes, they target the gardening suppliers themselves.
That's what happened to William Luck II, who ran an outfit called Hydro Expo in Fort Worth. In 2009, the DEA received a tip that he was selling equipment to people he new were cultivating marijuana.
That much seems obvious. Most people probably wouldn't need a tip to conclude as much. I'm assuming -- and I could be totally off base -- that the population of gardening enthusiasts in the Dallas-Fort Worth area willing to invest thousands of dollars to optimize their tomato yield is vanishingly small, on par with the number of tobacco users who prefer to ingest nicotine via fancy hand-blown glass water pipes. So it would stand to reason that any hydroponics supplier would know on some level that some customers are growing weed.
Nevertheless, the DEA set up a sting. An undercover agent and their informant, after explicitly telling Luck they were growing lots and lots of hydroponic weed, arranged for the purchase of $20,000 worth of equipment. In an apparent attempt to solidify their reputation as shady drug growers, they later told him they could only pay $17,000, since their previous harvest had been poorer than expected.
Luck agreed to the discount and took the money, all of it in cash. He was even obliging enough to promise that he would break up the $17,000 into smaller amounts so that he wouldn't have to include their names on a report to the IRS.
It was that last part that ended up getting Luck in trouble. Last January, he was charged with two counts of failing to file IRS Form 8300, which is required for cash purchases of $10,000 or more. He pleaded guilty to one count and on Thursday was sentenced to 37 months in federal prison.
So why, when the DEA was investigating him on drug charges, did prosecutors opt instead to hang their case on an obscure piece of tax law?
"Because that's easier to get someone on," says Chad West, a Dallas-based marijuana defense attorney. Knowingly selling supplies for marijuana use or production would fall under the federal law covering drug paraphernalia. That provision lists a number of things related to drug consumption, like pipes and spoons, as paraphernalia, but not the type of equipment found at hydroponic supply stores. "The code is really unclear how you would charge somebody who's not just providing pipes, who is really just providing the boxes to grow them in," West says.
And it's relatively easy for hydroponic suppliers as well as head shops, which do sell products defined paraphernalia, to avoid running afoul of the feds so long as they make clear they aren't intended to be used for illegal drugs. Hence all those absurd "FOR TOBACCO USE ONLY" labels on glass pipes and bongs.
Most of the time, West says the DEA focuses on marijuana growers, not the people who sell them equipment. "Fifty to 60 percent of my docket are marijuana-related cases ... and I have never seen a situation exactly like this," he says. "Generally the feds are more interested in the growers."