Hazy hemp law threatens Columbia business

COLUMBIA, S.C. (WIS) - First, Columbia Police Officers and state agents raided the store.

Then, the city cracked down on its branding.

The Columbia Police Department alleges the manager of the Five Points hemp store formerly advertised as Crowntown Cannabis sold marijuana and hemp without a license.

The Columbia business license office followed suit, alleging unlawful activity, and withheld the store’s business license until it agreed to stop advertising cannabis.

There have been no convictions in any of the criminal cases connected to the seizure.

Marijuana is illegal, but state law creates unclear rules about hemp flower and licensing.

The co-owners of the store say nothing illegal happened, raising questions about the clarity of state law and the city’s posture towards the store.

The city’s business license administrator said she withheld the license-based information provided to her by CPD but declined to elaborate on the details.

The Columbia Police Department answered some of WIS’s questions by email but did not agree to an on-record interview.

The crackdown comes amidst the expansion of hemp stores in Columbia since 2019, often touting the wellness benefits of their products.

The seizure

In January, the Columbia Police Department announced it seized 15-20 pounds of “green plant-like material believed to be marijuana” along with THC hash oil and edible samples from the store. South Carolina Law Enforcement Division (SLED) agents assisted.

Officers arrested store manager Connie Jackson and reported giving citations to two other employees.

Jackson is charged with possession of hemp without a license and conspiracy to distribute marijuana.

CPD reported that now-former Crowntown employees Karry Cohen and Alessandra Morales were cited for possession of hemp without a license. Those citations are not present in Richland County court records, but the two are charged with disguising marijuana as hemp.

Morales did not provide a statement while attempts to contact Cohen were unsuccessful.

Timmons sent WIS an email stating CPD had “received information” the store was selling marijuana “which led to an undercover investigation.”

Co-owners Michael Sims and Dan Hentschke said the seizure came after the company attempted to ship hemp flowers and other hemp products via FedEx.

FedEx prohibits the shipment of “raw or unrefined” hemp and marijuana.

They claim the package was sent to SLED, who then alerted CPD and the raid followed.

“It was an error on one of our colleagues’ parts, but we went through that,” Sims said.

SLED deferred questions about the case to CPD. WIS has submitted a Freedom of Information request to SLED for more information.

WIS emailed Timmons asking if SLED alerted CPD to Crowntown. Timmons responded by only stating it was a “joint investigation” and declined to comment further citing the active criminal cases.

The co-owners provided a photo of documentation they claim shows law enforcement seized the package.

“Honestly, we don’t know what’s ever happened to that package. There’s not been any test results, no warrants, no arrests, no cited, no tickets, nothing. It’s like it disappeared,” Hentschke said.

The Columbia Police Department sent out a press release about the seizure and arrest the day after the raid.

“Baffled. [Jackson] has no criminal background whatsoever,” he said.

Jackson has no prior criminal record in Richland or Lexington Counties.

Sims said Jackson told CPD that no hemp flower was at the store but it could be purchased online.

Later in the interview, Sims conceded there was hemp flower in the store but it was not being sold.

Both co-owners denied there was any marijuana on site.

Marijuana and hemp come from the Cannabis plant and are indistinguishable to the naked eye.

Marijuana is a federally controlled substance.

The rules around hemp are more hazy.

Congress removed hemp as a controlled substance nationwide through the 2018 Farm Bill. That federal law made hemp and various hemp-based products legal but allowed states to enforce laws of their own to regulate the production of hemp.

The federal law defines hemp as any cannabis plant that does not contain more than 0.3 percent Delta-9 THC. THC is a naturally occurring compound that is responsible for the psychoactive effects one feels when consuming cannabis.

State law also creates the same THC standard as the Farm Bill.

Timmons sent WIS an email stating the seized products have tested positive for marijuana and hemp in a SLED lab but has not released any documentation of results nor methods to WIS.

The co-owners provided WIS photos of two documents from February, appearing to be SLED lab results. They show a Crowntown Cannabis TCHA plant material testing at more than 1 percent Delta-9 THC.

Two packets of “Crown Town Cannabis Delta-8″ tested at 0.49 percent Delta-9 THC (with a variance of 0.11 percent).

Delta-9 THC can be produced when heat is applied to hemp. The process, called decarboxylation, turns the naturally present acid THCA into Delta-9 THC.

SLED’s testing process is unclear.

Sims said the results are “completely incorrect,” and alleged testing results often vary and are unreliable.

“That variance is not that big of a deal until you’re talking about someone’s freedom, someone’s business existing or not,” he said.

Sims and Hentschke said they have their products tested to ensure they’re within the 0.3 percent Delta-9 compliance and keep records on the testing.

“They weren’t asked for. We were never asked for [Certificates of Analysis] or whatever. We were told that the ones we did provide with the [seized FedEx] package were not valid anyway,” Sims said.

Hentschke provided WIS with certificates of analysis showing the company using two laboratories before the raid. One is a Tennessee-based lab with DEA approval. The second is certified in Colorado.

The DEA is requiring all hemp-testing labs to be federally registered by the end of the year.

The certificates are dated from September and January 2022, before the seizure of the products.

Timmons provided WIS with a largely redacted incident report where the officer alleges Jackson sold unprocessed hemp and marijuana.

“Unprocessed hemp” is illegal to possess without a license in South Carolina.

State law provides no definition for “unprocessed or raw hemp,” but states processing “means converting an agricultural commodity into a marketable form.”

The S.C. Attorney General’s office wrote a 2019 opinion letter to SLED specifying that simply packaging hemp flower does not constitute processing. Additionally, the opinion defers to law enforcement and the courts on whether hemp is unprocessed and contraband without a license.

“I want someone to explain to me how you can get something growing from a plant, dried, trimmed and packaged or put into a smokable form in a joint without describing a process,” Sims said.

The opinion does not carry any legal authority.

Timmons sent WIS an email stating CPD follows state law but did not provide any clarification on how CPD views processed vs. unprocessed hemp.

Jackson is represented by state lawmaker and defense attorney Seth Rose.

He said the experience was traumatic for Jackson, who believed she was operating legally.

“She’s been placed on the news. Multiple times now, press releases have been issued. The internet will never wipe this clean, no matter what happens with her case,” he said.

SLED Chief Mark Keel has been a vocal opponent of cannabis deregulation.

“Look at what law enforcement is fighting at the state house and what they’re not. Does anyone out there think hemp flower is a major issue facing our community?” Rose said.

All the criminal cases are still pending.

“We’re not putting our staff or anyone else at that risk anymore, ever. We wouldn’t have if we knew this would have been the outcome,” Sims said.

Sims and Hentschke estimate the financial cost of CPD’s seizure cost the store $30,000 in products.

They said they haven’t brought those products back, with Sims estimating a sales reduction by 50 percent since.

“We’re at a complete competitive disadvantage, [customers] come in here, they ask for it, they leave because we’re not allowed to carry it,” Hentschke said.

WIS visited several downtown Columbia hemp stores after the interview, finding different interpretations of the law.

One store sold WIS hemp flowers with THCA labeling in a jar. A second store sold hemp flowers in a pre-rolled joint with THCA flower labeling. However, the remainder of the stores visited told WIS they were not allowed to sell THCA flowers.

“I say to the attorney general and everybody else watching, if this is such a serious issue and you want this to be the law, then make it a law and not an opinion letter and very clearly state what is allowed and what isn’t,” Sims said.

WIS and CPD spokesperson Jennifer Timmons communicated from mid-June through mid-July in an effort to arrange an interview and get questions answered.

On June 28, WIS sent Timmons an email requesting an interview with a member of CPD leadership.

As of July 10, unanswered questions remained and CPD had not made any member of leadership available. WIS went to the Columbia Police Department office with a camera rolling in the hopes of getting an interview with Chief Skip Holbrook. Timmons said he was not available.

On July 11, Timmons offered WIS an off-record conversation with Holbrook and said there would be a CPD decision on “if an on-camera interview will be granted.”

WIS insisted the conversation with Chief Holbrook be on the record. Timmons canceled the meeting.

The civil fallout

Hentschke contacted WIS in early June after the store received multiple letters from Columbia Business License Administrator Kelly Smith. Smith leads the business license office.

The first letter dated May 24th stated the store needed to close immediately because the store’s business license had lapsed.

Hentschke said the store contacted Smith and the situation was handled.

A second letter came on June 1, informing Hentschke the city would not be renewing the business license because of “unlawful activity.”

In the letter, Smith again instructed the store to close immediately.

On June 16, WIS requested an interview with Smith.

On June 26, the city’s public relations team denied WIS’s interview request with Smith due to “possible pending litigation.” No lawsuits have been filed.

On June 28, the team sent WIS a copied section of the S.C. Freedom of Information Act, which regulates records requests from public bodies. At that point, the only request had been for an interview.

The team then cited ongoing law enforcement proceedings. There are pending criminal charges, but the business license office is not an arm of city law enforcement.

After WIS repeatedly objected to their interview denials, the press team said it forwarded the request to the city’s legal team on June 29.

By July 10, there was no word from the legal team. WIS went to Smith’s office with a camera rolling and attempted to get an interview with her. She declined, stating the press team had not cleared it.

On July 11, the press team arranged the interview for that day.

City Attorney and former CPD advisor Mike Hemlepp joined Smith, and WIS’s camera filmed him attempting to communicate with Smith during the interview.

Smith said after the May 24th letter, CPD contacted her office.

“I received details about the unlawful activity, but I can’t speak to you about the details in that unlawful activity,” Smith said.

She said CPD did not tell her to withhold the license but moments later said this is “the first instance where I had to do some type of denial of a license for them.”

Hentschke questioned the legal reasoning without a conviction.

“Well, who’s been charged and who’s been found guilty of anything illegal here? No one. So, you’re telling me I can’t renew my business license due to what?” he said.

Smith repeatedly declined to give specifics on why she withheld the license, referring to “details” CPD had provided her.

Timmons emailed WIS stating CPD provided Smith with information about the execution of the search warrant for the business. She said CPD did not instruct Smith to withhold the license.

“Unlawful activity in my ordinance is based on information that I receive and it’s a judgment call that I can make based on that information,” Smith said.

Smith said this situation is rare.

Via email, Timmons said CPD regularly reports “serious and significant” incidents to the business license office.

Smith’s June 1 letter provided a 10-day window to appeal. The co-owners filed an appeal, but the store was forced to close for a week.

However, the store has since re-opened after reaching a conditional agreement with the city.

The co-owners provided WIS with a copy of the agreement with the city. It required the store to not allow criminal activity, follow the law, and remove cannabis signage from the windows of their shop until cannabis products “become legal products to sell in South Carolina”.

Hemp is derived from cannabis and is legal in South Carolina so long as it falls under the 0.3 percent THC level.

The city has an ordinance specifically for the “purveyors of cannabis.”

Smith said the city’s legal team helped draft the agreement. She declined to explain why the removal of the cannabis signage was important to the city or why the city describes cannabis as illegal.

Smith repeatedly said the agreement was mutual, but later conceded there was no negotiation involved in the forming of the agreement.

Smith told WIS the city’s legal team did not tell her cannabis is illegal.

Smith also said City Manager Teresa Wilson did not instruct her to move for the removal of the signage.

She said nobody in SLED, the Governor’s office, the Attorney General’s office or state government communicated to her about the case.

WIS has submitted FOIA requests with SLED, CPD and the City of Columbia for their respective law enforcement and civil records related to Crowntown Cannabis.

“I don’t want to run from them, I don’t want to say anything negative to law enforcement or to the city. We want to work with them,” Sims said.

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