Long Island’s illegal marijuana business booming

Long Island’s multimillion-dollar marijuana industry — both illegal and potentially legal — is booming, experts say, with criminal arrests up, demand rising, a thriving underground market, and an ever-widening number of commercial and medical uses proposed for a weed kept for many years in society’s shadows.

A Newsday and News 12 Long Island investigation shows that in both Nassau and Suffolk, marijuana arrests have reached the highest levels in 10 years, creating a cat-and-mouse game between users pushing for legalization and police combating illegal pot farms and indoor “grow houses” where marijuana is cultivated in greenhouse-like conditions by middle-aged entrepreneurs.

“Growing marijuana has become a very lucrative business,” said Suffolk Chief of Detectives William F. Madigan about the string of marijuana busts of large-scale growing operations found in suburban homes since 2012. Madigan said Long Island’s illicit marijuana market was a motivating factor in three Suffolk homicides last year.

Despite a steady increase in criminal cases over the past decade, the lure of big money has spurred increasingly sophisticated illegal growers to jump into the market, with some importing pot from states where it is legal, experts say. Users who get caught rarely face a significant penalty.

Last year, 57 percent of the total 2,694 marijuana-related cases on Long Island wound up in some form of dismissal, an analysis of state court records shows, with very few going to jail or prison. Most found guilty of marijuana offenses received only a fine.

Marijuana cases: Inside the numbers

In 2013, 2,694 people faced marijuana-related charges in Nassau and Suffolk counties.

But 57 percent of cases were dismissed in court.
36 percent resulted in convictions.

(Almost 7 percent of cases moved ahead with charges unrelated to marijuana.)

Of the people convicted, most faced a fine.

Another 94 convicted were given a discharge and received no sentence.

Seventeen people were put on probation.

Another 50 are either awaiting sentencing or
faced some other sentence that didn’t involve jail time.

In 2013, only 5.38 percent of all cases ended up with the defendant behind bars.

Total: 2,694 cases

Graphic by Nathaniel Lash

Critics say this comes at a time when marijuana enjoys a greater public acceptance than ever before on Long Island and nationally. New York has passed legislation to legalize medical use of marijuana, already in place in more than 20 other states. And recreational use for adults — approved in the states of Colorado and Washington — may be only a few years away here, some say.

“I think the market for marijuana has grown significantly — among young people but also among older folks too,” said Jeffrey Reynolds, who until last month was executive director of the Long Island Council on Alcoholism and Drug Dependence, who is opposed to the drug’s legalization.

“Marijuana has been identified as a key investment opportunity for entrepreneurs. And locally folks have looked at this and said, ‘If they lessen the criminal penalties, and there is a lot of money to be made, why wouldn’t I enter this market?’”

Although no one knows for sure just how much pot there is on Long Island, several growing operations of various sizes have been discovered by law enforcement authorities in the past two years. For example, at a Brookville nursery last September, two men were arrested for growing more than 150 marijuana plants — some as tall as 15 feet — hidden from view from the owners. In June 2013, three men were caught by police growing marijuana inside two bedrooms of a Yaphank house equipped with high-powered lighting, water filtration and a special ventilation system. And last September in Commack, police arrested a man for growing marijuana outdoors in a local sump.

Doug Greene, legislative director for Empire State NORML, a pro-marijuana advocacy group, estimates there are “several dozen” pot farms and indoor “grow houses” on Long Island. He says millions of dollars in local, state and federal law enforcement is wasted each year in a futile fight against marijuana — an illegal drug that he says should be instead regulated and taxed like alcohol and tobacco.

“There’s a demand for marijuana, and as long as people want marijuana, there will be people who supply marijuana whether growing it indoors or growing it in a sump,” he said.

One of the largest marijuana networks investigated by authorities in the past two years involved homes in Seaford, Medford, Middle Island, Manorville and Riverhead, where “millions of dollars” was made from growing and selling weed, according to court papers filed by Suffolk police and the Internal Revenue Service.

In October 2013, inside a large Osborne Avenue “grow house” in Riverhead, police found more than 1,600 marijuana plants — worth an estimated $3.8 million alone, according to court records — as well as 50 “grow lamps,” multiple fans, fertilizer and packaging material used to produce a “Bad Dog” brand of marijuana.

Investigators say grow houses on Long Island are usually hiding in plain sight, located in comfortable suburban neighborhoods. Many produce just a few plants needed to support personal use. But those who’ve turned marijuana into a lucrative business can sometimes be detected with telltale signs. At the Riverhead house, the marijuana grower had illegally tapped into electric lines, stealing $275,000 worth of power, police discovered. Heat and light generated from this grow house also made it conspicuous in winter. “Despite the heavy snowfall in the area, I observed that all those roofs were covered in snow except one,” said John J. Jacobsen, a Suffolk detective working with the IRS task force, in court papers.

These investigations were largely the outgrowth of the 2012 investigation of John P. Franz, who lived in a huge Medford home that contained its own indoor swimming pool and an extensive marijuana growing operation. In court papers, authorities said Franz had been dealing marijuana heavily for “at least approximately the last 10 years and has never had a real job.”

Inside Franz’s house, the basement contained 10-12 tables with 50 marijuana plants each, with about 15 high-powered lamps shining on them, court papers say. At any given time, between 3,000 and 5,000 plants were raised inside the house at various stages of the growth cycle, enough every three weeks to yield $170,000 in value, authorities said.

At another grow house Franz controlled in Middle Island, police said, the basement walls were painted white, with many tables holding the green-leafed plants. Because marijuana carefully tended indoors often gets the best price, each stem was watered, fertilized, trimmed and ultimately harvested and then taken by Franz to his Medford house, court records say.

There, Franz packaged the carefully cut up and prepared marijuana buds into 1-gallon zip-lock bags, ready for sale. Surrounding the large property, he kept several video cameras for surveillance. Authorities said Franz relied on bottles of air-fresheners meant “to mask the strong marijuana odor” coming from the house and avoid detection by neighbors.

A similar but even bigger marijuana operation also took place at a third house controlled by Franz in Manorville, court papers say.

Franz’s indoor grow houses resembled high-end greenhouses, with some strong, healthy female marijuana plants (called “mom” plants) carefully cloned to create new plants, the documents say. Careful attention also was paid to nutrients added to the water and a natural bug insecticide to maximize the quality and the THC (tetrahydrocannabinol, the main intoxicant in marijuana) for users, court papers say.

“We had three children to put through college and survive here on Long Island, and John offered him a job. Basically the economy went down and John made him an offer that was kind of hard to refuse.” — Margaret Mastroeni on her husband’s sentencing

When police finally arrested Franz on drug conspiracy charges after a lengthy investigation in April 2012, they also charged his next-door neighbor in Medford, Richard Mastroeni, 58, a local car dealer, with aiding the large-scale grow house operation. Both men pleaded guilty in the case and are awaiting sentencing, said Assistant U.S. Attorney Burton Ryan.

Marijuana laws across the U.S.

Legal for recreational use

Legal for medicinal use

Not legal

Alabama, Florida, Iowa, Kentucky, Mississippi, Tennessee, Utah and Wisconsin all have laws that allow limited access to marijuana products, according to the National Conference of State Legislatures. * Minnesota allows for limited, liquid extract products only. ** New York’s law does not allow products to be smoked, and ingested doses may not contain more than 10 mg of THC. Source: ncsl.org

On a recent afternoon, Mastroeni’s wife, Margaret, 49, ruefully described how her husband, a nonuser, fell into the marijuana business. She said her husband was paid $1,000 a week to water the marijuana plants at one of the Franz’s grow houses — an offer he accepted because of the recession and family bills to pay.

“We had three children to put through college and survive here on Long Island, and John offered him a job,” Margaret said. “Basically the economy went down and John made him an offer that was kind of hard to refuse.”

At first, the Mastroenis weren’t sure what their neighbor did for a living, but then realized Franz was a major marijuana grower, she said. “That’s how we kind of figured it out, because he was like a vampire and only came out in night,” Margaret said. “He was never up all day.”

Margaret Mastroeni is bitter that her husband is imprisoned while others continue to grow and sell marijuana.

“Dozens definitely,” she said, when asked about the number of grow houses on Long Island. “They are everywhere. You just had one in Yaphank get hit. They are everywhere. There are two right here I know about and nobody would ever know. And it looks just like this — a normal home.”

On a Friday evening, a Suffolk narcotics detective showed a reporter and cameraman the grow home used by Franz and another nearby in Brookhaven where marijuana was dispensed until police made arrests. “This was set up as a retail house for selling marijuana,” said the detective, who asked not to be identified by name because he works undercover. “There was no furniture in the bedrooms. They had a table set up and two guys were selling marijuana.”

Like any market with supply and demand, Madigan said, marijuana — sold on the street for about $250 for an ounce — is more expensive these days than either heroin or pills. He said many marijuana charges are part of more serious crimes committed by defendants.

But Madigan said it’s wrong to consider marijuana harmless. “The large amount of money that’s involved in the marijuana trade can be a contributing factor in many of our violent crimes,” he said. Among three killings in Suffolk last year believed to involve the trade, Madigan pointed to the Christmas Day 2013 fatal shooting of a 19-year-old Bridgehampton man during a marijuana robbery.

Last year, U.S. Justice Department officials — faced with legalization of marijuana in states such as Colorado and Washington while federal law still makes it a crime — issued a strong warning about “diversion of marijuana” from legal states to places like New York where it is illegal. Newsday/News 12 Long Island’s investigation also shows the Long Island underground market for marijuana — traditionally supplied by smuggled exports from Mexico, Canada and other foreign nations — is now coming more domestically from other U.S. states where various marijuana uses has been approved.

“I think in a lot of cases the [Mexican] cartel has been losing out because there is a lot of very high-quality marijuana that is being produced all over the country, especially in California and Colorado,” said NORML’s Greene. “The Mexican cartel has lost business to a greatly improved domestic market over the years.”

In Colorado, where both medical and recreational marijuana use is legal, growers and sellers say they recognize that some of their product is winding up illegally in places like Long Island.

“Unfortunately it [marijuana diversion to New York] is collateral damage over legalization inside a new state,” said Luke Ramirez, co-owner of the Walking Raven, a Denver-based firm that both grows marijuana in a large warehouse and runs a storefront dispensary for retail customers. “There’s obviously heavy motives to grow in Colorado and sell it to a market that has a heavy demand. In a state like New York, where people can’t buy safely from counters inside stores, they have to buy from the black market. There’s an increase dollar … [profit] in the black market than in the legal market. So people in Colorado and Washington have a heavy motive to actually sell on the black market.”

Ramirez said his $4 million annual business is careful with security and other safety measures to avoid improper sales so that he doesn’t lose his state-approved license. But because of state tax that hikes the cost of legal marijuana by about 30 percent, Ramirez said there is still a flourishing underground market in Colorado.

“There’s a pretty large market of folks who are looking to buy from outside the store at a cheaper price,” he explained. “We unfortunately as a store have to pay very high taxes. So, of course, there are folks who want to avoid those taxes and purchase … [marijuana] in the underground market. Most of the underground market has turned to export, from Colorado to the outside states.”

On Long Island, users said they depend on these out-of-state domestic sources, rather than Mexico or elsewhere. Lee Salisbury, 62, a retired carpenter, says he relied on marijuana to self-medicate for bladder cancer, which is now in remission, and now he uses it simply to relax. Puffing on a marijuana joint, Salisbury said he’s too old to worry about the legal consequences.

“One or two [dealers] who I know and those are the ones I get it from,” he explained. “And they get it from California and Colorado and New Hampshire — those are the three places that have been identified to me as the sources of the pot that I get here in New York.”

Federal law-enforcement authorities remain concerned about the flow of diverted marijuana from states where it is legal or loosely regulated to places such as New York, where recreational use will continue to be banned.

Locally, Madigan said illegal pot often comes from local growers but adds: “We have seen marijuana that has come in from other states, pretty much from California and the State of Washington. They were either shipping it by mail or, in some cases, they were actually picking it up and bringing it back by fairly good-sized vehicle.”

New York’s current law-enforcement system against marijuana is often overwhelmed by a seemingly endless supply, a rising public acceptance and the rush to cash in by secret weed growers, said Touro Law School professor Richard Klein, a criminal-law expert who has followed the marijuana scene for years.

“I think marijuana is easier to purchase now than alcohol was during the Prohibition days,” Klein observed. “These … [marijuana growers] are business people. It doesn’t mean that only a pothead is going to grow marijuana. People who just see this as a way to make money — completely independent of their own use of marijuana — are going to enter the trade of marijuana.”

While some big-time growers such as Franz may face serious prison time, most marijuana users and sellers who are arrested by Long Island’s police face little risk of severe penalty. Each year, more Long Islanders get arrested for pot, but fewer are going to jail.

An analysis of state criminal records shows a steady rise in Long Island marijuana cases for possession and sale during the past decade. In Nassau County in 2004, there were 671 marijuana cases; by 2013, the number had steadily risen to 943 cases. Though the counties are similar in population, the number of Suffolk marijuana cases has been more than twice as much as in Nassau during the past decade, reaching a high in 2012 of 1,825 cases.

Suffolk cases outpace Nassau

Marijuana cases per 100,000 people

Graphic by Nathaniel Lash

In both counties, those arrested on marijuana charges last year received an outright dismissal by a court or an “ACD” (adjournment in contemplation of dismissal) more than half the time, records show. For example, of the 1,751 total marijuana cases in Suffolk, there were 1,014 winding up in dismissal. And of the 561 given a sentence last year in Suffolk, 90 adults were convicted on misdemeanor charges but another 445 on noncriminal offenses. While 24 went to jail and five went to prison, the vast majority of those convicted — 476 — wound up with just a fine.

Similarly, in Nassau County last year, of the 943 total marijuana cases, 508 wound up in some form of dismissal. And of the 405 given a sentence last year in Nassau, 113 adults were convicted on misdemeanors but another 271 on noncriminal offenses. While 55 went to jail and two to prison, the majority of those convicted — 209 — received just a fine.

Law-enforcement authorities such as Madigan say they are obligated to uphold the law as it currently exists, even if societal attitudes about marijuana are changing. And a spokesman for Nassau District Attorney Kathleen Rice said the law for first-time offenders often demands a dismissal, a decision generally not up to prosecutors. Rice said she favors legalizing medical marijuana but is opposed to recreational use.

Critics such as Klein say these statistics reflect the inconsistency of actively pursuing marijuana as a crime at the same time lawmakers in Albany were making medicinal use of it legal. He said the negative consequences for those caught in the current marijuana legal system can last forever.

“One of the real negative consequences of us continuing to criminalize marijuana is the impact that it can have on someone’s life,” Klein said. “It starts people down a path making it harder for them to get employment, if they’ve had to miss their jobs because they were arrested.”

Even those such as Reynolds who are against legalization say New York seems at a turning point with marijuana. He warned that the end of a decades-long prohibition on marijuana could lead to greater addiction problems, more need for costly treatment and hospitalization, more dangers on the roadway and unforeseen health and psychological problems with long-term use.

“The argument is ‘the war on drugs has failed, let’s try something else,’ and they’re right — the war on drugs has failed, our current approach is not working,” Reynolds said. “But I don’t know that we can simply throw everything away, and say we’re losing anyway and just legalize everything and let the chips fall where they may without suffering some consequences.”

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