Guilty pleas and an inside look at the Cannabis Culture business
TORONTO -- A police investigation into marijuana operations of Canada's self-proclaimed Prince and Princess of Pot offers a glimpse into the economics of the booming illegal storefront operations selling cannabis products.
Jodie and Marc Emery pleaded guilty Monday to a number of drug-related charges related to what the Crown called a "sophisticated" dispensary operation.
Crown attorney Kiran Gill told the Toronto court police seized thousands of pages of documents -- from contracts to transaction records and bank deposit slips -- at Cannabis Culture shops in several cities across the country last year along with a trove of documents found at the company's Vancouver headquarters.
"Marc and Jodie Emery had established a sophisticated franchise model with the goal of operating dispensaries all across Canada," Gill said.
She read an agreed statement of facts that showed the substantial amount of cash earned at numerous dispensaries, with the crown jewel a storefront in downtown Toronto.
Police began Project Gator in 2016 to look into Cannabis Culture, the marijuana brand operated by the Emerys that moved into the burgeoning dispensary business, Gill said.
The prosecution said it was able to piece together the vast sums of money involved after the Cannabis Culture raids.
First, franchisees had to pay Cannabis Culture a $25,000 franchise fee plus a $3,000 monthly fee. Marijuana and cannabis products, from weed to edibles to merchandise, had to be procured by the franchisee.
"Their marijuana is obtained illicitly," Gill told court.
Franchisees also had to pay six per cent to 10 per cent royalties on total sales to Cannabis Culture, court heard.
Gill provided court a snapshot of the money changing hands. A Cannabis Culture dispensary in downtown Toronto, owned by Marc Emery and Christopher Goodwin, was sending $20,000 to $45,000 in weekly royalties alone to headquarters in January 2017, according to transaction records police had seized.
"That's not money generated by the franchise itself, just the six per cent royalties," Gill said.
That means that location was bringing in at least $333,000 a week during the month of January 2017.
"I was making wads of money and I don't need it," Marc Emery said outside court. "I was giving it away all the time. Huge amounts of money, it was fun."
Jodie Emery said that most of the other stores were losing money.
Marc Emery, the self-proclaimed "Prince of Pot," pleaded guilty to possession of marijuana for the purpose of trafficking, trafficking marijuana and possession of proceeds of crime more than $5,000.
Jodie Emery pleaded guilty to possession of marijuana for the purpose of trafficking and possession of proceeds of crime over $5,000.
Three others with ties to the Emerys pleaded guilty to similar charges while the Crown withdrew charges against 17 Cannabis Culture employees.
All other charges against the Emerys were dropped and the judge accepted a joint recommendation for sentencing the couple.
The Emerys must each pay a $150,000 fine plus a $45,000 victim surcharge and spend two years on probation with conditions that include not participating, directly or indirectly, in any illegal marijuana dispensary.
"I think this fine is extraordinarily high, I even offered to go to jail for a year, but they weren't interested," Marc Emery said to the judge.
Jodie Emery told the judge she knew what she was doing was illegal but was hoping in the future it would be legal.
"We thought we could make a really big impact on what legalization should look like," she said.
Both told the judge operating the stores was an act of civil disobedience.
The judge didn't buy it and said a jail term would be appropriate, but agreed to the joint submission on sentencing.
"No doubt there were pro social motivations that were behind the actions, but at the same time, I have to recognize that much profit was made," Justice Leslie Chapin said.
The federal government is set to legalize recreational marijuana in July 2018, but its sale has been left up to the provinces.
In Ontario, for example, marijuana will be sold by the provincial government in a series of dedicated stores, similar to how it sells liquor.
The Cannabis Culture brand was used at one point by a chain of 19 marijuana dispensaries in British Columbia, Ontario and Quebec, but there are no more stores operating, Jodie Emery said.
Following sentencing the Emerys lit up joints and had a smoke on the courthouse steps.