Luke Scarmazzo and Ricardo Montes, both 26 at the time, opened the California Healthcare Collective in Modesto in 2004, running a medical marijuana dispensary that operated openly and paid taxes for more than a year.[1][2] The Drug Enforcement Administration raided the collective on 27 September 2006 after a 34-month investigation that ended with nine arrests and the seizure of 1,000 marijuana plants and $330,000 in cash.[1][3][2]
At trial the US Attorney argued the collective flouted even state law, saying it had taken a $9 million profit from 2004 to 2006 while state law required dispensaries to operate as nonprofits.[4] The defense answered that the collective held a Modesto business licence and had paid the IRS over $1 million, and that neither the city nor the state had ever told it that it was violating state law.[4] Modesto’s mayor and police chief stood with federal prosecutors at a news conference after the verdict, where officers said the police chief had called in the DEA to investigate the business.[4]
A Fresno jury convicted both men on 15 May 2008 of manufacturing and distributing marijuana and of operating a continuing criminal enterprise, which carried a 20-year mandatory minimum, along with firearms counts.[4][1][3] Learning of the mandatory term, two jurors filed declarations with the federal court in Fresno recanting their verdict while lawyers sought a retrial.[1]
On 21 November 2008 the Eastern District of California sentenced Scarmazzo to 262 months (21 years and 10 months) and Montes to the 240-month (20-year) minimum, with an $8.89 million forfeiture judgment.[1][3] Montes was granted clemency by President Obama and released in May 2017, while Scarmazzo served nearly 15 years before a compassionate release on 3 February 2023.[2]
