Emotion wells up in Karen Hasting while recalling the personal and financial toll of law-enforcement raids five years ago based on what Kansas appellate courts later determined to be erroneous classification of a synthetic cannabinoid as an illegal substance.
Hasting was owner of JKL Liquor and Price Right Smoke Shop in El Dorado when the Kansas Bureau of Investigation, the Kansas Department of Revenue and local law enforcement teamed up Aug. 6, 2012, to take down a handful of retailers selling small packages of dried plant matter, sometimes referred to as UR-144, laden with chemicals that delivered effects of marijuana without legal ramifications of marijuana possession.
Kansas authorities seized cash, vehicles, firearms, computers, vehicles, cameras and more from Hasting. Her liquor store in El Dorado was sealed by officials for about 150 days, leading to permanent closure of the business. Thousands of dollars worth of stale beer had to be dumped, while other booze was trucked away to storage. A 1956 Ford Thunderbird was hauled off.
The financial sweep included $20,000 saved to pay for treatment of cancer invading Hasting’s husband. Liens and warrants initiated by the state prevented acquisition of loans to defray the cost of his medical care, Hasting said.
“He died the next year,” she said. “They tried to break me so I couldn’t do anything. They tried to break me.”
Root of the legal conflict?
“I was selling a product that was 100 percent legal in the state of Kansas,” Hasting said. “At that time, it wasn’t illegal.”
Three appendages of the state’s legal system concluded seizures involving Hasting and her son, Jason Gaines, lacked solid legal foundation.
In 2012, the KBI secured from the Kansas Board of Pharmacy a temporary regulation listing UR-144 products as a controlled substance. The Kansas Department of Revenue, along with the KBI and other law enforcement entities, leaned on the Board of Pharmacy’s regulatory decision to obtain search warrants, seize assets and make arrests.
Hasting was never charged with a crime, but the Department of Revenue took possession of assets for failure to buy state drug tax stamps. Hasting and Gaines challenged the seizures through the Kansas Board of Tax Appeals.
BOTA declared listing of the compound UR-144 an overreach inconsistent with state law at time of raids associated with Hasting and Gaines.
“The Board of Tax Appeals declines to read such language into the statute when it is simply not present,” the BOTA order said.
The 2014 order was signed by BOTA members Ronald Mason, James Cooper and Arlen Siegfreid, all appointees of Gov. Sam Brownback.
Revenue officials in the Brownback administration responded by filing a motion with the Kansas Court of Appeals seeking to overturn BOTA. The three-judge panel of the Court of Appeals found “BOTA’s written decision correctly states and applies the law.” Attorneys with the revenue department sought review by the Kansas Supreme Court, but that petition was rejected April 26.
Wichita attorney Gerald Capps, who handled the tax case for Hasting and Gaines, said the outcome shouldn’t have been a surprise to executive branch lawyers and officials.
“They gambled and they lost,” Capps said. “That’s just black-and-white law. There’s nothing gray there.”
Hasting wasn’t charged with a criminal offense, but Capps estimated the state owed her about $200,000, in addition to the return of tangible property. The state has sent Capps’ clients approximately $84,000, Capps said. Other assets, including the antique T-Bird, remain in limbo.
“We’re going back and forth with the Department of Revenue and the KBI to get everything back,” Capps said.
He said it wasn’t clear whether state government agencies involved in the 2012 raids had contacted individuals or business owners with information about outcome of the appeal by Hasting and Gaines.
The KBI didn’t respond to requests for comment. A spokeswoman for the Department of Revenue asked for questions in writing.
“After consulting with agency attorneys, we need some more specifics from you in order to answer your inquiry to the fullest lawful extent,” said spokeswoman Rachel Whitten.
Alexandra Blasi, executive secretary of the Board of Pharmacy, said she couldn’t speak to the controversy because she started in the administrative position in 2015.
Five years ago, the KBI responded to an alarm raised by Salina Police Department officers about merchants selling products testing positive for UR-144. The KBI persuaded the Board of Pharmacy to impose a temporary regulation marking UR-144 as a controlled substance in Kansas. The effective date of the board’s edict was July 23, 2012.
Two weeks later, the Department of Revenue issued a tax assessment for synthetic cannabinoids offered for sale by Hasting in El Dorado. The state demanded $62,000 in tax for 310 grams of a “controlled substance” in her possession and a penalty of $62,000 for not having state drug tax stamps affixed to products. Under Kansas law, drug dealers are required to buy tax stamps equal to the value of marijuana and other controlled substances they’re attempting to distribute.
The KBI issued a news release three days after the raids revealing the El Dorado Police Department, Lyon County Sheriff’s Office, Department of Revenue and KBI culminated a seven-month investigation into sale of synthetic cannabinoids in Emporia, El Dorado, Arkansas City and Wichita. Officers served at least 10 search warrants on businesses and residences, the KBI said.
Several pounds of synthetic cannabinoid-treated “potpourri,” five vehicles, a boat, a motorcycle, tools, equipment and cash in excess of $100,000 was seized as evidence and for drug tax stamp obligations, the KBI said. The agency said “further arrests and seizures are expected.”
In April 2013, Brownback signed House Bill 2353 making the Board of Pharmacy’s temporary regulation on UR-144 a formal part of state law. The statute became applicable in July 2013, nearly 11 months after the raid in El Dorado.
Hasting said her case illustrated what could happen when government agencies acted zealously.
“The last five years have been very difficult for me and my family,” she said. “We have endured much, but justice prevailed.”