Retailer to pay $1.2 million fine in Kush sting
Adult novelty chain nabbed in state, county sting agrees to settlement
A chain of adult novelty stores has agreed to pay a $1.2 million settlement after a police sting discovered sales of synthetic cannabinoids known as Kush.
A chain of Houston-area adult novelty stores has agreed to a nearly $1.2 million settlement with state and county agencies after an undercover sting operation discovered the shops were selling synthetic cannabinoids, commonly known as Kush.
The settlement announced Thursday — the largest ever against a Texas retail operation that peddles the colorful foil packets of the drug over the counter — is part of a mounting effort by law enforcement to target deep-pocketed businesses instead of prosecuting users.
In the past two years, the Texas Attorney General’s Office and the Harris County Attorney’s Office have jointly filed 10 lawsuits against Houston-area stores that allegedly sold the leaf-and-chemical mixture, including a civil action this summer against a Spice Boutique smoke shop shortly after 16 people overdosed in Hermann Park.
“The monetary incentive (for businesses) is extraordinary,” said Assistant Harris County Attorney Rosemarie Donnelly, who has been involved in all 10 deceptive trade practices suits against local stores. “If you want to sell this, you’re at your own risk. If you are going to try to profit from these illegal substances, we are going to come after you and charge you with substantial penalties and if necessary shut down your store.”
The recent settlement was reached with the owners of Katz Boutiques, an adult novelty chain with nine locations across the Houston area.
Marc Hill, the attorney for Katz Boutiques, said his
client stopped selling Kush packets at stores within city limits after the product was outlawed in the City of Houston.
The chain owner, Bao Quoc “Tony” Nguyen, however, wasn’t aware the state had outlawed Kush sales until he got sued, said Nguyen’s attorney, Michael Lamson.
“It was an obscure change in the law, and it wasn’t one that was publicized,” Lamson said. “Basically, they got caught with their pants down without knowing it was illegal.”
The drug is typically sold in retail stores in 10gram packets containing the leafy material sprayed with chemicals ostensibly to mimic the effects of marijuana. One large envelope at a convenience store goes for about $25, but the retailers can buy it in bulk for about $7 apiece; buyers will often repackage the contents and resell Kush in smaller portions on the street.
The potency varies widely from one batch to the next, and at its worst, the drug can cause convulsions, hallucinations, psychosis or heart failure.
‘Sense of legitimacy’
The string of deceptive trade practices suits began with a series of transactions by the undercover deputies from the Harris County Sheriff’s Office at Katz stores, and proceeded with investigations and lawsuits at convenience stores and smoke shops across the county.
Law enforcement searched three Katz stores and recovered more than 3,000 packets of Kush, and lawyers with the attorney general’s consumer protection division said internal documents from Katz employees indicated as much as 40 percent of the stores’ revenues resulted from Kush sales.
Hill, who represents the Katz chain, and Lamson, who represents the stores’ owner, called the 40 percent figure ludicrous. The Katz stores sell 74,000 products, they said, including expensive lingerie.
The settlement does not include any admission of guilt or liability, and no criminal charges have been filed.
“The idea behind these cases is to attach liability to the store owner … (for) selling something that’s illegal and dangerous,” said Daniel Zwart, an assistant attorney general in the consumer protection division, who has helped shepherd many of the cases through court.
His co-counsel, Stephanie Eberhardt, says the response will be swift.
“If you can go in to buy illegal drugs in a regular store, that confers a sense of legitimacy rather than texting back and forth with a drug dealer to meet in a parking lot,” she said. “That’s where we’ve stepped into say if you are going to be in business of selling synthetic marijuana, we will get a court order to shut it down and we will seek penalties to make that not a profitable endeavor.”
Status of other cases
In all, the county and state have teamed up with lawsuits against 10 businesses, all of which are currently under court orders that prohibit them from selling synthetic drugs.
Katz and one other business have reached monetary settlements.
A judge ordered another establishment to shut its doors and pay penalties.
A fourth business took the matter to trial, where a jury found the owner liable for $878,000 based on the number of packets police retrieved on the premises.
The defense lawyer in that case, Douglas A’hern, said the lawsuits are a form of railroading business owners, who in some cases don’t know they’re breaking the law and would gladly stop selling Kush if they knew it was illegal.
“The state of Texas wants to make examples of people by seeking uncollectable monetary judgments,” A’hern said. “It’s certainly overreaching, it’s not practical and they can certainly accomplish what they’re trying to accomplish in a more reasonable fashion.”
The remaining civil cases, meanwhile, are awaiting trial, including the lawsuit against the Spice Boutique.
“We’re not going to stop until the retailers get the message that it is cost prohibitive to sell these drugs,” Donnelly said.