General Discussion

United States Attorney Benjamin B. Wagner
Eastern District Of California
Stockton Man Pleads Guilty To Operating Multiple Marijuana Storefronts And Cultivation Sites
FOR IMMEDIATE RELEASE
Friday, May 31, 2013

Docket #: 2:12-cr-255-GEB




SACRAMENTO, Calif. — Matthew Davies, 35, of Stockton, pleaded guilty today before U.S. District Court Judge Garland E. Burrell Jr. to 10 felony offenses arising from his operation of multiple marijuana businesses and cultivation sites, U.S. Attorney Benjamin B. Wagner announced. Davies pleaded guilty to one count of conspiring to manufacture and distribute marijuana, two counts of manufacturing marijuana in connection with two separate indoor marijuana grow operations, and seven counts of distribution of marijuana.

According to the plea agreement, Davies, along with co-defendant Lynn Farrell Smith, 62, of Stockton, owned and operated various marijuana businesses. One of the two marijuana manufacturing operations was a sophisticated indoor growing facility involving thousands of plants in a warehouse on Vickie Lane in Stockton. Stockton Police Officers responded to a burglary-in-progress call and found more than a dozen workers inside trimming the plants. A federal investigation began and a search warrant was executed at that location.

According to court documents, the investigation revealed that in addition to the marijuana growing operations, Matthew Davies and Lynn Smith owned and/or operated seven marijuana storefront businesses in Stockton and Sacramento between 2009 and 2011. The businesses generated substantial revenues.

Profit and loss statements obtained during the course of the investigation showed that, for example, the Pathways Family Health Cooperative in Stockton generated more than $2.2 million in marijuana sales in less than a year. It was closed in 2010 by the City of Stockton. Similarly, records show that the Central Valley Caregivers Cooperative, which Davies and Smith owned and operated in Stockton, generated more than $4.5 million in gross sales in 2011 before federal search warrants were executed in October of that year. The MediZen business in Sacramento generated $2 million in gross sales of marijuana during that same time period. During 2011, Davies also purchased a 50 percent interest in Port City Wellness in Stockton (which was briefly open between September and October of 2011) for approximately $200,000. During 2011, Davies and Smith also managed and operated River City Wellness and R & R Wellness (renamed Sacramento Patient’s Group), and purchased and operated Twelve Hour Care dispensary. All three of these marijuana businesses were in Sacramento. They also briefly operated an eighth marijuana business in Manteca before it was closed by the City of Manteca.

“Matthew Davies, a Stockton businessman with an MBA, set out to build a lucrative marijuana empire in the Central Valley, even though he knew that his conduct was illegal under federal law,” said U.S. Attorney Wagner. “He persisted in expanding his businesses even after local jurisdictions took action against them, and even operated one storefront business in Sacramento shortly after its prior owner had been arrested by local authorities. Despite all the claims about nonprofits and ‘cooperatives’ our investigation has shown that, in the end, it was all about the money.”

Sentencing before Judge Burrell is scheduled for September 27, 2013. The plea agreement filed today, if accepted by the court, would call for a sentence of five years in prison. The government intends to seek a substantial fine, and the plea agreement reflects that Davies has already voluntarily forfeited $100,000.

U.S. Attorney Wagner also noted that the sentence to be recommended in this case reflects the fact that Davies timely expressed a willingness to plead guilty, saving the government significant expenditure of resources, and is commensurate with other sentences recently imposed on similarly situated defendants in this district. Earlier this month, a Stockton man was sentenced to 10 years in prison after being convicted at trial of operating a warehouse marijuana grow and possessing a firearm in furtherance of a drug trafficking offense, and a resident of Elk Grove was sentenced to six years in prison for his role in owning and operating a marijuana business that was later sold to Davies. In recent months, a South Lake Tahoe man was sentenced to five years in prison for operating a marijuana business and cultivation sites, a Bakersfield man got four years in prison in connection with a storefront marijuana operation, and two Florida men got five years in prison each for a large indoor marijuana grow in Shasta County.

Co-defendant Smith pleaded guilty on January 18, 2013, to similar felony charges relating to the manufacturing of marijuana and six counts of distributing marijuana from storefront businesses in Stockton and Sacramento. Co-defendant Robert Duncan, 30, of Stockton, pleaded guilty on September 21, 2012 to marijuana cultivation.

The case against Davies, Smith, and Duncan was the product of an investigation by the U.S. Drug Enforcement Administration with the assistance of the U.S. Marshals Service, the Internal Revenue Service – Criminal Investigation, the San Joaquin County METRO narcotics task force, and the Stockton Police Department. Assistant U.S. Attorney Richard J. Bender is prosecuting the case.