The Complicated Connections Between Legal Hydroponics and the Marijuana Black Market

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Sometime in the middle of the afternoon on April 26, Luis Hernandez-Gonzalez, the 44-year-old owner of a hydroponics gardening store in Miami, Florida, received a call from a customer who had recently moved to Tennessee.

Luis Rego, a 32-year-old alleged pot farmer, was having trouble with his current crop and wanted some advice. Unbeknownst to both men, special agents from the US Drug Enforcement Agency (DEA) were eavesdropping on their conversation as part of an investigation into a ring they believed had set up an illegal grow house network in eight Tennessee counties. According to an excerpt from transcripts of the phone call, Rego said of his crop, "Man, this does not want to even out… In the morning, it's fine, and in the afternoon, it gets sad."

"At what temperature, what percentage do you have it on?" Hernandez-Gonzalez asked.

"Ever since I got here, I put it at 500, 400," Rego replied.

"Take a little picture for me later and send it to me here, so I can see it," the owner instructed.

The following afternoon, after receiving three photos of the plants from Rego, Hernandez-Gonzalez offered instructions via another recorded phone call. "Turn it completely around," he told the aspiring farmer. "After a week of turning it, all that wilting will go away."

Three months later, in a bust that generated international headlines, Hernandez-Gonzalez was arrested on marijuana trafficking, money laundering, and firearm charges. After finding small amounts of weed and $180,000 in cash at his place of business, narcotics investigators wheeled out 24 paint buckets containing shrink-wrapped bundles of cash totaling more than $20 million from a secret attic in Hernandez-Gonzalez's house in the suburb of Miami Lakes, according to an arrest report. Meanwhile, Rego and 11 others were criminally charged in a large-scale marijuana distribution conspiracy in Tennessee in mid June.

The case against Hernandez-Gonzalez put a spotlight on a cottage industry that straddles the letter of the law by selling tools needed to cultivate high-grade weed indoors. In states that have legalized pot for medical and recreational use, hydroponic supply companies are poised for record growth, leading one publicly-traded gardening conglomerate and mainstream brand, Scotts Miracle-Gro, to get in on the action. But in states like Florida where pot farming remains a felonious offense, stores selling hydroponic equipment are battlefronts in the ongoing war against weed.

According to market research firm IBISWorld, the hydroponic gardening retail industry has experienced annual growth of 8.2 percent since 2011, generates $654 million in annual revenue, and employs 11,721 people across the country. "Industry revenue is forecast to continue rising over the five years to 2021, as a result of rising popularity of quality organic produce along with increases in the market for both medical and recreational marijuana," their analysis states.

Michelle Goldman, vice-president of BetterGrow Hydro, a California gardening store chain founded in the 1990s, told VICE that perhaps 25 percent of her customer base grows fruit and vegetables. The majority, though, grow weed under the auspices of the state's robust medical marijuana program, she said. (Voters will get to decide if weed should be legal for recreational use in California this November.)

But in Florida, where the DEA eradicated 242 indoor marijuana grow sites in 2015—second only to California—indoor gardening retailers are catering to a mostly black market clientele with a wink and a nod, according to experts, cops, and local businesspeople. The Sunshine State currently allows only a non-psychoactive form of cannabis for medical use, and while a proposed constitutional amendment to legalize stronger strains of marijuana for very sick people is on the November ballot, pot cultivation over 25 pounds is still a felony punishable by a minimum of three years in prison.

"It's like going into a head shop," Arturo, a manager at Advanced Hydroponics in Miami who asked his last name not be published, said of his industry. "You use a "don't ask, don't tell' policy. If someone references illegal substances, I show them the door. But the truth is that a majority of the growth in our business is due to people getting into growing marijuana."

Miami-Dade Police Detective Jonathan Santana is leading the ongoing case against Hernandez-Gonzalez and has been a narcotics investigator for five years. He told VICE that a standard investigative technique for cops in the area is to just post up at hydroponics stores and follow customers when they leave.

"I have made numerous arrests that originate from these grow stores," he said. "I have never seen anyone who shop at these stores growing fruits and vegetables. It has always been marijuana."

Finn Selander, a former DEA special agent who helped organize the petition drive that placed recreational marijuana on the November ballot in Arizona, agrees there's no question a fair number of hydroponics supply store customers are involved in the marijuana business.

"The stores themselves operate in a legal element," Selander told me. "They may get customers that just want to grow daisies, but the real money is from people buying supplies to start [marijuana] grows."

For a majority of his 18 years with the DEA, Selander worked as the coordinator or the assistant coordinator for marijuana cases in Orlando, Florida and Albuquerque, New Mexico. Over time, he said, agents stopped monitoring hydroponic stores because it resembled profiling people leaving a bar for driving under the influence.

"I'm sure there are [law enforcement agencies] still doing that," he said. "But today, a lot of these stores sell a ton of stuff online. No one is going to get a list of all those people."

While Santana could not comment on Hernandez-Gonzalez's ongoing case specifically, recently filed court documents suggest investigators are still gathering evidence in an attempt to prove the Cuban expat has been using his store, The Blossoms Experience, as a conduit for illicit marijuana trafficking for more than a decade. Hernandez-Gonzalez is in jail—at least until he posts bail money that he can show comes from legitimate sources. (His defense attorney, Philip Reizenstein, declined comment for this story.)

According to an August 12 civil forfeiture lawsuit by the Miami-Dade Police Department against Hernandez-Gonzalez, investigators recently spoke to Efren Ruiz, an ex-con who in 2012 was charged in a Medicaid scam that diverted prescription drugs to treat HIV, schizophrenia and asthma for resale in the black market. During an interview conducted by Santana early this month, Ruiz allegedly claimed that he and Hernandez owned two houses, one in Davie and the other in Big Pine Key, where they grew marijuana between 2003 and 2006, harvesting hundreds of pounds. (In 2005, Hernandez-Gonzalez received probation for intent to sell cannabis.) During the same time period, Ruiz and Hernandez-Gonzalez each invested $60,000 to open The Blossoms Experience, Ruiz apparently admitted.

"Mr. Ruiz stated that he has knowledge that throughout Hernandez's business transactions at The Blossoms Experience, Hernandez would inform his customers that if they growing marijuana, he would purchase [the] marijuana for resale," the forfeiture suit states. When VICE contacted Ruiz at his home in Miami Lakes, he declined to comment.

In a recent motion to reduce Hernandez-Gonzalez's $4 million bond, Reizenstein, his attorney lawyer, argued that investigators still haven't shown a nexus between his client's seized cash and actual marijuana trafficking. "There was no controlled sale of marijuana involving Mr. Hernandez-Gonzalez," the attorney wrote. "And no law enforcement officer saw him in possession of any marijuana or ever discovered Mr. Hernandez-Gonzalez growing any marijuana."

Still, according to BetterGrow's Goldman, the suspect's legal troubles offer a case study of what not to do when operating a hydroponics store in a state where the War on Drugs is still in full effect.

"If you are in a state where marijuana is not legal, getting involved with your customer is a big no no," she told me. "That essentially makes you their partner."

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