In Texas, a chain of cannabis dispensaries known as THC Club is at the center of a criminal investigation, with owners facing money laundering charges after authorities uncovered sales of products that allegedly exceeded legal THC levels.
Law enforcement conducted undercover visits to the THC Club “North” location, where they purchased pre-rolled joints and cannabis products in vibrant packaging, allegedly sold as legal marijuana. However, lab tests cited in search warrants indicated that the products exceeded legal THC levels.
Following months of surveillance, all 18 THC Club locations were raided on September 25. The “flower” obtained by undercover officers reportedly had THC concentrations above the state’s legal threshold. Additionally, the shops are accused of violating packaging regulations.
The defendants, including brothers Krish and Kyle Arora, along with seven other managers, have been charged with felony money laundering for allegedly selling illegal products, with prosecutors claiming the group laundered more than $300,000, though the investigation uncovered a total of $4.5 million across 57 bank accounts linked to the operation. While the District Attorney’s office pursues these charges, their attorney insists the products are legal due to a loophole in state law.
“Everyone is paying attention because this isn’t just a Texas issue; it’s a national one,” said cannabis attorney Andrea Steel.
The investigation on THC Club began earlier this year when an undercover officer obtained a free sample from one of the locations. From February to September, investigators collected 22 samples from all 18 locations, with 21 allegedly testing positive for marijuana.
Court documents also reveal that investigators uncovered more than 57 bank accounts related to the operation. A certified fraud examiner traced approximately $4.5 million in alleged illegal proceeds.
In response, the THC Club released a statement asserting their compliance with the law: “The THC Club has operated legally and openly since its inception. Its owners have appeared in the media, testified in front of the legislature, and not a single one of them has broken any laws. This allegation is based on a fundamental misunderstanding of the law and the facts, and we look forward to a quick resolution in court.”
The case highlights the ongoing confusion surrounding Texas House Bill 1325, passed in 2019, which has led to differing interpretations of THC product legality in the state. The Texas Supreme Court is expected to hear a related case in the coming months regarding the legality of certain THC products.
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