Australia-Victoria: Vic Police Force Estimate Cannabis (Hydro) Black Market To Be a $A1.5 Billion A Year Industry

23 April 2016

Melbourne’s Age newspaper reports…

Any financial guru will tell you the best strategy is to mix high-risk – high-return investments with some blue-chip stock.

And it’s no different in the drug world where syndicates no longer specialise in one product, preferring the finger in many pies approach.

Police say the blue-chip stock of choice for drug rings these days is actually green – hydroponically grown cannabis.

And just as in legitimate business, the crime groups vary from family run concerns to multinational enterprises.

Consider the following – the average grow house produces around 100 plants every 12 weeks. At $3000 a mature plant, this equates to $250,000 a quarter or $1 million a year.

And police now admit they have massively underestimated the size of the hydroponic industry with intelligence suggesting there may be as many as 1500 crop houses operating in Victoria producing $1.5 billion for the national market.

Research shows Australia has one of the highest per capita consumption of cannabis in the world – a fact recognised by international crime syndicates keen to capitalise on consumer demand.

Detectives know much of the money is reinvested in higher risk but greater reward illicit products such as heroin and ice, which is smuggled from Asia by a small army of couriers.

And this is no whiteboard speculation. Late last year police began an investigation into a heroin trafficking syndicate.

It culminated four months later in 13 raids where police seized 2800 plants, 25 kilos of dried cannabis, ice, heroin and cocaine. The value of the drugs was over $10 million.

According to the head of the Drug Task Force, Detective Inspector Phil Harrison, “Cannabis crops funds other arms of organised crime.”

“(The crops) are more widespread than first thought and we are rethinking our approach at the highest level.”

The rethink is out of necessity. Police are confronting an ice epidemic of unprecedented proportions, an apparently insatiable cocaine market and a resurgence in heroin.

“Most of our resources are used in ice investigations because of the harm it does to the community,” says Assistant Commissioner (Crime) Steve Fontana.

Police could raid a crop house a day and only bruise a market that is supplying the most popular illicit product in Australia.

The usual police practice is to find a grow house and try to follow the trail to the organisers. This is time-consuming and not always successful.

And so police are trialling a disruption method. In just eight weeks police raided 35 properties and using immediate destruction provisions had the crop houses declared safe by electricians, the plants certified as cannabis by botanists and then destroyed on the spot (preserving evidence samples).

Senior police are also looking overseas at new strategies including the Dutch non-evidentiary model used to create maximum damage to illicit cannabis cartels.

While the Drug Task Force would continue to investigate major syndicates, police would embark on a legalised guerrilla war. No longer would they wait to snare every offender but move in to destroy the product while targeting the ringleaders in the long term.

“One approach is to prevent and disrupt using the Dutch model. They use private contractors to move in, pull out the plants, mulch, contaminate and then mix with green waste,” says Inspector Harrison.

“It removes both the consumption of the drug and the profit.”

It also solves the problem of police having to store decomposing cannabis that can be a health hazard. Some staff at a poorly ventilated major evidence room complain of headaches, declaring the place smells like Cheech and Chong’s sock drawer.

To give you an idea of the size of the problem, police in the last eight months have moved on three sophisticated international syndicates, raided 73 properties (the largest with 700 plants) and seized cannabis valued at $25 million.

A top-end syndicate works like this: Properties are selected by local experts (sometimes corrupt real estate agents) and then leased or bought under the name of a middle man (one rented 21 houses).

Electricians bypass the supply system, experts set up the hydroponics and the plants are established from grafts to ensure consistent quality. Crop sitters check the timers and nutrient supply and harvesters collect the mature plants, dry the product, then vacuum seal and wrap for the market.

But, of course, many of the electricians are glorified handymen who shouldn’t be trusted to change a light globe and their wiring leaves the properties as Guy Fawkes left the House of Lords.

Last year police declared 44 house fires were caused by hydroponic syndicates, “when the idiots have bypassed the electrical wiring”.

According to Inspector Harrison, the more sophisticated syndicates, like any successful business, undertake risk management and don’t work in one suburb, preferring a blend of suburban and rural crop houses in both residential and industrial properties.

Some of the profits head off shore while some are  laundered in Australia through shelf businesses.

Since November, police have had the power to automatically seize assets in large commercial quantity investigations (250 kilos or 1000 plants) and police intend to use the provisions in major organised crime cases.

Many (but not all) of the syndicates are controlled by Vietnamese crime gangs that have established national distribution networks and their own money launderers. Some of the crop sitters are foreign students or illegal immigrants who Assistant Commissioner Fontana says are often forced into the role.

Detectives have also found a Vietnamese crime gang centred in Canada is having an increased influence in Victoria.

Police are frustrated that courts are not reflecting the seriousness of the problem and seem to treat offenders as if they are dabbling in a soft drug rather than looking at the size of the criminal enterprise.

In one case, a major player who controlled several crop houses received a community based order, which is a little like getting slapped over the wrist with a damp cannabis leaf.

“We have a much better picture of the size of the problem now. There are some very large syndicates and some smaller ones. All seem very well organised,” says Assistant Commissioner Fontana.

“The volume of cannabis seized indicates Victoria outstrips the rest of the country.”

And so if you want to be a drug dealer, cannabis would seem the way to go with its big profits, huge markets and lighter jail sentences.

Except for one thing.

In the underworld where there is a cash cow there will always be predators.

In Melbourne there is a new breed. Armed gangsters who are patrolling the streets looking for signs of crop houses.

They clean out whole crops that are left unsupervised or burst in, terrorise the sitters and steal plants and dried cannabis. But it can be much worse than a bump on the head and a loss of profit.

“There have been at least three murders where there is evidence of hydroponic crops at the premises. We are not sure of the motives – they are all remain under investigation,” Fontana says.

“We are certainly seeing a spike in run throughs and aggravated burglaries in crop houses.”

And in an underworld arms race, the cannabis syndicates are fighting back, according to the assistant commissioner. “Increasingly we are finding grow houses that have been booby-trapped. This is extremely dangerous to our members, owners of rental properties who go to inspect them and members of the public.”

There are many people reading this story (including the overworked sub editor) who may well smoke marijuana. Some say cannabis is a soft drug that doesn’t harm anyone. So let’s get this straight, Hippy Boy: the pot from Woodstock is nothing like the hydroponically grown super weed on the market today.

The key compound in marijuana is THC and that level has risen so much in 20 years it is like comparing light beer to a Jagerbomb. Or putting rocket fuel in your second hand Commodore.

In the days of peace and love the THC content of cannabis was around one per cent.

A 2013 National Drug and Alcohol Research Centre analysis of NSW cannabis seizures found more than half the cannabis seized at cultivation sites had a THC content of more than 15 per cent.

The head of the project, Dr Wendy Smith found, “These results suggest that the profile of cannabis currently used in Australia may make some users vulnerable to mental health problems.”

So what is so magic about 15 per cent’? It is the level Professor Henk Garretson’s Netherland’s Commission recommended cannabis should be classified as a “hard drug” because it “increased the risks for public health.”

Fontana says cannabis is a major organised crime and health problem. “It causes all sorts of trouble. It is not harmless. It is illegal for a reason.”

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