A small Boulder, Colorado-based company that makes childproof storage bags has a simple mission--help parents keep cannabis and pharmaceutical medication locked and away from kids. But Stashlogix has been derailed after U.S. Customs and Border Protection seized its latest shipment of bags and banned the company from importing its products into the U.S.

In April, federal customs agents categorized Stashlogix's bags, which feature a built-in combination lock, odor-absorbing packets and UV-proof jars, as drug paraphernalia. U.S. Customs and Border Protection seized the company's shipment of 1,000 Stashlogix bags as the company was trying to import them into the U.S. from its manufacturer in China on April 28, Skip Stone, the founder of Stashlogix says. Stone says he lost about $16,000 and now has to set up a domestic manufacturer before his four-month supply of inventory runs out.

According to a letter from U.S. Customs, dated April 13, 2017, federal agents described how they came to classify the bags as drug paraphernalia even though, as the letter states, "standing alone, the Stashlogix storage case can be viewed as a multi-purpose storage case with no association with or to controlled substances." Drug paraphernalia laws are vague, which allow regulators to base their decision on how a product is marketed and used by customers. The U.S. Customs investigation concluded that Stashlogix's products are "primarily intended" to "conceal marijuana" after finding online reviews for the lockable pouches on sites like The Stoner Mom and The Weed Blog with headlines like "Keep Marijuana Away From Kids With Stashlogix."

Even though marijuana is legal in some form in 29 states, including Washington, D.C., marijuana is still illegal under federal law. The dichotomy between state and federal law creates friction for businesses like Stone's that import products from abroad. Jaime Ruiz, a public affairs officer at U.S. Customs, says the agency enforces "current" federal law and right now, 21 USC § 863 calls for "the seizure and forfeiture of drug paraphernalia."

Stone, who started Stashlogix in 2015, says he has sold 20,000 storage bags and imported 12 shipments successfully and without incident. In August 2016, Stone received a call from a U.S. Customs agent who said his products were being reviewed, but Customs officials let the shipment through.

"Our first shipment under Trump was seized," Stone says. "Is this just bad luck or a sign of things to come?"

Stone, a father of two who lives in Boulder, says he started the company because there weren't other products on the market to help prevent kids from getting their hands on cannabis.

"We thought the federal government would support us and our mission to prevent children from gaining access to cannabis," says Stone. "Look at the opioid epidemic, kids usually start by finding pills in their parent's medicine cabinets. I wanted to change that."

Micah Tapman, an investor who runs Canopy Boulder, a marijuana startup accelerator where Stone launched Stashlogix, says he doesn't believe this issue is related to the uncertainty permeating the industry due to President Trump and his Attorney General Jeff Sessions, who is a staunch opponent to legal cannabis. Tapman says running into regulatory issues, including U.S. Customs confiscating your container or getting your bank account shut down, is all part of being in the marijuana industry.

"As an investor, we expect this kind of stuff; the 'known unknowns,'" says Tapman. "We know there will be unknown circumstances---trouble with importing or exporting, problems with advertising, problems banking or payment processing, but we don't know when these issues will hit your company. You just know at some point you'll have issues."

Tapman says companies in the industry dealt with issues like this under Obama as well, but Tapman says Obama's administration was more willing to "collaborate" with businesses to solve problems. He says getting a container seized by Customs is due to an individual regulator and it's going to take a long time to change how Customs agents react to marijuana-related products until federal law changes.

Roger Volodarsky, co-founder of vaporizer company Puffco, imports vaporizers every month from his factory in China. He says dealing with Customs successfully is all about navigating the web of bureaucracy and regulations. Volodarsky says he hired a broker who helps make sure the company's containers clear Customs.

The up side to issues like this, Tapman says, is that he believes continued business disruptions will eventually lead to federal legalization.

"If the government continues to disrupt the industry it could be a catalyst for federal legalization and force Congress to act," says Tapman.

Published on: Jun 13, 2017