Owners charged with money laundering for selling illegal products at THC Club, records show

HARRIS COUNTY, Texas (KTRK) -- You can find cannabis dispensaries operating openly in almost every community.

A search warrant against a chain with more than a dozen locations in the Houston-area, is now revealing what police got during undercover visits.

Pre-rolls and cannabis in colorful packaging, in which records say it was sold as legal marijuana, but lab tests cited in the warrant, indicated that it wasn't.

The owners have been charged with money laundering for selling illegal products at the THC Club, but their attorney maintains the product is legal, because of a loophole.

"Everybody is watching because this issue is not a Texas issue. It's a national issue," Andrea Steel, who is a cannabis attorney, said.

Harris County is growing an audience for an unprecedented move of law enforcement against a major player in Texas' cannabis industry.

On Sept. 25, all 18 locations of the THC Club's locations were raided after months of undercover buys. According to the 84-page search warrant that ABC13 obtained, the "flower" that undercover officers purchased from the shops had THC levels above the the legal threshold.

RELATED: Evidence of illegal marijuana, money laundering found at Houston-based dispensary THC Club, docs say

The warrant also accuses the shop of violating packaging requirements.

The investigation into the THC club resulted in a money laundering charge because the DA's office says they were profiting of off something illegal.

The DA's office says the business laundered at least $4.5 million over a four-year period.

In the search warrant, it states a male employee at one of THC Club's locations told an undercover officer their hemp was flash frozen, which keeps the THC amount under the legal requirement.

In a statement to ABC13, the company's attorney said:

"Our clients operated a 100% legal business. If the District Attorney's Office and Precinct 4 have an issue with the way the law is written, then they need to take that up with the legislature rather than charging law-abiding businessmen for what they think the law should be."

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