STATE OF IOWA
BEFORE THE DEPARTMENT OF COMMERCE
ALCOHOLIC BEVERAGES DIVISION
IN RE:
DOCKET NO. S-2014-00017
DOCKET NO. S-2014-00018
DIA NO. 14ABD009
Jasjit Singh Nat1
d/b/a Nat Food Mart
1443 2nd Avenue
Des Moines, Iowa 50314
PROPOSED DECISION
Beer Permit Number BC-27098
Liquor License No. LE-2079
PROCEDURAL HISTORY
On March 4, 2014, the City of Des Moines, Iowa (hereinafter “local authority” or “city”)
filed an administrative Hearing Complaint and Request for Emergency Suspension
against Jasjit Singh Nat, d/b/a Nat Food Mart (hereinafter “licensee” or “Nat Food
Mart”). The Hearing Complaint and Request for Summary Suspension was filed with
the Alcoholic Beverages Division (Division) and alleged that:

1
the licensee, its owner, or employees of the licensee violated Iowa Code sections
123.49(2)(j) and 124A.4(1) by delivering or possessing with intent to deliver an
According to the licensing records at the Alcoholic Beverages Division, this liquor license was applied
for in the name of “Jasjit Singh Nat” as a sole proprietor, and this is how the licensee’s name appears in
the caption of the Local Authority’s Hearing Complaint, in the Division’s Summary Suspension Order,
and in Local Authority Exhibit 1 (See, eg., p. 15). In the licensee’s submissions and in the transcript
caption, however, the licensee’s name appears as “Nat Jasjit Singh.” It is clear that both names refer to
the same individual. This same individual also holds a second liquor license (LE-1737) for Nat Food Mart
#1 located at 3804 Hubbell Avenue, which is also the subject of a summary suspension appeal. For the
Hubbell Avenue store, the liquor license and beer permit were applied for in the name of “Nat Jasmit
Singh” as sole proprietor, which is how the Hearing Complaint and Summary Suspension were
captioned in the Hubbell Avenue case. (See Hearing Transcript, p. 228, Hearing Transcript Captions;
Pleadings and Briefs)
DIA No. 14ABD009
Page 2

imitation controlled substance on the licensed premises on twenty different dates
from October 16, 2013-February 24, 2014 2; and
the ongoing possession, delivery, and possession with intent to deliver illegal
controlled substances and imitation controlled substances presented an
immediate danger to the public health, safety, and welfare warranting an
emergency suspension of the liquor license.
On March 4, 2014, the Division issued a Summary Suspension Order, pursuant to Iowa
Code sections 17A.18A, 123.20, and 123.39. The Division’s Summary Suspension Order
immediately suspended Beer Permit Number BC-27098 and Liquor License LE-2079,
pending further proceedings before the Division. The Summary Suspension Order was
based upon the Division’s finding that the licensee had engaged in criminal activity
within the licensed premises, in violation of Iowa Code section 123.49(2)(j), and that
drug trafficking on the licensed premises poses a significant risk to the public health,
safety, and welfare.
On March 5, 2014, the licensee filed an appeal from the Summary Suspension Order.
The hearing was initially scheduled for March 21, 2014, but was indefinitely continued
at the licensee’s request. On September 26, 2014, the licensee filed an Application to Set
Hearing, and the hearing was rescheduled for October 27, 2014 at 1:00 p.m. by
agreement of the parties. The local authority was represented at hearing by Assistant
City Attorney Doug Philiph. The licensee was represented by attorneys Alfredo Parrish
and Gina Messamer. The hearing was recorded by a certified court reporter.
THE RECORD
The record includes the Hearing Complaint and Request for Emergency Suspension, the
Summary Suspension Order, the Notice of Hearing, Request for Continuance and
Continuance Order, Application to Set Hearing and Continuance Order, and an
Application for Expert to Testify by Telephone.3
In opening statement, the licensee’s attorney asserted that the licensee’s owners were
targeted for investigation based on their nationality and alleged a violation of the
At the time of hearing, the local authority made an oral motion to amend its Complaint to strike and
dismiss paragraphs 6(d), (e), (i), (l), (m), (q), and (s), thereby reducing the number of alleged illegal sales
transactions from twenty to thirteen. The licensee did not object to the motion to strike and dismiss those
portions of the complaint, and the motion was granted.
3 This motion was granted over the local authority’s objection, but the licensee later elected not to call the
expert (Kevin G. Shanks) as a witness. Mr. Shanks’ resume and two of his published articles were
submitted as exhibits. (Licensee Exhibits D, E1 and E2)
2
DIA No. 14ABD009
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owners’ right to equal protection under the state and federal constitutions. The
licensee’s attorney acknowledged, however, that the agency lacks the authority to rule
on constitutional issues and only asked to preserve this issue for further review. 4
The record also includes the testimony of Des Moines Police Officer Brady Carney; Iowa
Division of Criminal Investigation Criminalist Amanda Kilgore; Des Moines Police
Officer Rahn Bjornson; Private Investigator Delbert King, and Geetinder Nat. The
record also includes Local Authority Exhibits 1-11 and Licensee Exhibits A, and C-H.
The record also includes the licensee’s Hearing Brief, the licensee’s Post Hearing Brief,
and the City of Des Moines Response Brief.
IMPORTANT NOTE CONCERNING THE HEARING RECORD: The local authority
filed similar Hearing Complaints and Requests for Summary Suspension Orders against
three other licensees who operate convenience stores within the Des Moines city limits. 5
All four licensees appealed, and all are represented by attorney Alfredo Parrish.
Separate hearings were requested, and the hearings were scheduled to be held
throughout the day on October 27, 2014. At the time of the hearings, however, the
parties stipulated that the testimony of Amanda Kilgore, Rahn Bjornson, and Delbert
King would be submitted once and then considered as evidence in all four cases. In
addition, the parties stipulated that Officer Brady Carney would provide testimony
unique to each case concerning the controlled buys made at each individual store, but
the rest of his testimony would be submitted once and considered as evidence for all
four cases. This included Officer Carney’s testimony about his background, training,
and experience; his knowledge of synthetic cannabinoids; his submission of products
purchased during controlled buys for laboratory testing, and his receipt of the
laboratory reports containing the testing results. The parties agreed that Mr. Parrish
would give one opening statement for all four cases. The parties also agreed that the
court reporter would prepare a single chronological transcript of the day’s testimony
with four separate captions.
Soo Line R.R. v. Iowa Dep’t of Transportation, 521 N.W.2d 685, 688 (Iowa 1994); Shell Oil Co. v. Bair, 417
N.W.2d 425, 430 (Iowa 1987);Salsbury Laboratories v. Iowa Dep’t of Envtl. Quality, 276 N.W.2d 830, 836 (Iowa
1979).
5 See Docket Nos. S-2014-00015 (Shop N Save #1 on MLKing Jr. Parkway) S-2014-00014 (Shop N. Save on
6th Avenue), and S-2014-00016 (Nat Food Mart on Hubbell Avenue).
4
DIA No. 14ABD009
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FINDINGS OF FACT
Jasjit Singh Nat, d/b/a Nat Food Mart has been issued Beer Permit No. BC-270986 and
Liquor License LE-20797 for the premises located at 1443 2nd Avenue in Des Moines,
Iowa. Jasjit Singh Nat is the license holder and permit holder and has reported that he
is the 100% owner of Nat Food Mart. Geetinder Nat is the manager of Nat Food Mart,
and her husband, Bunny Nat, is listed as the contact person for the business. Nat Food
Mart is both a gas station and convenience store. Nat Food Mart currently sells gasoline
tobacco, groceries, non-alcoholic beverages, and lottery tickets. Prior to the summary
suspension, the store also sold liquor, wine, and beer. (Summary Suspension Order;
Local Authority Exhibit 1, p. 15; Testimony of Brady Carney; Geetinder Nat)
Background Information
Des Moines Police Officer Brady Carney has been a police officer since 2007 and has
been assigned to the Des Moines Police Department’s Narcotics Control Section (NCS)
since July 2012. While assigned to NCS, Officer Carney has been responsible for
completing narcotics-related investigations including undercover investigations,
managing confidential informants, and executing search warrants. Officer Carney has
attended a number of trainings and conferences related to drug investigations and drug
trends. Based on his experience and training, Officer Carney is familiar with the
manner in which individuals market, sell, and deliver controlled substances, simulated
controlled substances, and imitation controlled substances. Individuals involved in
criminal activity may attempt to sanitize proceeds or assets gained from illegal activity
by filtering those proceeds and assets through businesses or gambling activities thereby
creating a credible and seemingly legitimate source for these proceeds and assets.
(Testimony of Brady Carney; Local Authority Exhibit 1, pp. 11-12)
Officer Carney has had many first-hand encounters with individuals who are involved
in purchasing, using, and selling “synthetic cannabinoids,” which are commonly
referred to as “K-2,” “Kush,” or “Spice.” Synthetic cannabinoids are commonly
marketed under a number of different product names including “Cloud 9,” “Kush,”
A Class C Beer Permit authorizes the holder to sell beer to consumers at retail for consumption off the
premises. Iowa Code section 123.132.
7 A Class E Liquor License authorizes the holder to purchase alcoholic liquor from the Division only and
high alcoholic content beer from a class “AA” beer permittee only and to sell the alcoholic liquor and
high alcoholic content beer to patrons for consumption off the licensed premises and to other liquor
control licensees. The holder of a class “E” liquor license may also hold a class “B” wine or class “C” beer
permit or both for the premises licensed under a class “E” liquor license. Iowa Code section
123.30(3)(e)(2013).
6
DIA No. 14ABD009
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“Caution,” “Mister Nice Guy,” “Diablo,” and “7H Hydro.” According to Officer
Carney, the term “Hydro” is commonly used to refer to hydroponic marijuana, and the
term “Kush” is used to refer to high grade or high quality marijuana. Both are common
street or slang terms for marijuana. Synthetic cannabinoids may be falsely marketed as
incense. They are typically packaged in small sealable packages or pouches labeled
“not for human consumption,” and are often designated with a skull and/or crossbones.
Synthetic cannabinoids are commonly sold in packages weighing approximately 3
grams. (Testimony of Brady Carney; Local Authority Exhibit 1, p. 12)
Through his training and experience as a police officer, Officer Carney has learned that
synthetic cannabinoids are typically smoked in the same manner as marijuana.
Although many of these products are labelled as incense or potpourri, their price
(typically $20-$30) is much higher than the typical price for incense (3 or 4 sticks for a
dollar) or potpourri. Officer Brady was unfamiliar with anyone who burned these
products for their smell, which apparently is very unpleasant. Synthetic cannabinoid
users will often also purchase cigarillos, which are legal products, which they use to
smoke the synthetic cannabinoids. The user will cut the cigarillo’s wrapper lengthwise,
remove the tobacco, and then fill the wrapper with synthetic cannabinoids. The
common term for a cigarillo wrapper filled with either marijuana or synthetic
cannabinoids is a “blunt.” (Testimony of Brady Carney; Local Authority Exhibit 1, pp.
12-13)
The active ingredient in marijuana is THC, which is present in the marijuana plant
itself. Synthetic cannabinoids, however, are created when chemicals that have been
synthesized in a laboratory and dissolved into a liquid have been sprayed on a plant
material, such as potpourri or spice. The active ingredients in synthetic cannabinoids
work on the same brain receptors (CB1 and CB2) as marijuana and have similar effects
on the user’s body.8 The federal government enacted the Controlled Substances
Analogue Enforcement Act of 1986 (21 U.S.C. §813), which treats analogue substances
(substances that have a chemical structure substantially similar to a controlled
substance and that have similar effects on the central nervous system) the same as a
controlled substance under federal law, although there have been few prosecutions
under the under the federal analogue law. 9 The state of Iowa does not have a
controlled substance analogue law. 10 (Testimony of Amanda Kilgore)
The effects of the synthetic cannabinoids have been reported to include agitation, delusions,
hypertension, psychosis, sedation, and tachycardia. (Licensee Exhibit E1, p. 1).
9 21 U.S.C. §§ 813, 802(32)(A).
10 Iowa does have a statute prohibiting the manufacture, delivery, or possession with intent to deliver of
an imitation controlled substance. See Iowa Code section 124A.4.
8
DIA No. 14ABD009
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Both the federal government and the state of Iowa have taken legislative actions to
designate the specific active ingredients identified in some synthetic cannabinoids as
Schedule I controlled substances. The individuals that manufacture the synthetic
cannabinoids have responded by altering the chemical composition of their products so
that they do not include designated controlled substances.
There is little quality
control in the manufacture, packaging, and labeling of synthetic cannabinoids,
however. It is not unusual for the testing laboratories to find that identically packaged
and identically labelled products actually have different chemical compositions or
active ingredients. For example, one product may test positive for a Schedule I
controlled substance while an identically packaged product may only test positive for
non-controlled synthetic cannabinoids. (Testimony of Amanda Kilgore; Licensee
Exhibits D, E1, E2)
Officer Carney has responded to several medical emergencies where individuals have
had severe and life-threatening side effects from ingesting synthetic cannabinoids.
These side effects have included severely elevated heartbeat, slurred speech, and
inability to form speech, foaming at the mouth, tremors or seizures, belligerence,
hallucinations, comatose-like states, and cardiac arrest.11 Officer Carney further reports
that he has responded to medical emergencies where the ingestion of synthetic
cannabinoids has led to the death of the user. (Testimony of Brady Carney; Local
Authority Exhibit 1, p. 13)
In August 2013, Officer Carney learned of a large scale Drug Enforcement Agency
(DEA) investigation involving the alleged sale of synthetic cannabinoids in Northeast
Iowa. One of the primary targets of that investigation was Muhammad Anwar. DEA
Task Force Officer Bryan Furman informed Officer Carney that Muhammad Anwar was
currently living in the Des Moines area and was believed to be involved in the sale of
synthetic cannabinoids from stores. The DEA Task Force Officer reported, in part, that
Muhammad Anwar had called Bunny Nat, who was the named contact person for Nat
Food Mart, 324 times between August 29, 2012 and March 19, 2013. (Local Authority
Exhibit 1, pp. 13-15)
In 2013 and early 2014, the Des Moines Police Department received several complaints
regarding the sale and distribution of synthetic cannabinoids from stores in the Des
Officer Carney’s testimony concerning the effects of synthetic cannabinoids on the user is consistent
with the research paper submitted into evidence by the licensee, which notes that agitation, delusions,
disorientation, hypertension, psychosis, sedation, and tachycardia have been reported from the use of
synthetic cannabinoids. (Licensee Exhibit E-1, p. 1)
11
DIA No. 14ABD009
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Moines area. Based on the information received from the investigation in Northeast
Iowa and based on other complaints, the Des Moines Police Department started an
investigation of several Des Moines convenience stores, including Nat Food Mart, to
determine if the stores were selling synthetic cannabinoids to the public. (Testimony of
Brady Carney; Local Authority Exhibit 1, pp. 13-15)
On October 16, 2013, Officer Carney observed a white female enter the Nat Food Store
on 2nd Avenue and then exit approximately two minutes later carrying something small
in her hand. A short time later, the female’s car was stopped for a broken windshield.
During this stop and a subsequent interview, the female admitted that she had two
vials of “Snake” synthetic cannabinoids in her vehicle. The female reported that she
purchased the synthetic cannabinoids at Nat Food Mart for $10.00 a vial and was
heading home. She told Officer Carney that the vials came from under the counter, that
she paid cash for them, and that she did not receive a receipt. The vials were later
tested at the DCI Criminalistics Laboratory and found to contain 1.93 grams of ABFUBINACA, which was described as a non-controlled synthetic cannabinoid.
(Testimony of Brady Carney; Local Authority Exhibit 1, pp. 21-22; Local Authority
Exhibit 2)
Thirteen Controlled Buys at Nat Food Mart(October 23, 2013-February 24, 2014)
During his investigation, Officer Carney worked with a confidential informant
(hereinafter CI#2 or CI) in connection with the investigation of Nat Food Mart. CI#2
told Carney that he/she had purchased synthetic cannabinoids from the Nat’s stores on
several occasions. CI#2 reported that the Nat’s stores have different types and amounts
of synthetic cannabinoids, including:




“Snake” and “Bullet” which come in plastic vials and cost $10.00;
“Mr. Big Shot” pouches which cost $15.00;
“7H” pouches which cost $20.00 or $30.00 depending on the size; and
“Diablo” pouches which cost $25.00.
CI#2 also told Officer Carney that an Arab male named “Benny,” who was in his 30’s or
early 40’s, owned the Nat’s Stores and that the store on 2nd Avenue had two full time
employees: an Hispanic male named “Franky” who is approximately 30 years old and
an Hispanic female named “Claudia” who is approximately 21 years old. The CI told
Officer Carney that the Nat’s clerks will not sell to anyone who asks for “K2” or
“synthetic marijuana.” The CI further stated that the synthetic cannabinoids are kept
behind the counter in cardboard boxes or paper or plastic bags. Officer Carney enlisted
DIA No. 14ABD009
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CI#2 to make “controlled” purchases (i.e. purchases under the direction and
surveillance of police officers) of synthetic cannabinoids at Nat Food Mart on 2 nd
Avenue. (Local Authority Exhibit 1, p. 22)
Prior to each purchase, Officer Carney and another officer searched the CI and his/her
vehicle for contraband or currency. Finding none, Officer Carney gave the CI currency
and instructed the CI to try to make a purchase of synthetic cannabinoids at Nat Food
Mart. The officers followed the CI to Nat Food Mart, making sure that no stops were
made along the way. The officers observed the CI enter and exit Nat Food Mart and
then followed the CI to a predetermined location where they were given any purchase
made by the CI. The CI was equipped with an audio and video recorder that recorded
all of the transactions. The officers reviewed the recordings following each purchase to
ensure that they were consistent with the CI’s reports of what happened. CI#2 was
able to purchase products containing synthetic cannabinoids at Nat Food Mart on the
following dates: October 23, 2013; October 30, 2013; November 19, 2013; and December
9, 2013. In addition, Officer Carney went “undercover” and was able to purchase
products containing synthetic cannabinoids from employees of Nat’s Food Mart on the
following dates: December 23, 2013; January 2, 2014, January 21, 2014; February 3, 2014;
February 4, 2014; February 14, 2014 and February 24, 2014. (Testimony of Brady
Carney; Local Authority Exhibit 1, pp. 24-57)
October 23, 2013
On October 23, 2013, the officers followed CI#2 and watched him enter Nat’s Food
Mart. A short time later, the CI exited the store and left in his/her vehicle. The officers
followed the CI back to the predetermined location; no stops were made. At the
predetermined location, the CI handed Officer Brady several cigarillos and a vial of
“Snake.” The CI and his vehicle were searched, and no other currency or contraband
was found. (Local Authority Exhibit 1, p. 23; Testimony of Brady Carney)
The CI reported that he/she purchased the “Snake” from the clerk named “Franky” for
$10.00. “Franky” retrieved the “Snake” from a bag under the counter and did not
provide a receipt. The officers reviewed the recordings of the transaction and heard the
CI state “Snake gets you more messed up than that other…” before he was handed the
“Snake” by the male clerk. Officer Brady also heard the CI ask for cigarillos so he could
smoke the “Snake.” (Local Authority Exhibit 1, p. 23; Testimony of Brady Carney)
Officer Carney submitted the package of “Snake” to the Iowa Division of Criminal
Investigation (DCI) laboratory for testing. On November 21, 2013, DCI Criminalist
DIA No. 14ABD009
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Amanda Kilgore issued a written report concerning the results of the testing. Amanda
Kilgore has a B.S. degree in Chemistry and Forensic Science, and she has been
employed by the DCI Crime Laboratory for 8 years. She was previously employed by
the federal Drug Enforcement Agency (DEA) Laboratory in Virginia. Ms. Kilgore has
had substantial experience testing and identifying synthetic cannabinoids. Ms. Kilgore
reported that the “Snake” purchased on October 23, 2013 weighed 2.02 grams and was
instrumentally consistent with AB-FUBINACA, which was described by Ms. Kilgore as
non-controlled synthetic cannabinoids. (Testimony of Brady Carney, Amanda Kilgore;
Local Authority Exhibit 3, Lab #5)
October 30, 2013
On October 30, 2013, the CI returned to Nat Food Mart and purchased several cigarillos
and a plastic vial of “Snake,” under the same supervision and controls as the prior
purchase. The CI reported that he/she spoke to Hispanic female clerk named “Claudia”
and asked for some “Snake,” which she retrieved from under the counter and sold to
the CI for $10.00. The CI was not offered or given a receipt for the purchase. On the
audio/video footage of the transaction, Officer Carney first heard another male
customer ask for two packages of “Diablo.” He then heard the CI ask for “Snake” or
“Bullet” and for two kinds of wraps. Officer Carney heard a Hispanic female voice say
that “Diablo is better” and “It’s legit.” (Local Authority Exhibit 1, p. 25; Testimony of
Brady Carney)
Officer Carney submitted the vial of “Snake” to the DCI laboratory for testing. On
November 21, 2013, DCI Criminalist Amanda Kilgore issued a written report
concerning the results of the testing. The “Snake” purchased on October 30, 2013
weighed 2.06 grams and was instrumentally consistent with AB-FUBINACA, a noncontrolled synthetic cannabinoid. (Testimony of Brady Carney; Local Authority Exhibit
3, Lab #7)
November 19, 2013
On November 19, 2013, CI#2 returned to Nat Food Mart and purchased multiple
cigarillos and a pouch of “Mister Nice Guy,” under the same supervision and controls
as the prior purchase. The CI reported that he/she spoke to Hispanic female clerk
named “Claudia” and she recommended that he buy “Mister Nice Guy” because most
people bought that brand. The CI was not offered or given a receipt for the purchase.
On the audio/video footage of the transaction, Officer Carney heard the CI ask about
“7H” and the female clerk reply, “Mister Nice Guy.” The CI asked “what’s that they
DIA No. 14ABD009
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say?” and the clerk answered “Well, people buy that one more.” She told the CI that
“Mister Nice Guy” was $20.00. The CI asked for “Mister Nice Guy” and cigarillos to
smoke it. (Local Authority Exhibit 1, p. 29; Testimony of Brady Carney)
Officer Carney submitted the package of “Mister Nice Guy” to the DCI laboratory for
testing. On December 7, 2013, DCI Criminalist Amanda Kilgore issued a written report
concerning the results of the testing. The “Mister Nice Guy” purchased on November
19, 2013 weighed 2.88 grams and was instrumentally consistent with AB-PINACA and
AB-FUBINACA, which were described by Ms. Kilgore as non-controlled synthetic
cannabinoids. (Testimony of Brady Carney; Local Authority Exhibit 4, #21)
December 9, 2013
On December 9, 2013, CI#2 returned to Nat Food Mart and purchased multiple
cigarillos and a pouch of “Diablo” under the same supervision and controls as the prior
purchase. The CI reported that “Claudia” retrieved the pouch of “Diablo” from under
the counter and sold it to him/her along with some cigarillos. The CI was not offered or
given a receipt for the purchase. On the audio/video footage of the transaction, Officer
Carney saw the female clerk reach under the counter and sift through what appeared to
be synthetic cannabinoid pouches while helping another customer. He then heard the
CI ask “what did he get? The fifteen dollar one?”” and the female clerk stated that they
have “Diablo.” The CI then asked “Is that what people say? Is that what people say gets
you fucked up?” The clerk replied “We have Nice Guy. Have you tried that?” After
some additional conversation, the clerk could be seen retrieving a key from the counter,
unlocking a slide-out drawer from under the counter, removing a pouch and throwing
it on the counter, and then locking the drawer. The video/audio footage showed the
clerk selling the pouch and cigarillos to the CI. (Local Authority Exhibit 1, pp. 31-32;
Testimony of Brady Carney)
Officer Carney submitted the package of “Diablo” to the DCI laboratory for testing. On
December 31, 2013, DCI Criminalist Amanda Kilgore issued a written report concerning
the results of the testing. The “Diablo” purchased on December 9, 2013 weighed 3.11
grams and was instrumentally consistent with AB-PINACA and AB-FUBINACA, which
were described by Ms. Kilgore as non-controlled synthetic cannabinoids. (Testimony of
Brady Carney; Local Authority Exhibit 5, #22)
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December 23, 2013
On December 23, 2013, Officer Carney went to Nat Food Mart in an undercover
capacity and purchased a package of cigarillos and a pouch of “Mister Nice Guy” from
a male that he was able to identify as Bunny Nat. Officer Carney believed that Bunny
Nat was the manager of the store. He observed Bunny Nat use a key to unlock a
drawer just under the countertop and to the right of the cash register. He observed
Bunny Nat remove the “Mister Nice Guy” from the drawer and also observed several
similar pouches of synthetic cannabinoids in the drawer. Officer Carney paid Bunny
Nat for the “Mister Nice Guy” and the cigarillos and was not offered or given a receipt
for his purchases. (Local Authority Exhibit 1, pp. 33-34; Testimony of Brady Carney)
Officer Carney submitted the package of “Mister Nice Guy” to the DCI laboratory for
testing. On January 29, 2014, DCI Criminalist Amanda Kilgore issued a written report
concerning the results of the testing. The “Mister Nice Guy” purchased on December
23, 2013 weighed 3.05 grams and was instrumentally consistent with AB-PINACA and
AB-FUBINACA, which were described by Ms. Kilgore as non-controlled synthetic
cannabinoids. (Testimony of Brady Carney; Local Authority Exhibit 6, #27)
January 2, 2014
On January 2, 2014, Officer Carney went to Nat Food Mart in an undercover capacity
and purchased a pouch of “Mister Nice Guy” and some cigarillos from a female clerk.
Officer Carney initially asked the clerk “Did the stuff come in?” and mentioned “7H.”
The clerk responded “Yeah, what kind do you want?” When Officer Carney told the
clerk that he wanted to spend $20.00 or $25.00, she told him that would be either
“Mister Nice Guy” or “7H.” He asked for “Mister Nice Guy,” and the clerk asked if he
wanted sour apple or blueberry. He requested Officer Carney observed the clerk pull
out a sliding drawer below the counter, but then close the door and reach down lower
to take the “Mister Nice Guy” from a brown paper bag. Officer Carney asked if the
sour apple is better, and the clerk responded “I have no idea. People buy this one a
lot.” Officer Carney paid in cash for the Mister Nice Guy and the cigarillos, and he was
not offered or given a receipt for his purchases. (Local Authority Exhibit 1, pp. 35-36;
Testimony of Brady Carney)
Officer Carney submitted the package of “Mister Nice Guy” to the DCI laboratory for
testing. On January 29, 2014, DCI Criminalist Amanda Kilgore issued a written report
concerning the results of the testing. The “Mister Nice Guy” purchased on January 2,
2014 weighed 3.02 grams and was instrumentally consistent with AB-PINACA and AB-
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FUBINACA, which were described by Ms. Kilgore as non-controlled synthetic
cannabinoids. (Testimony of Brady Carney; Local Authority Exhibit 6, #33)
January 21, 2014
On January 21, 2014, Officer Carney went to Nat Food Mart in an undercover capacity
and purchased a pouch of “777 XTREME” and some cigarillos from a female clerk.
Officer Carney initially asked the clerk “What do you got?” The clerk responded that
they had the same stuff. She used a key to open the slide-out drawer beneath the
countertop. Officer Carney observed that the drawer was completely full of different
brands of synthetic cannabinoids. The clerk told him that “for fifteen, I have 7-7.”
When Officer Carney asked if it was new and if people liked it, the clerk responded that
it was new and that a lot of people did not know about it yet. Officer Carney told her
he would try it, and the clerk placed a package of “777 XTREME on the counter. Officer
Carney also asked for cigarillos. Officer Carney paid in cash for the 777 XTREME and
the cigarillos, and he was not offered or given a receipt for his purchases.
(Local
Authority Exhibit 1, p. 36; Testimony of Brady Carney)
Officer Carney submitted the package of “777 XTREME” to the DCI laboratory for
testing. On February 6, 2014, DCI Criminalist Amanda Kilgore issued a written report
concerning the results of the testing. The “777 XTREME” purchased on January 21,
2014 weighed 3.23 grams and was instrumentally consistent with AB-FUBINACA, a
non-controlled synthetic cannabinoid. (Testimony of Brady Carney; Local Authority
Exhibit 7, #34)
January 29, 2014
On January 29, 2014, Officer Carney returned to Nat Food Mart in an undercover
capacity and purchased a pouch of “Mister Nice Guy” and some cigarillos from a
female clerk. Officer Carney initially asked if they still had the “same stuff” and then
told the clerk that the previous stuff (777 Xtreme) was bad and he wanted some “Mister
Nice Guy.” The clerk retrieved the pouch of “Mister Nice Guy” from the drawer.
Officer Carney also asked for some cigarillos. Officer Carney paid in cash for the Mister
Nice Guy and the cigarillos, and he was not offered or given a receipt for his purchases.
(Local Authority Exhibit 1, p. 37; Testimony of Brady Carney)
After making his purchase, Officer Carney went over to the incense stand along the
west side of the building and selected a stick of incense to purchase. While waiting in
line to purchase the incense, Officer Carney observed a female customer enter the store
and ask for “7H” or “Diablo.” The female handed the clerk a $20 bill, and the clerk
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opened the slide-out drawer and sifted through several packets looking for the right
kind. The female customer ended up purchasing a pouch of “777 Xtreme.” Officer
Carney then paid $.25 for the incense stick and left the store. (Local Authority Exhibit 1,
p. 37; Testimony of Brady Carney)
Officer Carney submitted the package of “Mister Nice Guy” to the DCI laboratory for
testing. On February 15, 2014, DCI Criminalist Amanda Kilgore issued a written report
concerning the results of the testing. The “Mister Nice Guy” purchased on January 29,
2014 weighed 3.08 grams and was instrumentally consistent with AB-PINACA and ABFUBINACA, which were described by Ms. Kilgore as non-controlled synthetic
cannabinoids.. (Testimony of Brady Carney; Local Authority Exhibit 8, #38)
February 3, 2014
On February 3, 2014, Officer Carney went to Nat Food Mart in an undercover capacity
and purchased a pouch of “Mister Nice Guy,” some cigarillos, and some incense sticks
from the same female clerk. Officer Carney initially asked the clerk if she had anything
new and she said no. Officer Carney asked if they had any pipes for sale, and the clerk
told him that they just have wraps. Officer Carney asked for a pouch of “Mister Nice
Guy” and then selected two incense sticks that were clearly marked and openly
displayed inside the front door. Office Carney also requested two packs of cigarillos.
Officer Carney told the clerk that some of the other stores sell pipes and that some
people have said that smoking the synthetics through a pipe does not mess you up as
bad. The clerk retrieved the “Mister Nice Guy” from the slide-out drawer below the
counter. Officer Carney was not offered or given a receipt for his purchases. (Local
Authority Exhibit 1, p. 38-39; Testimony of Brady Carney)
Officer Carney submitted the package of “Mister Nice Guy” to the DCI laboratory for
testing. On February 20, 2014, DCI Criminalist Peter Wagner issued a written report
concerning the results of the testing. The “Mister Nice Guy” purchased on February 3,
2014 weighed 2.98 grams and was instrumentally consistent with AB-FUBINACA, a
non-controlled synthetic cannabinoid. (Testimony of Brady Carney; Local Authority
Exhibit 9, #45)
February 4, 2014
On February 4, 2014, Officer Carney went to Nat Food Mart in an undercover capacity
and purchased a pouch of “Mister Nice Guy” and some cigarillos. As he was entering
he store, Officer Carney observed an unidentified white male leaving the store with
multiple packages of cigarillos and a pouch of “Diablo.” Bunny Nat was at the counter
DIA No. 14ABD009
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going through paperwork and Geetinder Nat was stocking shelves. Officer Carney told
a female clerk that it was too cold out so he was “headed home to cuddle up and smoke
up.” He asked for a small bag of “Mister Nice Guy.” The pouch of “Mister Nice Guy”
was removed from the slide-out drawer under the counter. Officer Carney paid for his
purchases and was not offered or given a receipt. (Local Authority Exhibit 1, p. 40)
Officer Carney’s affidavit indicates that the “Mister Nice Guy” was submitted for
testing at the DCI laboratory and was consistent with a non-controlled synthetic
cannabinoid. (Local Authority Exhibit 1, p. 40) The record does not appear to include
the laboratory report for this purchase.
February 14, 2014
On February 14, 2014, Officer Carney went to Nat Food Mart in an undercover capacity
and purchased a pouch of “Mister Nice Guy,” a pouch of “7-7-7 XTREME” and some
cigarillos from a female clerk. Officer Carney initially selected an incense stick to
purchase and asked the clerk for “Mister Nice Guy, “which was rung up as $25.00. He
then asked the clerk if she had anything new. The clerk asked “How much?” and
Officer Carney that he wanted something between $15.00 and $20.00. The clerk
retrieved pouches of “Mister Nice Guy” and “7-7-7 XTREME” from the slide-out
drawer. Officer Carney also requested cigarillos. Officer Carney paid for his purchases
and was not offered or given a receipt. (Local Authority Exhibit 1, p. 41; Testimony of
Brady Carney)
Officer Carney submitted the packages of “Mister Nice Guy” and “7-7-7 XTREME” to
the DCI laboratory for testing. On February 20, 2014, DCI Criminalist Peter Wagner
issued a written report concerning the results of the testing. The “Mister Nice Guy”
purchased on February 14, 2014 weighed 2.85 grams and was instrumentally consistent
with AB-FUBINACA, a non-controlled synthetic cannabinoid. The “7-7-7 XTREME
purchased on February 14, 2014 weighed 3.06 grams and was instrumentally consistent
with AB-FUBINACA and AB-PINACA, non-controlled synthetic cannabinoids.
(Testimony of Brady Carney; Local Authority Exhibit 9, #48.1, 48.2)
February 24, 2014
On February 24, 2014, Officer Carney went to Nat Food Mart in an undercover capacity
and purchased a pouch of “7H Hydro,” a pouch of “Diablo” and some cigarillos from a
male clerk. When he entered the store, Officer Carney observed a male clerk take a
bright blue pouch of “7H” from the slide-out drawer under the counter and sell it to a
DIA No. 14ABD009
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male customer. He then observed the same clerk sell a vial of “Snake” and a cigarillo to
another customer for $11.05. Officer Carney approached the same clerk and asked for
“7H.” The clerk asked Officer Carney if he wanted the $15.00 one and indicated that he
had a $30.00 packet as well. Officer Carney asked for the $15.00 pouch and observed
the clerk remove it from the slide-out drawer under the counter. As the clerk was
totaling the transaction, Officer Carney also asked for “Diablo.” The clerk said he had a
$25.00 pouch of “Diablo” and he removed it from the same drawer. The clerk charged
Officer Carney a total of $40.00. He did not add sales tax and did not provide a receipt.
(Local Authority Exhibit 1, p. 45; Testimony of Brady Carney)
Officer Carney submitted the packages of “7H Hydro” and “Diablo” to the DCI
laboratory for testing. On February 27, 2014, DCI Criminalist Amanda Kilgore issued a
written report concerning the results of the testing. The “7H Hydro” purchased on
February 24, 2014 weighed 3.19 grams. The “Diablo” purchased on February 24, 2014
weighed 3.33 grams.
Both products were instrumentally consistent with ABFUBINACA and AB-PINACA, non-controlled synthetic cannabinoids. (Testimony of
Brady Carney; Local Authority Exhibit 10, #57.1, 57.2)
At hearing, Officer Carney agreed that some of the packages of synthetic cannabinoids
had labels indicating the absence of all banned substances. (Testimony of Brady
Carney).
Events Following the Controlled Buys
On March 4, 2014, a search warrant was executed at Nat Food Mart at 1443 2nd Avenue
in Des Moines. The search warrant was issued based on the submission of two
affidavits from Officer Carney. The affidavits described Officer Carney’s training and
background as well as detailed information about the controlled buys conducted at Nat
Food Mart, police surveillance of the owners of Nat Food Mart, and information about
the licensee’s bank accounts. The affidavit also included information about the
investigation and controlled buys at Nat Food Mart #1 located on Hubbell Avenue in
Des Moines.12 (Local Authority Exhibit 1; Testimony of Brady Carney)
In his affidavit, Officer Carney outlined the evidence that led him to believe that the
manner in which Nat Food Mart was selling synthetic cannabinoids was consistent with
the sale and distribution of controlled substances, simulated controlled substances,
imitation controlled substances, and synthetic substances as prohibited by Iowa law.
12
Jasjit Singh Nat is the license holder and reported 100% owner of both of the Nat Food Stores. (Local
Authority Exhibit 1, p. 15)
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This evidence included: 1) keeping the synthetic cannabinoids below the counter while
traditional incense and potpourri was displayed on open shelves; 2) the price disparity
between synthetic cannabinoids and the traditional incense and potpourri sold by the
store; 3) the clerk’s refusal to sell synthetic cannabinoids without age verification; 4)
the sale proceeds from the synthetic cannabinoids were rung up separately and the cash
from these sales were sometimes kept in a separate location. No receipts were given or
offered. Sales tax was charged on traditional products but not for the synthetic
cannabinoids; 5) the clerks’ selective sale of synthetic cannabinoids to some people and
not others; 6) the purchase of the synthetic cannabinoids with cigarillos, which are used
to ingest the synthetic cannabinoids; and 7) the language used by the clerks and the
purchasers when referring to synthetic cannabinoids. (Local Authority Exhibit 1, pp. 4647; Testimony of Brady Carney)
A number of items were seized at the Nat Food Mart during the execution of the search
warrant on March 4, 2014. The seized items included:





147 packages of various synthetic cannabinoids;
Cash in the following amounts: $551 and $729;
5 boxes of “glass rose” pipes which are commonly used to ingest illegal
narcotics;
Plastic tubs with blue and white glass pipes; and
Plastic bins with smoking screens and zip lock baggies.
(Local Authority Exhibit 11; Testimony of Brady Carney)
The Division issued its Summary Suspension Order on March 4, 2014. The licensee has
been in compliance with the Summary Suspension Order and has not sold alcoholic
beverages in violation of the Order. (Summary Suspension Order; Testimony of Rahn
Bjornson, Brady Carney)
On May 30, 2014, the owner of both of the Nat Food Marts (Jasjit S. Nat), as well as three
other named individuals (including Bunny Nat and Geetinder Nat) and two banks
entered into a Settlement Agreement with the Polk County Attorney’s Office concerning
the forfeiture of cash, bank accounts, and other property that had been seized from
them. The parties named in the forfeiture agreed to forfeit a total of $146,485 in cash
and/or bank accounts. (Licensee Exhibit A)
The licensee submitted a letter dated August 14, 2014 from “The Bookkeepers, Inc.”
The letter states that for the period from March 1, 2013 through July 31, 2013, Nat’s
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reported gross sales of $177,603.09 for the 2nd Avenue store. For the period from March
1, 2014 through July 31, 2014, Nat’s reported $25,604.24 in gross sales for the 2nd
Avenue store. The reported total reduction in gross sales for the 2 nd Avenue Store was
$151,998.85. (Licensee Exhibit H; Testimony of Geetinder Nat)
CONCLUSIONS OF LAW
I.
Emergency Suspension of Liquor License
The Iowa Alcoholic Beverages Control Act (Iowa Code chapter 123) is an exercise of the
police power of the state for the protection of the welfare, health, peace, morals, and
safety of the people of the state, and all its provisions shall be liberally construed for the
accomplishment of that purpose. It is declared to be public policy that the traffic in
alcoholic liquors is so affected with a public interest that it should be regulated to the
extent of prohibiting all traffic in them, except as provided in chapter 123. 13
Administrative agencies are authorized by statute to use emergency adjudicative
proceedings in a situation involving an immediate danger to the public health, safety or
welfare requiring immediate agency action.14 The agency may only take such action as
is necessary to prevent or avoid the immediate danger to the public health, safety, or
welfare that justifies the use of the emergency adjudication. 15 After issuing an order
pursuant to its emergency adjudicative authority, the agency shall proceed as quickly as
feasible to complete any proceedings that would be required if the matter did not
involve immediate danger. 16Summary suspension of a license may be ordered pending
proceedings for revocation or other action, which shall be promptly instituted and
determined.17
The Division has adopted administrative rules governing emergency adjudicative
proceedings at 185 IAC 10.31. The rules provide, in relevant part, that the Division may
suspend a license, in whole or in part.18 Before issuing an emergency adjudicative order
the agency shall consider factors including, but not limited to, the following:
Iowa Code section 123.1 (2013).
Iowa Code section 17A.18A(1)(2013).
15 Iowa Code section 17A.18A(2)(2013).
16 Iowa Code section 17A.18A(5)(2013).
17 Iowa Code section 17A.18A(2013).
18 Iowa Code section 185 IAC 10.31(1).
13
14
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a. Whether there has been a sufficient factual investigation to ensure that the
agency is proceeding on the basis of reliable information;
b. Whether the specific circumstances which pose immediate danger to the
public health, safety or welfare have been identified and determined to be
continuing;
c. Whether the person required to comply with the emergency adjudicative
order may continue to engage in other activities without posing immediate
danger to the public health, safety or welfare;
d. Whether imposition of monitoring requirements or other interim safeguards
would be sufficient to protect the public health, safety or welfare; and
e. Whether the specific action contemplated by the division is necessary to avoid
the immediate danger.
185 IAC 10.31(2).
Based on the investigation conducted by the Des Moines Police Department, the
Alcoholic Beverages Division was justified in issuing the emergency suspension of the
licensee’s liquor license and beer permit. The Division was provided sufficiently
detailed and sufficiently reliable information upon which to conclude that imitation
controlled substances had been purchased from the licensee’s employees on the
licensed premises on at least thirteen occasions over a period of four months. There is a
strong public interest in stopping and preventing the use of licensed liquor
establishments as locations for the sale of illegal drugs, including synthetic
cannabinoids.19 The illegal sale of drugs, including synthetic cannabinoids, poses a
substantial risk to the public health, welfare and safety, and a licensee’s use of the
licensed premises for this purpose justifies a summary suspension of the liquor license.
A prompt hearing was scheduled on the emergency suspension, and the delay in
proceeding to hearing was due solely to the licensee’s continuance requests. When the
licensee asked for the hearing to be reset, one was promptly scheduled, in accordance
with Iowa Code section 17A.18A and 185 IAC 10.31.
See 185 IAC 4.7(4) (“No licensee, permittee, their agent or employee, shall knowingly permit the
licensed premises to be frequented by, or become the meeting place, hangout or rendezvous for …those
wo are known to engage in the use, sale or distribution of narcotics, or in any other illegal occupation or
business.”)
19
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II.
Division’s Authority to Suspend or Revoke the Liquor License for Knowingly
Permitting or Engaging in Illegal Activity on the Licensed Premises
The Division’s Administrator or the local authority may suspend a liquor license or beer
permit for a period not to exceed one year, may revoke the license or permit, and/or
may impose a civil penalty not to exceed one thousand dollars for any violation of the
provisions of Iowa Code chapter 123.20 A criminal conviction is not a prerequisite to
suspension, revocation, or imposition of a civil penalty.21
Iowa Code section 123.49(2)(j) (2013) provides:
2.
A person or club holding a liquor control license or retail wine or
beer permit under this chapter, and the person's or club's agents or
employees, shall not do any of the following:
...
j.
Knowingly permit or engage in any criminal activity on the
premises covered by the license or permit.
(Emphasis added). Similarly, the Division’s administrative rules specifically provide
that a violation of Iowa Code chapter 123 by any employee, agent, or servant of a
licensee shall be deemed to be the act of the licensee and shall subject the licensee to
suspension and revocation.22
In order to show a violation of Iowa Code section 123.49(2)(j) for knowingly permitting
or engaging in illegal activity on the licensed premises, it is only necessary to show that
the licensee or its employees were aware that the activity was occurring on the legal
premises.23 It is unnecessary to demonstrate or show that the licensee or its employees
knew that they were violating the law by permitting or engaging in the specific
activity.24
Iowa Code section 123.39(1)(b)(2)(2013).
Iowa Code section 123.39(1)(c)(2013).
22 185 IAC 4.8.
23 See Sullivan v. Iowa Departmental Hearing Board of Iowa Beer and Liquor, 325 N.W.2d 923,926 (Iowa Ct.
App.1982). (The Court construed Iowa Code section 123.49(2)(a) and held that the word "knowingly" in
the subsection prohibiting licensees or the licensees’ employees from knowingly permitting gambling on
the licensed premises, modifies the word "permit" rather than "violate." The court noted that a person's
knowledge of the law is generally presumed, particularly when the activity challenged is regularly
conducted by the person in the course of business.)
24 Id.
20
21
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Sale/Delivery of Imitation Controlled Substances
In paragraph 6 of the Hearing Complaint, the local authority alleges that the licensee, its
owner, or its employees knowingly permitted or engaged in criminal activity on the
licensed premises, in violation of Iowa Code section 123.49(2)(j), by delivering or
possessing with intent to deliver an imitation controlled substance, in violation of Iowa
Code section 124A.4(1). The local authority alleged that the licensee or the licensee’s
employees delivered or possessed with intent to deliver imitation controlled substances
on the following dates: October 16, 2013; October 23, 2013; October 30, 2013; November
19, 2013; December 9, 2013; December 23, 2013; January 2, 2014; January 21, 2014;
January 29, 2014; February 3, 2014; February 4, 2014; and February 24, 2014.
Iowa Code Chapter 124A is the “Imitation Controlled Substances Act.”25 “Imitation
Controlled Substance” means a substance which is not a controlled substance but which
by color, shape, size, markings, and other aspects of dosage unit appearance, and
packaging or other factors, appears to be or resembles a controlled substance. The
board of pharmacy may designate a substance as an imitation controlled substance
pursuant to the board’s rulemaking authority and in accordance with chapter 17A.26
When a substance has not been designated as an imitation controlled substance by the
board of pharmacy and when dosage unit appearance alone does not establish that a
substance is an imitation controlled substance, the following factors may be considered
in determining whether the substance is an imitation controlled substance:
1.
The person in control of the substance expressly or impliedly
represents that the substance has the effect of a controlled substance.
2.
The person in control of the substance expressly or impliedly
represents that the substance because of its nature or appearance can be
sold or delivered as a controlled substance or as a substitute for a
controlled substance.
3.
The person in control of the substance either demands or receives
money or other property having a value substantially greater than the
actual value of the substance as consideration for the delivery of the
substance.27
Iowa Code section 124A.1(2013).
Iowa Code section 124A.2(4)(2013).
27 Iowa Code section 124A.3(2013).
25
26
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It is unlawful for a person to manufacture, deliver, or possess with intent to deliver, an
imitation controlled substance. A person who does so is generally guilty of an
aggravated misdemeanor.28
By administrative rule, the Pharmacy Board has designated certain synthetic
cannabinoids, including products by whatever trade name that are treated, sprayed, or
saturated with these synthetic cannabinoids, as “imitation controlled substances”
subject to the provisions of Iowa Code chapter 124A.29 None of the substances at issue
in this contested case, however, have been specifically designated in the Board’s rules as
“imitation controlled substances.” Therefore, the factors outlined in Iowa Code section
124A.3 must be considered in determining whether or not the substances sold by the
licensee’s employees on the licensed premises constituted illegal “imitation controlled
substances.”
The preponderance of the evidence in this record established that the licensee’s
employees repeatedly sold imitation controlled substances on the licensed premises, in
violation of Iowa Code sections 123.49(2)(j) and 124A.4(1). The DCI Laboratory Reports
and the testimony of Officer Carney established that each of the packages purchased by
the Des Moines’ Police Department’s confidential informant (CI) or by Officer Carney at
the licensed premises contained AB-FUBINACA and/or AB-PINACA, both of which are
synthetic cannabinoids. According to DCI Criminalist Amanda Kilgore, synthetic
cannabinoids have active ingredients that work on the same brain receptors (CB1 and
CB2) as marijuana, and they have similar effects on the body as marijuana. Moreover,
the totality of the circumstances surrounding these sales supports the conclusion that
the licensee’s employees fully understood that customers were purchasing and smoking
these products as a substitute for a controlled substance and to obtain the same effect as
a controlled substance.
The licensee and the licensee’s employees were clearly the “persons in control” of these
substances, which unlike legal products were kept beneath the store’s front counter and
out of sight of the store’s customers. Contrary to the typical procedures for the sale of
legal products such as incense or potpourri, no receipts were provided for the sale of
the synthetic cannabinoids. No sales tax was added to the purchase price. In order to
Iowa Code section 124A.4(1)(2013). If a person 18 years of age or older violates subsection 124A.4(1) by
delivering an imitation controlled substance to a person under 18 years of age who is at least three years
younger than the violator, then the offense is classified as a class “D” felony. Iowa Code section 124.4(3).
29 657 IAC 10.41(1).
The Pharmacy Board’s rule also identifies some currently marketed products
containing the imitation controlled substances identified in subrule 10.41(1) as including K2, Red Dragon
Smoke, Spice, K2 Spice, Mojo, Smoke, Skunk, K2 Summit, and Pandora Potpourri. 657 IAC 10.41(2).
28
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purchase the substances, customers had to specifically request them from the licensee’s
employee and had to pay approximately $20-$25 for a 3 gram package, which is
substantially higher than the typical price for potpourri or incense.
With each purchase, either the CI or Officer Carney also purchased cigarillos, which are
commonly used for smoking marijuana or synthetic cannabinoids.
The licensee’s
employees who made the sale clearly understood that the CI and Officer Carney
intended to smoke the substances that they were purchasing. On October 23, 2013, the
CI commented to the licensee’s employee that “Snake gets you more messed up than
the other” and asked for cigarillos so he could smoke the “Snake.”
On multiple
occasions the licensee’s employees responded to questions from the CI or Officer
Carney by either explicitly or impliedly recommending one of the synthetic
cannabinoids over another. On October 30, 2013, the licensee’s employee commented
that “Diablo is better.” On November 19, 2013, the licensee’s employee recommended
“Mr. Nice Guy” to the CI because most people bought that brand. On February 3, 2014,
Officer Carney made the comment to the licensee’s employee that some people have
said that smoking synthetics through a pipe does not mess you up as bad. The
circumstances of these sales were wholly inconsistent with the purchase of legal
products, such as incense or potpourri, which are not intended for human consumption
or ingestion.30
The preponderance of the evidence supports the conclusion that the licensee’s
employees knowingly engaged in or permitted illegal activity on the licensed premises
when they repeatedly sold synthetic cannabinoid products from under the counter. The
licensee is liable for the acts of its employees.31 The circumstances of the sales support
the conclusions that these products constituted imitation controlled substances, which
were sold in violation of Iowa Code section 124A.4(1). The licensee argues in its brief
that the licensee had a good faith belief that the products were legal. The licensee
offered no testimony from the store’s owners or from its employees, however, to
support that contention other than the concession by Officer Carney that some of the
synthetic cannabinoids had labels indicating the absence of all banned substances.
Moreover, the local authority was not required to prove that the licensee’s employees
knew that the particular substances being sold were in fact illegal, knowledge of the law
Commentators have concluded that “a conspicuous ‘not for human consumption’ label has in many
ways become code for ‘this product is a drug.’ “ State v. Heinrichs, 845 N.W.2d 450, 457, ftnte 4 (quoting
from Timothy P. Stackhouse, 54 Ariz. L. Rev. 1105, 1131 (2012).
31 Iowa Code section 123.49(2)(j); 185 IAC 4.8.
30
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is presumed when the activity challenged is regularly conducted by the person in the
course of business.32
III.
Sanction
The local authority is requesting revocation of the liquor license and beer permit as the
appropriate sanction for illegal drug trafficking on the licensed premises. The Division
has previously revoked a liquor license after finding that the licensee’s employee was
selling cocaine on the licensed premises.33 A license revocation has severe repercussions
not only for the licensee, but also for the licensee’s spouse and business associates, and
for the owner of the property where the business is located. Following a revocation, the
licensee, the licensee’s spouse, and certain business associates of the licensee may not be
issued a liquor control license, wine permit or beer permit for a period of two years
from the date of revocation.34 In addition, the premises which had been covered by the
license may not be relicensed to anyone for a period of one year.35
The licensee asserts that the length of the emergency suspension of its license (now
more than 9 months) has been more than sufficient punishment given the nature of its
conduct. The licensee notes that the ceiling for license suspensions is one year, which
the licensee argues should be reserved for only the most egregious conduct. The
licensee contends that its conduct does not merit the most severe sanction because the
licensee:


believed that it was legal to sell these products;
was never told to stop selling synthetic cannabinoids or offered the opportunity
to enter into an agreement not to sell these products,36
Sullivan, 325 N.W. 2d 923, 926. See also United States v. Sheppard, 219 F.3d 766, 769 (8th Cir, 2000) (“The
government is not required to prove that the defendant knew the exact nature of the substance with
which he was dealing”) and United States v. Ramos, NDIA NO. 13-CRF-2034-LRR, 2014 WL 4437554
(9/9/2014 Order) (finding that the amount Ms. Ramos charged for her products, where she stored the
products in her store, and the fact she offered investigating officers ‘rolling papers’ along with the sale of
a synthetic cannabinoid was sufficient evidence to support a conviction for knowingly distributing an
illegal controlled substance.).
33 See Administrator’s Final Order, Hacienda Bar Limited Liability Company, d/b/a La Hacienda, Docket No. S2002-00012, issued February 17, 2003.
34 Iowa Code section 123.40(2013).
35 Id.
36 The licensee submitted an Agreement (Exhibit C), which was signed by Abdul Islam as the owner of
Kartar, LLC d/b/a University Grocery, 2121 University Avenue, on October 2, 2013 and argued that this
licensee should have been given the same opportunity to enter into an agreement with the local authority
rather than have its license suspended. Exhibit C states, in part, that Abdul Islam agreed not to sell
32
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


fully cooperated with law enforcement subsequent to the suspension of its
license on March 4, 2014;
and its owners have not been criminally charged;
is willing to agree not to sell any synthetic cannabinoid products in the future.
The licensee asserts that it has suffered significant financial losses as a result of the
suspension and that any further suspension of its liquor license would irreparably harm
the licensee’s business.
The licensee’s owner and none of the employees involved in sales of synthetic
cannabinoids testified. The licensee’s brief makes a number of factual assertions that
were not considered in making the decision in this case because those factual assertions
were not supported by testimony or other evidence at hearing. The unsupported
factual assertions included assertions that: (1) the licensee had a good faith belief that
the particular products it was selling were legal to sell; (2) the licensee paid sales tax
and income tax on the money generated from the sales of these products; (3) the
licensee was aware that certain synthetic cannabinoids were illegal while others were
not and that there was a fine line between the two; (4) the sales representative who sold
these products to the licensee represented them to be legal; (5) the products were
marketed as bath salts, incense, potpourri, plant food, and fertilizer with a label stating
that they were legal in the United States; and (6) the products were kept behind the
counter to prevent theft and not to conceal them from law enforcement.
The licensee’s brief also asserts, in part, that: (1) specific dollar amounts purporting to
be the licensee’s actual loss of revenue due to the license suspension, (2) that the store is
not self-sustaining without the revenue from the sale of liquor, (3) that the licensee’s
losses have greatly exceeded any profits made from the sales and the licensee has no
other source of income; (4) that the settlement and keeping the store open without
liquor revenue has exhausted the licensee’s savings and any additional suspension will
place the business at risk of going out of business; and (5) that the timing of these
hardships is particularly difficult because the licensee’s wife passed away two months
ago.
prohibited Schedule I substances under Iowa Code 124.204 and “imitation controlled substances” as
defined in Iowa Code section 124A.2(4) , as well as other products. Although the licensee was allowed to
submit this exhibit, it was ultimately given no weight in making this decision. No other signature
appears on the Agreement, and it is unknown what circumstances led to the agreement or if the
agreement was accepted by the local authority.
DIA No. 14ABD009
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The licensee did not testify at hearing. The only evidence in the record to support the
factual assertions listed above was the letter from the licensee’s bookkeeper (Licensee
Exhibit H) which provides a summary statement of the decrease in the licensee’s loss of
revenue, as reported by the licensee. No receipts or business records were provided to
support the statements made in the letter.
The licensee also points to its Settlement Agreement (Exhibit A) with Polk County, in
which Jasjit S. Nat, along with Bunny Nat, Geetinder Nat, Narinder Nat and several
banks agreed to forfeit $146,485 in United States currency from several different bank
accounts, in return for the release of additional bank accounts and two vehicles. The
Settlement Agreement was admitted as an exhibit at hearing. The licensee suggests that
this forfeiture should be considered in mitigation of the administrative penalty while
the local authority asserts that the forfeiture is irrelevant to this administrative
proceeding.
This Settlement Agreement was given some weight in considering the sanction to be
imposed. Administrative sanctions should be adequate to punish the violator given
the number and nature of the violations, to ensure that the violator does not benefit
financially from the violation, and to deter others from engaging in the same prohibited
behaviors. The fact that the licensee has agreed to forfeit a significant amount of cash
proceeds makes it more likely that the licensee has not benefitted financially from the
violations established at hearing. The amount of the forfeiture may also serve as a
deterrent to others who might otherwise consider selling similar products containing
synthetic cannabinoids.
Finally, the licensee argues that the length of the suspension as of the date of the
hearing was already significantly longer than the Division’s typical suspensions and is
more than double the suspension imposed on a store found to have sold to a minor for
the third time in three years. The licensee also cites to links for news articles out of
other states concerning the length of license suspensions in those states. Once again,
these news articles were not offered into the record at the time of the hearing and are
matters outside the record that were not considered in making this decision.
The licensee’s illegal sales of imitation controlled substances are very serious violations
of the Iowa Alcoholic Beverages Act that threatened the public health, safety and
welfare. An emergency suspension was warranted in order to bring a halt to the use of
the licensed premises for this illegal activity, and a lengthy license suspension is clearly
warranted given the number and nature of the violations. Based on all of the
circumstances presented, the violations warrant the maximum license suspension of
DIA No. 14ABD009
Page 26
one (1) year but do not warrant revocation. The primary reason for choosing the
sanction of a one year suspension over the revocation that was requested by the local
authority is that the illegal sale of synthetic cannabinoids is an issue of first impression
for the Alcoholic Beverages Division.
ORDER
IT IS THEREFORE ORDERED, pursuant to Iowa Code section 123.39, that for
knowingly engaging in illegal activity on the licensed premises, Liquor License No. LE2079 and Beer Permit No. BC-27098, issued to Jasjit Singh Nat d/b/a Nat Food Mart,
shall be SUSPENDED for a total period of one (1) year. The licensee shall receive full
credit for the period of the emergency suspension. Therefore the period of license
suspension, which began on Tuesday, March 4, 2014, shall continue and shall end on
Tuesday, March 3, 2015 at 6:00 a.m. IT IS FURTHER ORDERED that no alcoholic
liquor, wine, or beer may be sold, dispensed or consumed on the premises during the
period of suspension.
Pursuant to the administrative rules of the division, any adversely affected party may
appeal a proposed decision to the Administrator of the Alcoholic Beverages Division
within thirty (30) days after issuance of the proposed decision. In addition, the
Administrator may initiate review of a proposed decision on the Administrator's own
motion at any time within thirty (30) days following the issuance of a proposed
decision. 185 IAC 10.27(1) and (2).
Requests for review shall be sent to the Administrator of the Alcoholic Beverages
Division, 1918 S.E. Hulsizer, Ankeny, IA 50021. Unless otherwise ordered, each
appealing party may file exceptions and briefs within thirty (30) days of the notice of
appeal or order for review. Within thirty (30) days thereafter, any party may file a
responsive brief. The Administrator may shorten or extend the briefing period as
appropriate. The Administrator may resolve the appeal on the briefs or provide an
opportunity for oral argument. 185 IAC 10.27(6). The administrator may affirm,
reverse or modify the proposed decision.
A party who is adversely affected by the proposed decision shall not be deemed to have
exhausted administrative remedies unless the adversely affected party files a request
for review of the proposed decision within the time provided and the Administrator
has reviewed the proposed decision and has affirmed, reversed, or modified the
proposed decision.
DIA No. 14ABD009
Page 27
Dated this 17th day of December , 2014.
Margaret LaMarche
Administrative Law Judge
Department of Inspections and Appeals
Administrative Hearings Division
Wallace State Office Building-Third Floor
Des Moines, IA 50319
CC: See Attached Mailing List
DIA No. 14ABD009
Page 28
Copies to:
Margaret LaMarche
Administrative Law Judge
Depart. of Inspections & Appeals
Wallace State Office Building
Des Moines, Iowa 50319
Douglas P. Philiph
Assistant City Attorney
Des Moines Police Dept.
25 E. 1st Street
Des Moines, Iowa 50309
John Lundquist
Assistant Attorney General
Department of Justice
Hoover State Office Building
Des Moines, Iowa 50319
Steve Bogle
Iowa Lottery
2323 Grand Avenue
Des Moines, Iowa 50312
Lt. Ritzman
ISP, District #1
260 N.W. 48th Place
Des Moines, Iowa 50313-2299
Steven Mandernach
Social Gaming Unit
Lucas State Office Bldg.
Des Moines, Iowa 50319
Diane Rauh
City Clerk - City Hall
400 Robert D Ray Drive
Des Moines, Iowa 50309
Karen Freund
Licensing/Regulatory Bureau Chief
Iowa Alcoholic Beverages Division
1918 SE Hulsizer
Ankeny, Iowa 50021
Interim Police Chief Douglas Harvey
Des Moines Police Dept.
25 E. 1st Street
Des Moines, Iowa 50309
Alfredo Parrish
Attorney at Law
2910 Grand Ave
Des Moines, Iowa 50312
Officer Rahn Bjornson
Des Moines Police Department
25 E. 1st Street
Des Moines, Iowa 50309