Puretane Executives Admit Laundering Profits From Illegal Butane Business

Assistant U.S. Attorney Andrew J. Galvin (619) 546-9721

NEWS RELEASE SUMMARY – March 10, 2016

SAN DIEGO – Former Chief Executive Officer Michael Tandberg and Chief Financial Officer Adam Hopkins of Lahar Manufacturing, Inc., pleaded guilty in federal court today, admitting that they conspired to launder proceeds from their illegal business. Their Newport Beach-based business—operating under the name Puretane—was the first and largest domestic manufacturer and distributor of butane specifically designed for use in making butane hash oil. 

Butane hash oil (“BHO”) is a marijuana concentrate similar in appearance to honey or butter.  BHO contains extremely high levels of tetrahydrocannabinol, or THC, and can be up to four times more potent than high grade marijuana. BHO is commonly manufactured by packing marijuana into a glass, plastic, or metal tube. Butane is then sprayed into the top of the tube. The butane strips the marijuana of its cannabinoid-containing oils, which drip from the bottom of the tube, often through a filter and into a holding container. The end product is highly-profitable and can be ingested as an oil, consumed in edibles, or solidified to make concentrated forms of cannabis known as “wax.”

During the manufacture of BHO, butane, a flammable gas that is odorless, colorless, and heavier than air, can evaporate out of the substance and collect on the floor, accumulating to explosive levels without proper ventilation. This process creates an invisible, but very real, risk of fires, explosions, and chemical burns. In 2015 alone, there were 33 reported fires and explosions that occurred during the manufacture of BHO in California.

According to the DEA, Butane Hash Oil Extraction Laboratories have caused 10 fires and explosions in San Diego County since January of 2015. In the Southern District of California there have been a number of Butane Hash Oil Extraction cases. In a recent case, defendant Steve Mora was sentenced last month to 40 months in custody after pleading guilty to creating substantial risk to human life while manufacturing Butane Hash Oil. Mora operated a marijuana dispensary where BHO was manufactured and resulted in an explosion in 2014.

News reports indicate that butane-related blasts are happening all over the country. For example, a 2014 article reported that Butane-fueled blasts sent 17 people to a Portland burn unit with serious injuries in the past 16 months, including one Northeast Portland man who later died from his injuries and a 12-year-old girl who suffered multiple broken bones after leaping from a second floor apartment building rocked by a butane explosion.  During just the first nine months of 2014, Colorado reported that there were 31 butane hash oil explosions in homes across the State.  A 2015 news article reported that at two Northern California burn treatment centers, injuries from BHO explosions accounted for eight to ten percent of severe burn cases, which represents a larger percentage than from car wrecks and house fires combined.

The manufacture of BHO is met by an unregulated and largely underground industry that plays out in garages, basements and kitchens. In this type of setting a spark from something as ordinary as a refrigerator compressor can set off a fiery explosion.   Puretane’s butane was marketed specifically for use in the unregulated manufacture of BHO.  For example, in October 2014, High Times, a drug culture magazine, featured an article describing Puretane’s butane as “designed specifically for the needs of BHO makers.” Puretane posted a link to the High Times article on its website and social media accounts. Similarly, in January 2015, Puretane hosted a contest, in which it offered a case of Puretane butane to the contestant who could manufacture the highest quality BHO.

Puretane sold its butane in 300 ml canisters for approximately $4-5 per canister to retailers throughout the United States, including to at least 25 retailers in San Diego County such as Raw Smokeshop, Dr. Green’s Ink, and Holy Smoke.  From just the period of February to August 2015, Puretane sold more than 400,000 canisters of their butane to retailers.

As part of their pleas, Tandberg and Hopkins agreed to forfeit the money remaining in their corporate bank account and over 66,000 canisters of Puretane butane. Tandberg and Hopkins will appear for sentencing on May 27, 2016, at 8:30 a.m. before U.S. District Judge Gonzalo P. Curiel.

DEFENDANTS:                                           Case Number 16-CR-460-GPC

Michael Tandberg                                           Age: 54                                   Newport Beach, CA

                                                                        Case Number 16-CR-461-GPC

Adam Hopkins                                                Age: 45                                   Santa Monica, CA

SUMMARY OF CHARGES

Money Laundering Conspiracy – Title 18, U.S.C., Section 1956(h)

Maximum penalty: 20 years’ imprisonment and $500,000 fine

AGENCY

Homeland Security Investigations