BUSTED: GRATEFUL SHED CASE SHOWS HOW FEDS CAN CRACK DOWN

The story of the Grateful Shed could be a cautionary tale for
Montana's high-flying medical marijuana industry.

Over 21 years, Gallatin County's leading "head shop" has sold an
assortment of smoking pipes, water pipes, Bob Marley and Grateful Dead
posters, colorful tie-dyed clothing and concoctions designed to keep
certain substances from showing up in employees' drug tests.

While the Grateful Shed sells all the accoutrements one might use for
smoking tobacco or marijuana, it does not sell the forbidden weed,
insists Peggy Holstine, 51.

She is co-owner of the shop with partner Thomas B. Robinson and her
husband, Bob Holstine, who got his start following Grateful Dead
concerts around the country in an old school bus, selling pipes and
T-shirts.

The lack of actual marijuana in the shop didn't keep the federal Drug
Enforcement Agency from busting their business and similar shops in
Missoula, Great Falls and Kalispell in May 2005, during the Bush
administration.

"I was in the back, tie-dying," Holstine recalled, chatting at the
counter of the incense-scented shop, located for the past year in
Bozeman at 2230 W. Main St.

"The DEA came and took all our stuff. They took everything. They were
rude, hostile.

"I was hysterical. They kept searching, looking for drugs," she said.
"I said, 'No, look everywhere, there's nothing!'"

Though the feds came up empty-handed on drugs, they still indicted the
shop's then-partners, Steve Andriakos and Robinson, on federal charges
of selling drug paraphernalia.

After fighting in court for a year, the case ended in June 2006 with
the judge tossing out Andriakos' charge for lack of sufficient
evidence. Robinson's case resulted in a hung jury in Butte federal
court.

It probably cost them $250,000 in legal fees and seized inventory,
none of which was ever returned, Holstine said. "It was quite an ordeal."

Federal attorneys agreed not to put Robinson on trial again, and in
exchange he signed a deal to pay a $5,000 fine, give up all seized
inventory, and not to sell for two years any pipes, grinders, sifters,
roach clips, miniature spoons, or scales that could be used with
illegal drugs, according to court records.

Since the Obama administration announced it wouldn't prosecute medical
marijuana cases that comply with state laws, the business climate has
changed - and not for the better -- at the Grateful Shed.

"Everybody thinks because it's legal, we're doing major business. It's
not true," Holstine said.

When the Grateful Shed was located at Four Corners, it could afford
four employees, she said. Now, it's just the partners, who take turns
running the store.

Holstine said some of today's medical marijuana sellers are "totally
ridiculous," flaunting marijuana leaf posters in their storefront
windows. The Grateful Shed is much more circumspect, with signs posted
asking patrons not to talk about anything illegal in the store.

Even more sedate medical marijuana storefronts are competing with the
Grateful Shed.

"It's not fair," Holstine said. "They're selling pipes,
too."

While there are good marijuana caregivers, a minority is pushing the
limits of the new law, she said. She was shocked to talk to some kids
from Colorado who claimed they had just walked in and purchased
marijuana from one Bozeman storefront.

"I moved here 11 years ago, and I had to wait six months to get a
fishing license," Holstine said. "And I had to show them my phone bill.

"It's a little out of control."