Chong was born at the University of Alberta Hospital in Edmonton, Alberta, on May 24, 1938, and given the name Thomas B. Kin Chong at birth. His mother was Lorna Jean (nee Gilchrist), a waitress of Scots-Irish ancestry, and his father was Stanley Chong, a Chinese truck driver who emigrated to Canada from China in the 1920s. The senior Chong had first lived with an aunt in Vancouver after arriving in Canada. As a youth, Tommy Chong moved with his family to Calgary, settling in a conservative neighbourhood Chong has referred to as "Dog Patch".

While government officials denied that Chong was treated any differently from the other defendants, supporters felt his celebrity status was being used against him. Chong's publicist Brandie Knight said the Chong family was shocked by the raid. "We've done everything the right way, and the government is saying there is no right way," Knight said. Supporters started the "Free Tommy Chong!" movement that called for his release. They questioned why Chong was prosecuted rather than his son Paris Chong, who was CEO of the business. They also pointed to the disparity in sentences between Chong's and those of other defendants and the DEA tactics used in the investigation.  Paris Chong had started Nice Dreams in 1999. He was never charged with his crimes in relation to the investigation as part of a plea bargain. When asked why the government had focused on Chong rather than his son the CEO, US Attorney Mary Beth Buchanan said that "Tommy Chong was the more responsible corporate officer because he financed and marketed the product."  Of the 55 people who were subjects of the investigation, Chong was the only one without previous convictions who received jail time. When questioned on the sentencing, U.S. Attorney Mary Beth Buchanan noted that Chong had never gone to trial and made a plea bargain. She said, "He was a relatively new player, but he had the ability to market products like no other."  During its investigation of Nice Dreams, federal agents posed as head-shop owners from Beaver County in western Pennsylvania. They asked Paris Chong to sell them pipes through the mail to a fictitious shop in the town of Beaver Falls, 31 miles (50 km) from Pittsburgh. Paris Chong had been prohibited from selling to Pittsburgh or anywhere in Western Pennsylvania because of the successful federal prosecution of Akhil Kumar Mishra and his wife, Rajeshwari, who had two head shops in the city. Accounts differ as to who in Nice Dreams went against Chong's prohibition, or even if it had been made up by the defense, but the sales did take place to the agents. This enabled the U.S. Attorney to show jurisdiction in Pennsylvania for Chong's illegal activities, as opposed to California, which was the base for Nice Dreams.

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