The neo-nazis are a closed and extremely controversial group, who police their own and would ordinarily avoid the authorities, even in criminal situations. Like any other gang, they would rather retaliate on their own than call the cops. There also aren't a ton of them. Thus, it makes sense that they would have an isolated venue int he middle of the Pacific Northwest (overtly liberal, but known to have isolationist militias and various other crazies outside of the big towns), and feel comfortable having a secret drug lab locked away downstairs. I mean, why not? It had a hidden trap door (there was no access until they literally cut through the floor), and it was separate from anyone's home in case of a raid. Having shows was an easy cover for spending lots of time there. So if a stabbing or drunken brawl occurred there, which it ordinarily wouldn't because it's highly unlikely that a non-nazi would stumble onto their hidden forest compound, they would have taken care of the offender on their own. The concern this time was that Pat had a chance to call the authorities, AND there was a whole group of outsiders, not just a single random hiker.
For the record, white power skinheads scare the crap out of me, more than any other facet of the movement. They are outwardly violent, scary people.
The meat grinder song was the cue for she and Daniel (her secret bf) to leave. It was implied that she was Werm's gf, and Werm found out somehow and killed her. He was a red laces member, so they didn't want to throw him under the bus. Like any gang, you don't just leave the organization - blood in, blood out. That's why Emily and Daniel would have had to sneak away.
They're coming to get you, Barbara!
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