OAKLAND — California Attorney General Bonta today announced the arrest of, and felony charges filed against an unlicensed retailer of cannabis for $7.1 million in tax evasion. From April 2019 through November 2022, the suspect operated an extensive number of unlicensed cannabis dispensaries in Los Angeles, Orange, and San Bernardino Counties. During that period, the suspect failed to file sales tax returns and to report approximately $80 million in sales. In addition, he evaded payment of approximately $7.1 million in sales tax to the California Department of Tax and Fee Administration (CDTFA).
“Evading taxes through hazy business tactics is not a victimless crime and it carries serious consequences. When individuals and businesses deliberately avoid their legal responsibilities, they are shifting the burden onto honest taxpayers and depriving communities of essential funding,” said Attorney General Rob Bonta. “Accountability in these cases isn’t simply about punishment, it is about protecting the integrity of public institutions and ensuring that everyone contributes their fair share. We will continue to weed out bad actors and hold accountable those who believe they are above the law.”
"Cases like this underscore the importance of a level playing field for all businesses," said California Department of Tax and Fee Administration Director Trista Gonzalez. “Cannabis businesses that do not pay their fair share deprive important programs of critical funding, including youth substance abuse prevention, environmental restoration, and cannabis research. The Department is committed to ensuring that all businesses meet their obligations and will continue to work to hold accountable those who attempt to evade their financial responsibilities."
The joint investigation was conducted by CDTFA and California Department of Justice (DOJ). During the execution of search warrants, investigators seized approximately $2.2 million in cash, 125 pounds of contraband untaxed cannabis products, 62 electronic devices and 14 boxes of related evidence. This case is being prosecuted by DOJ, and the charges include failure to file sales tax return, engaging in business without a permit, money laundering and while collar enhancements.
The DOJ task force responsible for this investigation is the Tax Recovery in the Underground Economy Task Force (TRUE). The case is being prosecuted by DOJ’s Special Prosecutions Section. TRUE focuses on combating and deterring underground economic crimes in California. TRUE includes attorneys, investigators, and special agents from DOJ’s Special Prosecutions Section and Bureau of Investigation, as well as the Franchise Tax Board, Employee Development Department, the CDTFA, California Department of Motor Vehicles, Homeland Security Investigations, and the Internal Revenue Service. Through multi-agency collaboration such as this one with DOJ and CDTFA, the TRUE Task Force works to combat financial crimes in the underground economy.
It is important to note that charges are merely allegations. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.
Here is a copy of the complaint.
Here are photos of the seizure:
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