State Aims at Pot Shops That Evade Taxes

State Aims at Pot Shops That Evade Taxes
Timothy Norris/L.A. Weekly

The state of California's Board of Equalization is cracking down on pot shops that haven't been paying their taxes.

Apparently there are plenty of them in the city of Los Angeles. Despite a voter-approved law that says only about 125 dispensaries can now operate in town, state authorities counted 935 "active cannabis businesses in the city of Los Angeles," according to a BOE statement.

That's a lot more than the 415 shops that the L.A. City Attorney's Office suggests are still in operation in Los Angeles. City prosecutors said in spring that they have essentially shut down 503 pot shops.

The BOE argues that 28 percent of the 935 shops it believes are still in action are operating under the radar of state tax authorities. That's 258 that are not registered sellers with the good people of California, the board says.

Officials say these pot shops are robbing taxpayers of millions in contributions that could be going to roads, parks and education. The state has a plan to "educate, investigate, audit, arrest and force" pot shops to pay taxes, the BOE said in a statement.

At the same time, the BOE is endorsing the "Cannabis Tax Enforcement 'Eliot Ness' Plan" (because California pot people these days are so into Chicago gangland history).

BOE Chairman Jerome E. Horton suggests that the Cannabis Tax Amnesty Act, proposed by Assemblyman Mike Gipson, will give those under-the-radar collectives a chance to get right with the tax man:

The Cannabis Tax Amnesty Act is an opportunity for those not in compliance to bring themselves out of the shadows of the underground economy and in line with existing law ... 

Amnesty? Maybe.

Gipson says, "If passed, cannabis operators will have two options: Comply with the law or risk imprisonment, as gangster Al Capone did for
tax evasion."

Horton also is encouraging the BOE, the Franchise Tax Board, the Department of Justice and other agencies to join forces with the state's Tax Recovery and Criminal Enforcement (TRaCE) Task Force to get that tax money and "to track down the cannabis entities connected to organized crime," according to the BOE.

Horton:

Because of the illegal aspect of cannabis sales and their potential to fund illegal activities in our communities, it is important that we distinguish between the responsible and irresponsible growers, distributors, vendors and consumers, and enforce the law to its fullest extent for those who choose to violate existing law.

Upcoming Events

Paranoid? Yeah, it's not just the sativa talking.

Send feedback and tips to the author. Follow Dennis Romero on Twitter at @dennisjromero. Follow L.A. Weekly News on Twitter at @laweeklynews.


Sponsor Content

Newsletters

All-access pass to the top stories, events and offers around town.

  • Top Stories
    Send:

Newsletters

All-access pass to top stories, events and offers around town.

Sign Up >

No Thanks!

Remind Me Later >