In many ways, it seemed as if the nine medical marijuana facilities peppered throughout Orange and Los Angeles counties weren’t much different than the hundreds of others that have cropped up in recent years.
Our Los Angeles marijuana lawyers understand they bore names such as “Alternative Herbal Care” and and “Safe Harbor Collective.”
On paper, it appeared each of the facilities was owned and operated by different people and nothing was particularly askew.
However, federal authorities say that all nine facilities were actually owned by a 56-year-old man with prior convictions for drug dealing. Additionally, investigators say he admitted to giving orders to managers at the facilities to shred records that would reveal taxable income from marijuana sales. The clinics reportedly raked in approximately $25 million over the course of six years, but the owner allegedly only reported a few hundred thousand dollars of income annually.
As an example, prosecutors say the owner made about $11.5 million back in 2009, but he only reported about $201,000 worth of income to the federal government.
What’s more, officers allegedly found hundreds of thousands of dollars hidden in his house when they conducted a search. They also found an assault rifle, three other firearms and cases of ammunition – something he was forbidden to have as a convicted felon.
The defendant, nicknamed “Pops,” recently pleaded guilty to felony charges of tax evasion and conspiracy to distribute more than 1,000 kilograms of marijuana. As part of the plea deal, he was forced to forfeit some $25 million in assets, businesses interests and cash, including eight homes, as well as pay more than $4 million in restitution for unpaid taxes.
He faced 10 years to life in prison. The judge sentenced him to 15 years.
This case illustrates why it is so critical to not only run your marijuana dispensary above-board, but to have a legal consultant reviewing your practices, not just when you open but as part of an ongoing process.
Marijuana regulation in California mirrors something of the Wild West, and it’s understandable that there might be confusion about the exact nature of your obligations.
Admittedly, this might not have been a situation where the owner was confused. However, there are many other scenarios where defendants believed they were doing everything right, and they ended up getting swept up in the federal crackdown on medical marijuana in this state.
In this case, the investigation was initiated by the Orange County Sheriff’s Office, which later tapped federal authorities for further assistance.
The case was eventually handed over to the U.S. attorneys office because the penalties in federal cases tend to be much more severe than what we might see in a state criminal case.
Another reason so many of these cases end up in federal court is because prosecutors know that at the state level, defendants can at least present a defense that involves protection of their actions under state medical marijuana laws. Federal law, meanwhile, does not recognize marijuana as legal for any purpose, so prosecutors know mounting a defense will be tougher.
The Los Angeles CANNABIS LAW Group represents growers, dispensaries, collectives, patients and those facing marijuana charges. Call us at 949-375-4734.
Additional Resources:
Man secretly owned 9 pot stores, March 9, 2013, By Joe Mozingo, The Los Angeles Times
More Blog Entries:
Doctors Hazy on Medical Marijuana Prescriptions, March 23, 2013, Los Angeles Marijuana Lawyer Blog