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Licensed Marijuana Dispensaries in Santa Ana and Los Angeles Raided for Unpaid Taxes 

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A half dozen unmarked vehicles and two California Highway Patrol (CHP) cars blocked off the parking lot of Super Clinik, a registered cannabis dispensary in Santa Ana, shortly after the store opened on March 18 at 8 a.m.

With an agent from the California Department of Tax and Fee Administration supervising the situation, multiple CHP officers entered the building and counted numerous six-inch-high stacks of cash, and ultimately took the money from the store. 

Super Clinik owners refused to respond to the numerous questions surrounding the incident, with state tax authorities claiming that privacy laws prevent them from discussing particular cases. Experts say the Santa Ana shop operation had all the symptoms of a “till tap” civil warrant — an order the IRS employs to confiscate cash from businesses that haven’t paid sales tax bills despite repeated warnings.

This is the second time of such an incident occurring at a longstanding dispensary in the last month. In early March, the CDTFA and CHP raided TLC in Boyle Heights, which is run by the well-known industry veterans Jungle Boys. Officers walked in with weapons drawn and confiscated more than $100,000 from TLC’s cash registers after they paid $18 million in taxes in 2021, according to a video released on the company’s Instagram page. 

“That’s triggering to all of us because this is what used to happen regularly,” Dana Cisneros, an attorney who’s worked with cannabis businesses for five years, said.

Law enforcement have raided pot shops in California for decades, immediately arresting people and seizing goods on the grounds of businesses operating in the gray space provided by medical marijuana laws. Due to marijuana legalization in 2016 and leeway granted to individuals in the growing cannabis industry, raids on licensed dispensaries have been rare in recent years.

Raids, such as these, bring attention to separate licensed businesses, prompting questions of whether state authorities are entering a stricter enforcement phase when dealing with legal dispensaries. 

One issue is the underground cannabis market’s continued existence. In California, it’s difficult for licensed operators to get started, but it’s not difficult for illegal operators to stay in business. As a result, most analysts believe the underground cannabis market in California is almost twice as large as the licensed industry. The time and attention state agents put into raiding licensed businesses could ultimately be shifted towards the illegal operators.

“I’m not saying that anyone shouldn’t pay their taxes,” Cisneros said. “But where are law enforcement to protect people who follow the law, or at least try?”

Certain licensed dispensaries have threatened to withhold their tax patents from the state and put that money in escrow accounts. However, there is no evidence of licensed companies acting on this threat, or that any of the recent CDTFA raids were linked to such an effort. 

Hilary Bricken, a cannabis industry attorney, claims that it is expected of the CDTFA to share information with the IRS if firms get into trouble with the agency, which might draw federal attention. Raid reports can also undermine relationships with customers, vendors and financiers, which are already difficult to come by in a high-risk industry.

Rob Taft, proprietor of 420 Central in Santa Ana, has long predicted that California and other governments would employ tax enforcement to pursue potential offenders in the cannabis market, similar to how criminal Al Capone was brought down for tax cheating. 

However, while vendors continue to look toward the state government for protection, others are now attempting to provide it themselves.

“The government is not going to do it for us,” Taft said. “We have to be the ones pushing.”

Kayode Giwa is a City Staff Writer. He can be reached at kgiwa@uci.edu.