California Targets Underground Cannabis Shops With Tax Warrants


“The CDTFA’s collaboration with the CHP is an important deterrent to tax evasion”

As COVID-19 puts a crunch on the state’s coffers, the California Department of Tax and Fee Administration is targeting California’s multi-billion dollar underground cannabis economy to get a piece of the pie.

CDTFA announced last week it has taken sweeping actions against 12 illegal cannabis retailers across SoCal, from Los Angeles to San Bernardino County, in recent weeks. The CDTFA served tax warrants to the dozen in collaboration with the California Highway Patrol, who also assisted with the investigations.

In the process of the tax raids, the state also seized nearly a million dollars in products on top of $100,000 in cash. CDTFA said that money will go toward the tax liabilities involved with the various retailers.

“The CDTFA’s collaboration with the CHP is an important deterrent to tax evasion,” stated CDTFA Director Nicolas Maduros said in a statement announcing the actions. “Tax evasion unfairly shifts the burden onto all other taxpayers and makes it tough for those businesses that are playing by the rules to survive.”

CDTFA went on to note that under the California Revenue and Taxation Code, if you are willfully evading or attempting to evade the cultivation tax, the cannabis excise tax or the sales tax you’re committing a crime. But it’s worth noting these actions target retailers that were completely illegal, as opposed to anyone who may be fudging the numbers in a legal operation to mail a few packages East.

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