The state of California says 10 Los Angeles marijuana dispensaries owe $14.4 million in taxes. A public auction was held to make up those fees with property seized from the businesses.
But after the gavel was hit, the state only made $2,075, according to officials.
Nine of the dispensaries were operating illegally, and one was a legal business but owed back taxes, the California Department of Tax and Fee Administration said in a news release announcing the public auction for the seized goods. This marked the first time the agency auctioned off personal property seized during law enforcement raids to try to recover the fees owed to the state, according to the agency.
The agency partnered with the California Highway Patrol to sell the property, which included glass pipes, bongs, TVs, furniture and miscellaneous office supplies. At the Feb. 16 auction in Los Angeles, items were sold in 10 lots, and all were purchased, with many listed in “as is” condition.
“Seizing and auctioning property from cannabis businesses that evade the law is a tool to recover the taxes owed to the state,” said Nick Maduros, director of the tax and fee agency, in a statement.
The agency said in a statement that its intention is to “discourage unlicensed cannabis activities and to help level the playing field for legitimate businesses paying their taxes.”
In 2022, according to the agency, nearly $90 million in products and cash were seized from businesses during 2,200 inspections.
Legal cannabis businesses operating in California are required to collect a 15% excise tax from their customers at the time of sale. California generated more than $621 million in excise tax in 2023 and over $461 million in sales tax, according to available data.
