Property Seized in Illegal Cannabis Activity Up for Auction
CDTFA Combatting Illegal Cannabis Sales

Sacramento – The California Department of Tax and Fee Administration (CDTFA) is selling commercial properties seized in connection with illegal cannabis operations to recover unpaid taxes.

On March 23, CDTFA will auction off a property in Whittier that was seized as a result of an investigation into illegal cannabis sales. Operators of illegal cannabis operations at the site owe more than $850,000 in taxes. Wednesday's sale will mark the second time this month that CDTFA has used seized properties to reclaim tax revenues lost to illegal cannabis sales.

On March 2, in conjunction with the Los Angeles County Sheriff's Department, CDTFA sold a property seized in Compton for $256,000. CDTFA hopes to recover at least $220,000 from the sale of the Whittier property which will take place at 10 a.m. at the Stanley Mosk Courthouse in Los Angeles.

“Unlicensed cannabis operators not only undercut legitimate businesses, but they also cheat California communities out of revenue for vital programs,” said CDTFA Director Nick Maduros. “These businesses are not licensed under the laws approved by California voters, and many of their products are unregulated.”

The seized properties were used in conjunction with unlicensed cannabis operations that sold a variety of illegal, unregistered cannabis products. Unsuspecting consumers may have purchased unregulated products that fail to meet the strict safety standards required for cannabis products in California. These unlicensed operations failed to report and pay taxes to the state and have an unfair business advantage over legal operators who are compliant with state tax laws.

CDTFA casts a wide enforcement net to identify illegal businesses and ensure that licensed businesses are properly registered and collecting and remitting appropriate taxes. The Department collaborates with the California Highway Patrol, local law enforcement, city and county licensing authorities, and other government agencies. Since 2020, CDTFA has performed more than 1,000 inspections and observations of cannabis businesses and seized more than $32 million in cash and products.

To report suspected tax fraud activity, call toll free1-888-334-3300 or file an anonymous online complaint form with the investigations bureau at CDTFA.

Background:
In November 2016, California voters approved Proposition 64, the Control, Regulate, and Tax Adult Use of Marijuana Act. On January 1, 2018, two new cannabis taxes went into effect: a cultivation tax on all harvested cannabis that enters the commercial market and a 15 percent cannabis excise tax upon purchasers of cannabis and cannabis products. In addition, retail sales of cannabis and cannabis products are subject to state and local sales tax. Sales tax applies to sales of cannabis, cannabis products, and other merchandise such as pipes, rolling papers, and shirts. Certain retail sales of medicinal cannabis are exempt from sales and use taxes when the purchaser holds a valid Medical Marijuana Identification Card issued by the California Department of Public Health. To learn more, visit the Tax Guide for Cannabis Businesses on the CDTFA website.

The California Department of Tax and Fee Administration administers California's sales and use, fuel, tobacco, alcohol, and cannabis taxes, as well as a variety of other taxes and fees that fund specific state programs. CDTFA-administered programs account for over $73 billion annually, which in turn supports essential local services such as transportation, public safety and health, libraries, schools, social services, and natural resource management programs through the distribution of tax dollars going directly to local communities.