State officials are probing into whether proprietors of the San Francisco Cannabis Buyers’ Club may have violated federal and state tax laws by failing to report club revenue to the IRS. Failing to report income, including income generated through illegal activities, is against the law. The allegation is the latest in a series of accusations made by state law enforcement officials since the club was raided on August 4. To date, no individuals have been arrested in connection with the club, nor have any formal charges been filed.
California Bureau of Narcotics Chief Joe Doane said that the issue of possible tax evasion arose because agents found no documents related to the withholding of salary for Social Security, state and federal taxes and workers’ compensation for employees of the club. “That indicates [that club founder Dennis Peron] was not following state and federal laws regarding payment of taxes on salaries and benefits,” argued state attorney general’s office spokesman Steve Telliano.
Dennis Peron told United Press International that standard business practices were not followed at the club because of the underground nature of supplying medical marijuana to those who needed it. “Until we change the law, you have to realize that what we are doing is illegal. We’ve had to do things a certain way to protect the people whose lives we were trying to help.”
Californians for Compassionate Use treasurer John Entwistle called the state’s latest allegation “another red herring” and reiterated that all profits were distributed back into the club. “If we had bought big houses, then we’d be ashamed,” he remarked. “But we didn’t; we’ve all taken vows of poverty. There is no hidden money.”
Officials report that criminal charges involving both the tax issue as well as other facets of the club’s activities may be filed in three to four weeks.
For more information, please contact Californians for Compassionate Use @ (415) 621-3986.