California, Feds Tussle Over Marijuana Cash

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Fearful of enticing another federal raid, at least one California medical marijuana dispensary has a unique practice: it pays its state sales taxes every week. Usually businesses pay the state Board of Equalization annually, quarterly, or monthly, but there's nothing stopping companies from “prepaying” weekly, says board spokesperson Anita Gore. She couldn't say how many taxpayers deposit that often, but hadn't heard of the practice until now. The Berkeley Patients Group — a dispensary with about 10,000 patients in the Bay Area — pays weekly ever since a DEA raid in 2007.

The agency pounced on a Southern California offshoot of the Berkeley nonprofit for distributing a federally controlled substance. Agents seized nearly everything on-site as well as $100,000 in funds in a bank account. The $100,000 was taxes it had set aside, Berkeley Patients Group spokesperson Brad Senesac says. Now the multimillion-dollar-a-year dispensary, which is legal under state law, prepays the state to avoid large amounts of cash on the books, which is an invitation to federal scrutiny.

The Berkeley dispensary actually got the money back after the City of Berkeley stood up for it. The city stated in a 2008 resolution: “seizures of assets of medical marijuana dispensaries and collectives have blocked payments of taxes to the state of California and the City of Berkeley.” Berkeley asked federal authorities to back off and they did.

“The raid was terrible,” says Senesac. “Paying weekly is now just another one of those hoops you have to go through and we're determined to go through them all.”

BPG, along with two other Berkeley clubs, net about $18.5 million per year. BPG now seeks a replacement for its current bank, Wells Fargo. The national chain has started refusing service to dispensaries, as it operates under federal license.

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