A man who ran dozens of unlicensed cannabis dispensaries across three Southern California counties faces 66 charges for allegedly failing to report more than $80 million in sales and evading payment of about $7.1 million in sales taxes, authorities said on Wednesday, May 13.
From April 2019 to December 2022, Pin Hsien Hsu, now 46, allegedly operated about 30 dispensaries across Los Angeles, Orange and San Bernardino counties, failed to report his earnings and failed to pay taxes, California Attorney General Rob Bonta said.
“This tax evasion is not a victimless crime,” Bonta said during a virtual press conference held in Sacramento. “When someone intentionally cheats the system and refuses to pay what they legally owe, the consequences are felt by all of us.”
All of the storefronts were shut down, his office said.
State authorities said they served search warrants and seized about $2.2 million in cash, 125 pounds of untaxed cannabis products, 62 electronic devices and 14 boxes of related evidence.
The investigation, conducted by the California Department of Justice and the California Department of Tax and Fee Administration, started in 2020 during an “illicit-dispensary enforcement operation” in San Bernardino County, where investigators found evidence “that a cloud-based point-of-sale system was being used to support illegal cannabis sales,” said the tax agency’s director, Trista Gonzalez.
They learned that about 30 dispensaries were connected to the system, Gonzalez said, classifying the network as “a highly organized operation that allegedly employed several thousand individuals and maintained a sophisticated business structure, including their own human-resources department.
“This was not a small illegal establishment operating in the shadows, this was an organized underground business designed to profit by avoiding California’s laws,” Gonzalez said.
“Tax evasion at this scale impacts every Californian,” Gonzalez said. “The over seven million in taxes the charged individual failed to remit could have supported critical public services, including schools, infrastructure, public safety and community programs.”
Hsu faces 66 total charges, including multiple counts of failing to file a sales tax return, engaging in business without a permit and money laundering, according to court papers.
If convicted, he could spend more than 50 years in state prison, Bonta said.
“Illegal cannabis operations also undermine licensed businesses that work hard to comply with California laws, pay taxes responsibly and operate within the regulated market,” Gonzalez said. “When cannabis products bypass California’s safety requirements, consumers may be exposed to products that are unregulated, untested and potentially dangerous.”
Orange County inmate records show Hsu was booked into jail on April 29 and released on May 2.