Portland Cannabis Business Owner Receives Federal Prison Sentence For Tax Crimes
The U.S. Attorney’s Office for the District Of Oregon announced on September 17, 2018 in a press release that Matthew Price, age 32, of Portland, was sentenced to seven months in federal prison and ordered to pay more than $262,000 for willfully failing to file federal income tax returns in four consecutive years.
According to court documents, in 2010, Mr. Price, then 25 years old, came to Portland with the financial backing of a business partner in Colorado to start a state-legal marijuana business in anticipation of Oregon’s full retail legalization. He had previously been working in a marijuana store in Colorado owned by his business partner. In December 2010, Mr. Price began operating a marijuana farmers market in Portland called Cannabliss. In mid-2013, Mr. Price and his business partner converted the business to a medical marijuana dispensary. In 2014, the pair opened two additional Cannabliss dispensaries, a second in Portland and one in Eugene, Oregon.
Mr. Price failed to file personal income tax returns in four consecutive years between 2011 and 2014, despite retaining the services of three different certified public accountants. His taxable income steadily grew from $42,000 in 2011 to $590,000 in 2014. In 2015, Mr. Price was a member of the Oregon Liquor Control Commission’s (OLCC) Recreational Marijuana Technical Advisory Retail Subcommittee. In this capacity, Mr. Price, with other retailers, advised the OLCC in its rulemaking process for Oregon Measure 91, the Control, Regulation, and Taxation of Marijuana and Industrial Hemp Act.
Mr. Price previously pleaded guilty to four counts of willfully failing to file personal income tax returns in violation of 26 U.S.C. § 7203 on May 31, 2018. Upon completion of his prison sentence, he will be on supervised release for three years with six months of home detention.
Penalty For Failure To File Income Tax Returns – 26 U.S.C. § 7203
The Internal Revenue Code (Section 7203) provides that:
Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return, keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $25,000 ($100,000 in the case of a corporation), or imprisoned not more than 1 year, or both, together with the costs of prosecution. In the case of any person with respect to whom there is a failure to pay any estimated tax, this section shall not apply to such person with respect to such failure if there is no addition to tax under section 6654 or 6655 with respect to such failure. In the case of a willful violation of any provision of section 6050I, the first sentence of this section shall be applied by substituting “felony” for “misdemeanor” and “5 years” for “1 year”.
Bottom line is that you can be looking at a felony conviction and up to five years’ incarceration.
Investigation By IRS Criminal Investigation Division Led To The Conviction
Billy J. Williams, U.S. Attorney for the District of Oregon, stated that “Matthew Price attempted to live a double life—advising OLCC officials on how to regulate state-legal marijuana sales, while privately evading his personal and business tax obligations. Marijuana businesses and business owners are subject to the same federal tax laws as every other business and will be scrutinized for criminal wrongdoing. Tax cheaters will not be tolerated in any industry”.
You can also bet that the Civil Division of the Internal Revenue Service will likely be interested in Mr. Price.
What Should You Do?
As more cannabis operators and producers look to go legal under State law, you run the risk that the federal government will discover you and uncover non-compliance in filing past income tax returns. Protect yourself and your investment by engaging the cannabis tax attorneys at the Law Offices Of Jeffrey B. Kahn, P.C. located in Orange County (Irvine), the Inland Empire (including Ontario and Palm Springs) and other California locations. We can come up with tax solutions and strategies and protect you and your business and to maximize your net profits.