SANTA CRUZ COUNTY — Santa Cruz County Sheriff’s personnel on Wednesday served search warrants at five cannabis dispensaries, part of a multi-jurisdictional investigation into suspected tax evasion and money laundering.
The dispensaries are also suspected of failing to provide workers' compensation insurance to employees, as well as unlawful cannabis distribution and cultivation.
According to Santa Cruz County spokesman Jason Hoppin, investigators were targeting cannabis operators who are suspected of operating out of compliance with state and local regulations.
The investigation includes evidence that at least one of the businesses was using money orders in a sophisticated effort to launder large amounts of currency, and avoid payment of Santa Cruz County Cannabis Business Tax, Hoppin said.
Investigators seized 540 pounds of processed cannabis and more than $140,000 in cash, along with business and banking records.
All the businesses searched were controlled by the same individuals, who are suspected of directing specific financial transactions to avoid financial reporting and tax obligations, Hoppin said.
Additionally, several residential properties in Santa Cruz County owned by the suspects have been the focus of recent investigations for unregulated, unlawful commercial cannabis activity.
Investigators are determining whether unregulated cannabis from those properties was introduced into the lawful, regulated market through the five businesses searched, Hoppin said.
The investigation included Redwood Skyline on the 2700 block of South Rodeo Gulch in Santa Cruz, Rooted Republic on the 100 Block of Manfre Road in Watsonville, Boutique Unlimited on the 100 block of Airport Road in King City, Monterey Botanicals on the 22000 block of Fuji Lane in Salinas and Newtown Enterprises on the 7000 block of Highway 1 in Moss Landing.
No arrests were made during the service of the search warrants. Investigators will be consulting with the regulating agencies and District Attorney’s Office to determine criminal charges and civil assessments, Hoppin said.
The total amount of unpaid cannabis tax to the County of Santa Cruz will be determined once business records and banking records have been examined.
The investigation included the Internal Revenue Service Criminal Investigation Unit, California Department of Tax and Fee Administration, California Bureau of Cannabis Control, Monterey County Sheriff’s Office, California Department of Fish and Wildlife and other agencies.