Prison sentences, California taxes, and Maryland police corruption.
By Kaitlin Domangue
Former cannabis exec to serve 22 months in prison
This is quite the story y’all, and I can’t lie. It’s kind of depressing, but worth talking about.
Helios Dayspring, the founder and former CEO of California retail brand, Natural Healing Center, was sentenced to 22 months in prison last week.
Dayspring was convicted of bribery and failing to report millions of dollars in income in federal court. He must pay $3.4 million in restitution to the IRS.
Just two Natural Healing Center dispensary locations generated $15.3 million in revenue from April 2021 to March 2022.
The Dayspring case holds a lot of weight. For a few reasons.
Not only was Dayspring concealing millions of dollars, at least $3.4 million apparently, but he was also bribing government officials.
Dayspring admitted to bribing Adam Hill, then-San Louis Obispo County Supervisor. Hill was paid a total of $32,000 in exchange for votes favoring Dayspring’s cannabis farm to operate before getting final approval.
This isn’t anything new. We’ve seen it before.
The FBI has even investigated cannabis business license processes. There’s likely been chatter of bribery in exchange for cannabis licenses in every legal state.
However, this goes a lot deeper and unfortunately a lot darker. Trigger warning:
Adam Hill died in August 2020 and his death was ruled a suicide. Just a few months prior, in March, Hill attempted to commit suicide and had been on medical leave from work since July to seek mental health treatment.
Without veering too much off track or disrespecting Mr. Hill’s life and his family, his story paints a bleak picture of government relations behind-the-scenes.
A sexual assault complaint was brought forth in July 2020 by his legislative assistant – one month before he took his life – and reached a settlement in November 2020. He was also wrapped up in the cannabis allegations.
U.S. District Judge André Birotte Jr. called the case “troubling” because “it goes to the heart of government processes.”
What I’m thinking 🧠
This is unfortunately who the cannabis industry is up against.
We rely on government officials to handle our business and industry with integrity, but there have been countless bribery cases and shady behavior.
In some instances, like this one, the operators are also acting disingenuously. We’ve seen operators do this before, both bribe officials and hide income.
There have been way too many cases of government officials being bribed to approve cannabis licenses.
Corrupt officials and greedy operators apparently go hand in hand to prevent legitimate, honest, and knowledgeable operators from entering the space and that’s a grievance plenty of us have aired before.
California cannabis might see tax relief
Okay, y’all – this could be something big for cannabis.
California cannabis retailers might see tangible tax relief.
If you’ve been hanging out with The Green Paper (or me) for a while – you know that I’m vocal about 280e being one of the most important things we can focus on as an industry.
Amending 280e immediately frees up a large source of capital for cannabis businesses, especially in California where the legal market is struggling the most.
This bipartisan bill coming out of California, SB 1336, would give cannabis businesses a 25% tax credit, not exceeding $250,000.
There hasn’t been much discussion around this yet, surprisingly.
But based on California Senator Scott Wiener’s press release, it looks like the only qualified expenses will be for:
- Employee compensation
- Safety-related equipment and services
- Employee workforce development and safety training
“Prop 64 was a major step forward for cannabis access, but our legal retailers are in danger of losing business to the illicit market, in part due to high taxes. SB 1336 will give legal businesses a much-needed leg up so Californians can continue to access safe and tested cannabis products,” Senator Scott Wiener said in the press release.
This bill hasn’t been passed yet, but this move comes after Gov. Gavin Newsom’s not-so-popular proposed tax cuts for cannabis businesses just a few weeks ago.
His budget proposal would end the cultivation tax and shift the 15% excise tax from distributors to retailers. If tax revenue falls short of the set $670 million baselines, the excise tax will be raised.
What I’m thinking 🧠
In my opinion, the tax bill for cannabis retailers should have a tiered system based on the business’ operations.
No matter the size of your cannabis business, the same rules apply. No legal American operator skates by tax code 280e or the barriers to bringing a product to market.
The $250,000 can be life-changing for some operators and a drop in the bucket for others, especially if the credit can only be applied to employee-related expenses.
With that being said, a business could pay 5.5 employees at a salary of $45,000 annually with that money. That’s pretty impactful for smaller operations.
I hope to see this bill pass. Cannabis businesses deserve the same rights as traditional businesses, but it’s a step in the right direction.
Are Maryland police departments falsifying cannabis arrests?
Days without an investigation into cannabis: 0.
But this time – it ain’t about us. 😎
It’s about the FBI’s system of reporting cannabis arrests that local law enforcement agencies in Maryland use, and likely other states, too.
Local officials have asked the Justice Department of the Inspector General to launch a formal investigation.
The issue seems to be around citations issued for cannabis possession and whether or not they should be recorded in the FBI’s system as “arrests.”
Maryland decriminalized personal possession of under 10 grams of cannabis. Medical cannabis is legal in the state.
There’s speculation that the data from the Uniform Crime Reporting (UCR) program is artificially inflated.
One Maryland state police department told Marijuana Moment that even simple cannabis possession citations have to be recorded as arrests, however, it appears not all departments are following the same procedure.
According to a public affairs specialist at the FBI, there are three types of “arrests” agencies must report, including on-view arrest, summoned/cited, and taken into custody.
This false metric “undermines the value” of cannabis decriminalization as a cost-saving measure for local law enforcement agencies, according to Eric Sterling, an attorney who filed the new complaint with the DOJ.
Sterling also says there’s a possibility that arrest data may influence federal funding for police departments.
Yikes, y’all. There it is.
“The [Inspector General] should investigate why the FBI has corrupted the national reporting on arrest data to exaggerate the number of arrests generally, the number of drug arrests by requiring the false characterization of the issuance of civil citations for which no criminal penalty attaches as ‘arrests’ equivalent to custodial arrests for heroin trafficking, rape or murder. This policy should be ended so that local police will report accurately the details of marijuana possession arrests,” Sterling wrote in his letter to the DOJ Inspector General.
What I’m thinking 🧠
Local law enforcement agencies aren’t exactly brushed up on cannabis legislation. I remember when Missouri was in a transitional period.
Dispensaries weren’t open yet, but patients had medical cannabis cards and we were able to legally obtain medicine as a home cultivator or patient of a caregiver.
This meant people legally had cannabis on them, but not from the dispensary. Jamie Wilson was the first medical cardholder in Missouri to be arrested for cannabis and his case sparked pure, unadulterated outrage in our community.
Wilson was also arrested for child endangerment because the medicine was on the floorboard on the same side of the truck where his four-year-old grandson sat.
It wouldn’t surprise me if Maryland’s police departments just didn’t know the rules. It will be interesting to see how this unfolds, and if this sparks investigations in other decriminalized states.