The former owner of a Michigan marijuana store could serve up to nine years in prison after he was found guilty by a federal court of evading income taxes and obstructing the IRS.
Court proceedings showed that Ryan Richmond, a former owner of the Relief Choices cannabis store in Warren, paid operating expenses in cash and routed credit-card payments through a third-party bank account to hide his business’ actual gross receipts between 2011 and 2014, according to a news release.
Richmond mislead IRS investigators when he was being audited in 2015 and 2016, the release noted.
The total tax loss to the IRS was more than $1.15 million.
Richmond, 46, will be sentenced Dec. 13.
He faces a statutory maximum penalty of five years in prison for each count of tax evasion, three years in prison for obstructing the IRS and one year for the willful failure to file a tax return count.
Federal income taxes are especially punishing to the cannabis industry.
Because marijuana is a Schedule 1 substance, the industry isn’t able to deduct business operating expenses from its gross income, according to Section 280E of the federal tax code.
According to a recent analysis by industry research firm Whitney Economics, marijuana businesses overpaid $1.8 billion in federal taxes in 2022, and that total could reach $2.1 billion in 2023.
