Legal Pot Business Owner Sentenced for Federal Tax Crimes

A part-owner and operator of medical marijuana dispensaries in Oregon was sentenced to seven years in prison Monday, marking what a prosecutor called the country's first federal sentencing of a legal pot business owner for tax crimes.

Posted: Sep. 17, 2018 4:12 PM
Updated: Sep. 17, 2018 4:24 PM

PORTLAND, Ore. (AP) — A part-owner and operator of medical marijuana dispensaries in Oregon was sentenced to seven months in prison Monday, marking what a prosecutor called the country's first federal sentencing of a legal pot business owner for tax crimes.

Matthew Price also was ordered to pay $262,776 restitution to the Internal Revenue Service during sentencing in federal court in Portland, the Oregonian/OregonLive reported .

Price, 32, pleaded guilty to four counts of willfully failing to file income tax returns in connection with his Cannabliss stores in Portland and Eugene. Price admitted that he didn't file individual tax returns from 2011 through 2014 for income received from the operation of the dispensaries.

An investigation into Price started after the IRS discovered he hadn't paid employment taxes for his employees.

Price failed to report nearly $1 million of income and disregarded advice from three different certified public accountants who warned him not to use his business money to pay personal expenses, Assistant U.S. Attorney Seth Uram said. Price did anyway, spending $67,000 in cash on a sports car, $15,000 in cash on a Rolex watch, and other income on vacations, homes and season tickets to the Portland Trailblazers, Uram said.

Price's defense lawyer, Whitney Boise, had urged probation for Price, saying he has no prior criminal record, has accepted responsibility, has nearly paid off the restitution and already has suffered. Price wasn't sure what could or couldn't be deducted from his taxable income, was unorganized and wasn't comfortable with the advice he received from his accountants, Boise said.

U.S. District Judge Michael W. Mosman said he didn't fully accept the defense's explanation that Price didn't comprehend his tax obligations.

"It's true you didn't walk into this with an MBA," Mosman said. But it's also clear Price has the intelligence to understand "one of the most basic obligations of running a business," the judge said.

Price, who apologized in court, must turn himself in on Nov. 1.

Whether he'll be able to continue in his marijuana business until then, or after prison, will be decided at a hearing Friday. The matter arises because use or sale of marijuana remains prohibited under federal law and is a standard prohibition during federal supervision.

There was a tax-related prosecution 12 years ago in Detroit of a "back-door'''-type marijuana dispensary, but not a legal business such as the one Price ran, Uram said.

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