QUESTION for fellow canna business owners.

[Budsmoker187]

I formed a collective at the start of the year and now am in the process of making inventory purchases for my members so they are offered more variety until our crops are finished... my question is when making a transactions from someone I obviously am making a written record on my end but my sources is not as organized or proper as I run things. So i don't see him paying his dues to uncle sam at the end of the year is it required to send a 1099 to him at the end of the year or how does that work?

 

[JennyBright]

I formed a collective at the start of the year and now am in the process of making inventory purchases for my members so they are offered more variety until our crops are finished... my question is when making a transactions from someone I obviously am making a written record on my end but my sources is not as organized or proper as I run things. So i don't see him paying his dues to uncle sam at the end of the year is it required to send a 1099 to him at the end of the year or how does that work?

I replied to your most recent post on this subject, so I will reply with the same info here, in case you are still interested and don't see the other one. I am going through the same thing as you are, trying to stay compliant and realizing nobody else is managing to do so and some of these things I have learned the hard way. Happy to help:

Non profits are still liable for sales tax as well as federal and state income tax. Non-profits still pay taxes. Non-profit does not mean non-taxed, as you well know by now.

Some collectives 1099 vendors, but volunteers receiving reimbursements from a non-profit are not required to receive one, so most attempt to bypass this requirement by claiming the purchases as reimbursements for donations. This is also done because many interpret the attorney general guidelines that state that monetary exchanges may be made to reasonably cover reimbursements for costs related to cultivation to mean they are only able to offer reimbursements for medicine donated. If the collective were to get audited many of those expenses may not be allowed, because an expense reimbursement does not cover labor, it is a service that should usually require a 1099. I don't see a lot of growers bringing their utility bills to account for expense reimbursements either, and this lack of accounting could screw the collective if the IRS were to audit them.

Nothing in the law states that you cannot pay someone for their labor, just that nobody may profit. Non-profits are allowed to compensate workers, and that's how vendors can appear on paper, as paid labor. Being paid for your labor is not considered profiting, and the nature of the business does not need to be disclosed to the IRS as per our fifth amendment right to not incriminate oneself. Vendors would need to receive a 1099 to guarantee the collective can claim the expense, otherwise the collective may have to pay the tax on their gross receipts.

Also, a collective cannot file a 1099 for you unless they collect your social security number on a form W9. Again, the real issue a collective could face by not filing 1099s is when claiming those expense deductions, even as a cost of good sold(which is still allowed under FITC 280E), having no proof of who was compensated.

Even if a collective is able to bypass the 1099 requirement, not giving receipts or tracking the source of marijuana, poses a legal risk, because it is explicitly written in the California Attorney General's guidelines that a collective should track and record the source of their marijuana to secure it's non-diversion. Not doing so can be grounds for arrest and seizure due to non compliance, even though the guidelines say "should" and not "must", and are presented as "suggestions" for remaining compliant, these guidelines are how law enforcement determines the legality of a collective.

The way most collectives are operating is not in accordance with current state guidelines or the federal tax code. Unfortunately, being in line with current state and tax regulations can be incriminating to oneself. The fifth amendment does give one the privilege, or right, to not incriminate yourself. However, this right does not protect an individual from their tax requirements, so any 1099 filed may legally withhold the nature of the business, but not the amount owed. Many growers form LLCs and claim the income under a tax id number as an agricultural company, or simply state their individual business as being a farm laborer or small farmer, both options enable them to claim expenses related to farming, like utilities and soil. You do not need to incriminate yourself to the federal government in order to remain legal, but you may not last long if you think the IRS will continue to allow massive deductions for expenses you have no way of accounting for. Don't mess with the IRS, they will ruin your life, seriously...

 

[deadgro]

You should file a 1099 for any payment over $600 to a single individual or business for the year. You can list an SSN or EIN or TIN on a 1099, or none at all, but provide as much information as possible in regards to name and address.

 

[Dan Kone]

I formed a collective at the start of the year and now am in the process of making inventory purchases for my members so they are offered more variety until our crops are finished... my question is when making a transactions from someone I obviously am making a written record on my end but my sources is not as organized or proper as I run things. So i don't see him paying his dues to uncle sam at the end of the year is it required to send a 1099 to him at the end of the year or how does that work?

You have to protect the anonymity of your vendors. I don't t99 any of my vendors. The Henry Levy Group does my accounting and they didn't have a problem with that.

Also in case of an audit you should allow all your vendors to choose their own vendor ID. Do not link it to their personal info. Let them choose the vendor ID and tell them they are responsible for remembering it to receive payment. Give them a receipt so they can file, but put that vendor ID on it, not their real info.

You're not responsible for enforcing the tax code on your vendors. That's between them and the IRS. What you are responsible is protecting the anonymity of your patients. Your vendors are patients. This is how pretty much every collective does it with very few exceptions.

What is important is that you write a receipt for absolutely every transaction. I don't care if it's buying 10 grams off them, it all adds up way faster than you realize. The nickle and dime stuff turns into big money when you're doing your taxes. Every single purchase you make will be a deduction. You will need those deductions. If you aren't able to write off ALL your purchases you'll get screwed big time at the end of the year.

 

[JennyBright]

You have to protect the anonymity of your vendors. I don't t99 any of my vendors. The Henry Levy Group does my accounting and they didn't have a problem with that.

Also in case of an audit you should allow all your vendors to choose their own vendor ID. Do not link it to their personal info. Let them choose the vendor ID and tell them they are responsible for remembering it to receive payment. Give them a receipt so they can file, but put that vendor ID on it, not their real info.

You're not responsible for enforcing the tax code on your vendors. That's between them and the IRS. What you are responsible is protecting the anonymity of your patients. Your vendors are patients. This is how pretty much every collective does it with very few exceptions.

What is important is that you write a receipt for absolutely every transaction. I don't care if it's buying 10 grams off them, it all adds up way faster than you realize. The nickle and dime stuff turns into big money when you're doing your taxes. Every single purchase you make will be a deduction. You will need those deductions. If you aren't able to write off ALL your purchases you'll get screwed big time at the end of the year.

Hey Dan, How do you ensure that you can prove to the state or federal authorities that you are not diverting marijuana(i very much dislike that word) outside of the membership if the vendor id is not linked to any particular member? Truly, I need to know and appreciate your insight.

 

[Dan Kone]

Hey Dan, How do you ensure that you can prove to the state or federal authorities that you are not diverting marijuana(i very much dislike that word) outside of the membership if the vendor id is not linked to any particular member? Truly, I need to know and appreciate your insight.

You're not required to prove that you aren't doing something illegal. Burden of proof is on them to prove you are.

http://www.hlgcpa.com/

 

[panhead]

See this is one of the reasons i sold out , business owners helping vendors hide assets is just plain wrong , if your gonna use a vendor you link every last dollar transacted to him & if he wont go for it then tell him to beat it , dude if your new to the game your getting ready to find something out , vendors are a dime & dozen , not 1 gives two shits about you or your business , the longer your open the more vendors will come , after a while you'll be having them offer you fire dirt cheap .

For the 2 yrs i had control of a co-op i 1099'd anybody who SOLD to us , only the rats will refuse to accept a 1099 , especially if their bringing volume , most of our vendors welcomed the chance to make their assets legit , if they pay thier tax its less chance they loose everything .

1099 the hell outta everybody , you dont have the luxury of being invisable & when shit goes bad your the one responsible for every dollar .

 

[JennyBright]

You're not required to prove that you aren't doing something illegal. Burden of proof is on them to prove you are.

http://www.hlgcpa.com/

If you were to be prosecuted and they looked at your receipts you would not be compliant. The burden of proof would be on them, but your books would prove that you are not ensuring all purchases are made from members of the collective. I know that they would have to prove that, but it seems they would have all the info they need. Thanks for your thoughts on the matter. It's a lot to consider.

 

[panhead]

I replied to your most recent post on this subject, so I will reply with the same info here, in case you are still interested and don't see the other one. I am going through the same thing as you are, trying to stay compliant and realizing nobody else is managing to do so and some of these things I have learned the hard way. Happy to help:

Non profits are still liable for sales tax as well as federal and state income tax. Non-profits still pay taxes. Non-profit does not mean non-taxed, as you well know by now.

Some collectives 1099 vendors, but volunteers receiving reimbursements from a non-profit are not required to receive one, so most attempt to bypass this requirement by claiming the purchases as reimbursements for donations. This is also done because many interpret the attorney general guidelines that state that monetary exchanges may be made to reasonably cover reimbursements for costs related to cultivation to mean they are only able to offer reimbursements for medicine donated. If the collective were to get audited many of those expenses may not be allowed, because an expense reimbursement does not cover labor, it is a service that should usually require a 1099. I don't see a lot of growers bringing their utility bills to account for expense reimbursements either, and this lack of accounting could screw the collective if the IRS were to audit them.

Nothing in the law states that you cannot pay someone for their labor, just that nobody may profit. Non-profits are allowed to compensate workers, and that's how vendors can appear on paper, as paid labor. Being paid for your labor is not considered profiting, and the nature of the business does not need to be disclosed to the IRS as per our fifth amendment right to not incriminate oneself. Vendors would need to receive a 1099 to guarantee the collective can claim the expense, otherwise the collective may have to pay the tax on their gross receipts.

Also, a collective cannot file a 1099 for you unless they collect your social security number on a form W9. Again, the real issue a collective could face by not filing 1099s is when claiming those expense deductions, even as a cost of good sold(which is still allowed under FITC 280E), having no proof of who was compensated.

Even if a collective is able to bypass the 1099 requirement, not giving receipts or tracking the source of marijuana, poses a legal risk, because it is explicitly written in the California Attorney General's guidelines that a collective should track and record the source of their marijuana to secure it's non-diversion. Not doing so can be grounds for arrest and seizure due to non compliance, even though the guidelines say "should" and not "must", and are presented as "suggestions" for remaining compliant, these guidelines are how law enforcement determines the legality of a collective.

The way most collectives are operating is not in accordance with current state guidelines or the federal tax code. Unfortunately, being in line with current state and tax regulations can be incriminating to oneself. The fifth amendment does give one the privilege, or right, to not incriminate yourself. However, this right does not protect an individual from their tax requirements, so any 1099 filed may legally withhold the nature of the business, but not the amount owed. Many growers form LLCs and claim the income under a tax id number as an agricultural company, or simply state their individual business as being a farm laborer or small farmer, both options enable them to claim expenses related to farming, like utilities and soil. You do not need to incriminate yourself to the federal government in order to remain legal, but you may not last long if you think the IRS will continue to allow massive deductions for expenses you have no way of accounting for. Don't mess with the IRS, they will ruin your life, seriously...

Wow that was an excellent & informative post , thank you for taking the time to post it , you covered every angle very well .

Your absolutely right about most not being compliant , in my state our co-op was the only mj related business to be given a business liscesnse .

To the op all the state laws are meaningless when it comes to the IRS , i hired an expert lawyer & accounting firm to structure everything for me before we opened for business , all sales to patients were recorded using their patient ID# instead of full name , traceable at state level .

All vendor purchases were recorded in our computer the same way using their patient # & thier ss # , all vendors had to fill out " sub contractor " tax papers & leave them on file with us , at tax time our payroll/ accounting service sent them all 1099's , its up to them from there .

State laws may not require specific tax info on vendors but federal tax laws do & this is where you need to protect yourself .

I did every transaction according to federal tax laws vs state mj laws , my junior partners had other ideas allready posted here where we had to keep vendors invisable , lotsa back door deals , lbs comming & going unrecorded to any specific person with nothing other than a unnamed recipt to prove funds exchanged , i asked our lawyer & accountant how these generalized purchases would effect our non profit status should we be audited by the tax man , i was told in no uncertain terms its the businesses responsibility to have unrefutable proof where every dollar was spent , if our deductions were based on flimsy recipts the IRS would disallow any & all expenses from vendors who were not supplied 1099's , every step of the way the IRS should to be able to follow every dollar if WE THE BUSINESS wanted to remain non profit & use deductions .

I was also advised that the loose accounting pratices my partners were doing was putting all of our personal non mj business related assets at risk of IRS seizure , including our homes .

We could pay ourselves extremely large salaries & use profit sharing to disperse left over income to our employees as bonuses & work incentives ,as long as it was all accounted for we were 100% compliant with tax laws & non profit status where the IRS could not seize personal assets or business holdings such as our store front , grow building & its contents .

Dont risk it playing hardball with mmj laws protecting you from the IRS for the sake of a vendors invisability , a vendor is NOT A PATIENT if he is recieving payment for goods .

Dont risk your livelyhood or your freedom , trust me the vendors are gonna be beating your door down with high quality meds the longer your open , you'll be able to pick n choose the one's who are willing to act as businessmen & fill out their tax paperwork to be 1099'd , especially if you cash them out on the spot & dont make them wait till goods are sold .

 

[Dan Kone]

If you were to be prosecuted and they looked at your receipts you would not be compliant. The burden of proof would be on them, but your books would prove that you are not ensuring all purchases are made from members of the collective. I know that they would have to prove that, but it seems they would have all the info they need. Thanks for your thoughts on the matter. It's a lot to consider.

Not according to my accountant and lawyer. They would have to prove that I'm not buying from members of the collective, which they couldn't do. You have to prove guilt, not innocence.

 

[Dan Kone]

See this is one of the reasons i sold out , business owners helping vendors hide assets is just plain wrong , if your gonna use a vendor you link every last dollar transacted to him & if he wont go for it then tell him to beat it , dude if your new to the game your getting ready to find something out , vendors are a dime & dozen , not 1 gives two shits about you or your business , the longer your open the more vendors will come , after a while you'll be having them offer you fire dirt cheap .

For the 2 yrs i had control of a co-op i 1099'd anybody who SOLD to us , only the rats will refuse to accept a 1099 , especially if their bringing volume , most of our vendors welcomed the chance to make their assets legit , if they pay thier tax its less chance they loose everything .

1099 the hell outta everybody , you dont have the luxury of being invisable & when shit goes bad your the one responsible for every dollar .

I'm not helping them hide anything. I'm protecting their anonymity. There taxes are their business, not mine.

And the purpose isn't tax evasion. We are talking about a federally illegal product. The purpose is to protect their identity from the federal government who refuses to acknowledge that cannabis is a legitimate medical product.

I'm not new to the business, just new to this side of it (been running a store front for about a year). I've been in this business a very long time.

And if you think vendors are a dime a dozen, I can see why you got out of the business. It's not all just "pot". You can't simply replace one vendor with another and just expect people to keep coming back because you have "pot". Different vendors have different strains and skill levels. You can't treat them all as dispensable. I mean you can, but you're going to have a pretty shitty collective if you do.

I take pride in what I do. I work hard to have the best collective out there. I'm not trying to just "sell pot". I want to have diverse variety of the best strains and products out there. So far I believe I'm succeeding in that to the best of my capabilities.

I don't 1099 home depot when I purchase things there. I didn't 1099 the company who sold us our display cases. I don't 1099 cannaline. I collect or write receipts for them. Why should cannabis vendors be treated any different?

I realize that running a dispensary carries extra legal/irs risks. They target dispensaries. But I report every cent that comes into my store. I pay my taxes. I keep records just like every other business. I follow the instructions of my lawyers and accountant, who have successfully defended many dispensaries before. Basically, I have nothing to hide except the medical information of my patients.

 

[panhead]

I'm not helping them hide anything. I'm protecting their anonymity. There taxes are their business, not mine.

And the purpose isn't tax evasion. We are talking about a federally illegal product. The purpose is to protect their identity from the federal government who refuses to acknowledge that cannabis is a legitimate medical product.

I'm not new to the business, just new to this side of it (been running a store front for about a year). I've been in this business a very long time.

And if you think vendors are a dime a dozen, I can see why you got out of the business. It's not all just "pot". You can't simply replace one vendor with another and just expect people to keep coming back because you have "pot". Different vendors have different strains and skill levels. You can't treat them all as dispensable. I mean you can, but you're going to have a pretty shitty collective if you do.

I take pride in what I do. I work hard to have the best collective out there. I'm not trying to just "sell pot". I want to have diverse variety of the best strains and products out there. So far I believe I'm succeeding in that to the best of my capabilities.

I don't 1099 home depot when I purchase things there. I didn't 1099 the company who sold us our display cases. I don't 1099 cannaline. I collect or write receipts for them. Why should cannabis vendors be treated any different?

I realize that running a dispensary carries extra legal/irs risks. They target dispensaries. But I report every cent that comes into my store. I pay my taxes. I keep records just like every other business. I follow the instructions of my lawyers and accountant, who have successfully defended many dispensaries before. Basically, I have nothing to hide except the medical information of my patients.

Well protecting peoples identity is up to you , you seem to be highly satisfied how your conducting business is legal than why so much emphasis on hiding others ?, if they want to make a living off mj then why do they have to hide , especially if everything is on the level ?

Your preachin to the church here bro , my getting out of the business had to do with the greed of others who only saw $ instead of people , before my partners decided to do back door deals with my top flight meds my co-op didnt even need or use vendors , i grew enough for all 400 members & offered 8 top flight strains , my Getting out of the biz had nothing to do with my greed ,me being a good provider to club membership has nothing to do with vendors either, vendors arent gonna pay my legal bills or tax bills , the way the IRS see's it your unwillingness to make a truthfull accounting of every dollar spent will end up hanging you out to dry if your audited , count on it , unprovable deductions are not a smart business model .

I was only in the mj biz 2 yrs but ive owned my own business over 30 yrs & know from experience every business gets an audit sooner or later & when they do shoe boxes full of hand written recipts to john q public are not gonna work as deductions .

Your legal team may have successfully defended tons of dispensary owners but i personally would rather not up being defended for anything & just do business the way the IRS requires , stupid pot laws have nothing to do with it .

There is nothing nobel in watching you & your family go down in flames after the IRS goons seize everything & you still owe them a fortune , my saftey comes before the cause , being defended isnt free , are your vendors loyal enough to kick in $200k for your defense ?

 

[Soupsah]

Let's take a highly successful place like harborside who has been audited. Now do they 1099 their vendors?

 

[panhead]

Let's take a highly successful place like harborside who has been audited. Now do they 1099 their vendors?

Dont know , do they ?

Before we proclaim victory how bout all the highly successfull one's in cali that have been taken down over the last 10 yrs or so , got any stats on them ?

 

[Dan Kone]

Let's take a highly successful place like harborside who has been audited. Now do they 1099 their vendors?

I was a harborside vendor and I never got a 1099 nor gave them my ss#.

 

[Dan Kone]

Well protecting peoples identity is up to you , you seem to be highly satisfied how your conducting business is legal than why so much emphasis on hiding others ?, if they want to make a living off mj then why do they have to hide , especially if everything is on the level ?

Well because there is nothing in the law that protects vendors or even says growing cannabis as a method to support yourself is legal at all. I know all vendors now call themselves "a collective", but it's very unlikely that most of their "collectives" would not hold up to any type of legal scrutiny.

I don't know, I guess I just feel obligated to help other people in the cannabis community when it comes to law enforcement. If we don't have each other's backs who will?

I get what you're saying, vendors don't give a fuck about me so why should I give a fuck about them. Especially how the majority of vendors view and treat people in a dispensary. I don't have to like all of them and and they don't have to like me. (not all vendors, some are cool, but most are disrespectful divas who hate on anyone who owns a club)

But still, when it comes to certain things I still follow a set of unwritten rules. Not giving up people to the government is rule one on that list. I guess I'm old school like that.

 

[panhead]

Well because there is nothing in the law that protects vendors or even says growing cannabis as a method to support yourself is legal at all. I know all vendors now call themselves "a collective", but it's very unlikely that most of their "collectives" would not hold up to any type of legal scrutiny.

I don't know, I guess I just feel obligated to help other people in the cannabis community when it comes to law enforcement. If we don't have each other's backs who will?

I get what you're saying, vendors don't give a fuck about me so why should I give a fuck about them. Especially how the majority of vendors view and treat people in a dispensary. I don't have to like all of them and and they don't have to like me. (not all vendors, some are cool, but most are disrespectful divas who hate on anyone who owns a club)

But still, when it comes to certain things I still follow a set of unwritten rules. Not giving up people to the government is rule one on that list. I guess I'm old school like that.

Good morning Dan, your right to stand firm on your beliefs & i allpaud you for it , you seem like an honorable man with good ethics , unfortunately honor & ethics are not a common commodity in business with most.

I used to have a good attitude like you do twords compassion clubs & vendors until i became part of the network , saw the sheer greed 1st hand & it jaded me twords most vendors & DISPENSARY owners .

When " I " Started the co-op i had to put up my life savings ,allmost $300,000 to get things going with purchasing buildings , equipment & remodeling ,lawyers & accounting structuring the business model for non profit approval , I ran the entire grow for 400 patients & ran the whole show , i had visons of helping terminally ill patients like my wife who has several terrible diseases including Multiple Sclerosis, i started programs where we gave away FREE meds to patients who submitted medical records to our doctor showing their illness as one of the 6 most severe , we gave discounted meds to low income working folks & the disabled , we supplied free meds & door to door delievery for shut in's , my wife had a program going where we supplied dozens of home cooked meals daily that were heavily laced with my meds for those who couldnt smoke from stage 4 cancer & were home or hospital bound , we waived doctor fee's & gave money orders to low income patients with severe MS like my wife so recertification wouldnt cost them a dime ,i gave away roughly 20% of our gross & the cash was still rolling in faster than i could get it to the bank , my 2 partners saw the 20% as a profit loss instead of holding true to the mission statement our charter was granted a provisional liscense to operate under ( keep in mind this is Michigan & no mj shop gets a business liscense , ours was the 1st & only liscensed co-op ) , we got in at the start & theres been a moratorium on liscensing since to my knowledge.

My partners set up grow houses & started growing mid grade product & mixing it in with my top shelf meds to account for the 2lbs a week they back doored the membership on , they started selling qp's to members when our limit was 7 - 14 g's per member per visit , they did everything they could to line their pockets even though how i had it set up all 3 of us would be millionairs within 5 yrs legally but that wasnt fast enough , both partners made less than $50k a yr before becomming involved in the business , within a year they were driving a BMW & a Vette !

I paid our employees a minimum of $16 an hour & my store manager much more , they wanted to cut wages to $10 an hour to maximize profits when there was no need to change anything , we were so profitable we were on the cusp of opening our 2nd liscensed storefront & needed to use vendors for the 2nd retail space , i couldnt produce more than the 4lbs a week i was for the club so like it or not i needed vendors .

The vendors i met at 1st were greedy arrogant growers who wanted $250 an ounce or more which is ridiculous, we let all prospective vendors know in advance that we payed one price for recievables which was a fair $2k a lb & they'd all be responsible for taxes & 1099'd , we posted an open welcome meeting to all vendors in our newsletter & store windows where our lawyer would be in attendance to explain what would be required of them to become a member of our co-op & a provider for the membership .

We had nearly 50 growers show up & our city approved charter was explained to them , then what it takes for the co-op to remain a non profit class business & how the business had to account for every dollar & every gram , he also gave them tips on how they could legally claim their expenses including the home they grew in & at the same time protect their assets from uncle sam , 80% of the growers pissed & moaned about how they'd be getting fucked & not make as much money as they could on the street ,i asked a show of hand poll asking the prospective members is growing was their main source of income & had atleast half raise their hands ,this is where i got a bad taste for most vendors , i had to ask them if their only interest was in making as much untaxed money possible & if so to hit the door right now , but if they gave a damm about helping people & making an honest decent living then to stay , we had 6 vendors stay till the end of the meeting & out of them 6 only 1 signed up that night , within 3 days the remaining vendors who stayed until the end of the meeting all supplied samples & were signed on as vendors .

Over the next few months vendors who welcomed the protection paying taxes offered them started flocking in atleast one a week , we had so many comming in we had to post a sign saying were currently not accepting new vendors , we had our pick of dozens of quality vendors who's only interest wasnt lining their own pockets , those were the vendors I APPROVED & USED , my partners took phone numbers from the shady bunch & started doing back door deals , right before i decided to close the co-op down it was to the point all my meds & quality vendor meds were being stolen from the club & sold on the street for more money , then replaced with sub par vendor meds unchecked for mites & molds , i owned both buildings & was majority shareholder with the co-op still owing me allmost $100k , i gave my partners a choice to buy my shares on the spot & the co-op members finish paying off my remaining investment or we shut the doors as soon as the last gram in stock was sold .

Im not gonna post the amount i sold my shares for but i will say that 2 guys making $100k a yr salary off the co-op had no business having enough money to cash me out but they did , they bought me out & the last i knew the IRS is heavily into their books trying to find where they got the cash to buy me out because i claimed the payments , i had to ,the start up costs originally came from my retirement account & had to be replaced in order to assure health care for my wife should i go before her.

Were both in our 60's & both have serious medical issues ,the start up capital for the 2nd store came as a loan from my family real estate business account & needed to show repayment, ive turned the business over to my son & couldnt leave my childrens business a mess so that money needed reported & claimed .

I know for a fact that the vendors i approved & had accounting 1099 them are in the clear while the other several dozen vendors who my partners used are screwed with the IRS , my partners had to show where the money came from to cash me out & all of them are in a big mess because the books dont record each transaction to any individual , the IRS brought in a forensic accountant & he's not making allowances for unnamed transactions, right now my ex partners are in danger of loosing the business , their newly bought houses , the BMW & Corvette ZR1 they bought with club assets & anything else in their names .

I recieved a letter from the IRS not 2 weeks ago telling me i may be called to a sworn deposition to explain in detail how the vendor process works in the day to day accounting with the business , my 2 yrs as ceo passed the forensic accounting from the IRS & my assets are not in danger .

Its good that you hold to your beliefs unfortunately most dont think like you & me , my partners are having a hella time getting their back door vendors to come foward & claim payment , now the ex partners are stuck proving where nearly $800,000 came & went.
Their legal fee's are gonna be in the hundred thousand dollar range easily , the co-op attorney resigned shortly after his 1st meeting with the new CEO .

All the shit they are in coulda been avoided by simply not being greedy & using vendors who cared about doing business the legal way , as business owners our biggest enemy isnt the DEA its the IRS .

Im of a belief that clubs have a responsibility to protect the identity of patients & i did do that but when money changes hands were all in it together at that point , vendors are small business owners if they profit in any way according to the IRS & i didnt have too much trouble rounding up vendors who wanted to be on the level , part of this fight is everybody doing things on the level , then theres no need to hide imo .

 

[Dan Kone]

Good morning Dan, your right to stand firm on your beliefs & i allpaud you for it , you seem like an honorable man with good ethics , unfortunately honor & ethics are not a common commodity in business with most.

I used to have a good attitude like you do twords compassion clubs & vendors until i became part of the network , saw the sheer greed 1st hand & it jaded me twords most vendors & DISPENSARY owners .

No doubt. This business is filled with snakes on all sides of it.

When " I " Started the co-op i had to put up my life savings ,allmost $300,000 to get things going with purchasing buildings , equipment & remodeling ,lawyers & accounting structuring the business model for non profit approval , I ran the entire grow for 400 patients & ran the whole show , i had visons of helping terminally ill patients like my wife who has several terrible diseases including Multiple Sclerosis, i started programs where we gave away FREE meds to patients who submitted medical records to our doctor showing their illness as one of the 6 most severe , we gave discounted meds to low income working folks & the disabled , we supplied free meds & door to door delievery for shut in's , my wife had a program going where we supplied dozens of home cooked meals daily that were heavily laced with my meds for those who couldnt smoke from stage 4 cancer & were home or hospital bound , we waived doctor fee's & gave money orders to low income patients with severe MS like my wife so recertification wouldnt cost them a dime ,i gave away roughly 20% of our gross & the cash was still rolling in faster than i could get it to the bank , my 2 partners saw the 20% as a profit loss instead of holding true to the mission statement our charter was granted a provisional liscense to operate under ( keep in mind this is Michigan & no mj shop gets a business liscense , ours was the 1st & only liscensed co-op ) , we got in at the start & theres been a moratorium on liscensing since to my knowledge.

That's really fucking awesome of you.

My partners set up grow houses & started growing mid grade product & mixing it in with my top shelf meds to account for the 2lbs a week they back doored the membership on , they started selling qp's to members when our limit was 7 - 14 g's per member per visit , they did everything they could to line their pockets even though how i had it set up all 3 of us would be millionairs within 5 yrs legally but that wasnt fast enough , both partners made less than $50k a yr before becomming involved in the business , within a year they were driving a BMW & a Vette !

I definitely know the type. We aren't running out of those type of people in Cali either.

The vendors i met at 1st were greedy arrogant growers who wanted $250 an ounce or more which is ridiculous, we let all prospective vendors know in advance that we payed one price for recievables which was a fair $2k a lb & they'd all be responsible for taxes & 1099'd , we posted an open welcome meeting to all vendors in our newsletter & store windows where our lawyer would be in attendance to explain what would be required of them to become a member of our co-op & a provider for the membership .

In Cali most vendors have this sense of entitlement. First off, they come in, having never met me, already hating me because I'm in a dispensary. Then they act as if having a dispensary makes me not only obligated to buy their products, but buy them on whatever terms they set. Then if you say no, they act as if I'm some kind of crook. I've had vendors try to pull every imaginable scam and trick. It's obnoxious and makes you see the whole growing community in a different light.

This type of vendor I described covers about 95% of the vendors who come in. It's rare I meet growers who aren't like that. When I do, I usually grab them up assuming they have a product I want.

These are the same people who complain about getting squeezed out of the business. But it's easy to understand why. I realize most dispensary owners are no treat to deal with either, but still. People complain about the mythological "corporate cannabis", but if they knew the shit people in this business pulled on everyone they'd probably welcome it. Most vendors and dispensary people alike are shady as hell. I can't wait for this industry to grow up a little bit.

Its good that you hold to your beliefs unfortunately most dont think like you & me , my partners are having a hella time getting their back door vendors to come foward & claim payment , now the ex partners are stuck proving where nearly $800,000 came & went.
Their legal fee's are gonna be in the hundred thousand dollar range easily , the co-op attorney resigned shortly after his 1st meeting with the new CEO .

I get where you're coming from, but at the same time, I don't do stuff like that. I'm not involved in the black market at all. I report EVERYTHING. I pay all my taxes. I still have my used Ford I bought in 2009. While my store is doing fantastic, I make a low but normal middle class salary which really isn't different from what my employees make. There are no boats or mansions in my immediate future. If the IRS looked into me and my finances they wouldn't see anything unusual. If they came after me they'd be squeezing blood from a stone. I haven't even paid myself back the money I invested in it.

Im of a belief that clubs have a responsibility to protect the identity of patients & i did do that but when money changes hands were all in it together at that point , vendors are small business owners if they profit in any way according to the IRS & i didnt have too much trouble rounding up vendors who wanted to be on the level , part of this fight is everybody doing things on the level , then theres no need to hide imo .

I see growing cannabis for a living as a legitimate job. The government disagrees with me. So I do the most my accountant and lawyers let me do to protect them.

 

[FLkeys1]

Little different subject:
Looking at a Disp. Online they noted that they pay your sales tax because the BOE in California states medical marajuana is taxable. Funny how they can tax a illegal product, according to federal law. When I go to the pharmacy and get a prescription in Ca. It is not taxed.. Last if you go to the store and buy a fruit tree, tomato or any plant considered a food it is not taxed in Ca.

I have never been to a Disp. That charged me tax. I wonder how many know they are suppose to be collecting it? And once again the big tax man gets its share of the pot, no pun intended..

 

[deadgro]

I have never been to a Disp. That charged me tax. I wonder how many know they are suppose to be collecting it? And once again the big tax man gets its share of the pot, no pun intended..

Dispensary's prices already have the tax included.