Sacramento Medical Marijuana Taking a Hard Hit

Three months after federal authorities seized its bank account in a probe of alleged concealment of medical marijuana proceeds, a Sacramento dispensary announced Thursday it will close its doors on New Year's Eve.

The One Love Wellness Center, a 7,000-square-foot dispensary on El Camino Avenue near the Capital City Freeway, was one of 38 dispensaries allowed to apply to stay in business under a local medical marijuana ordinance passed by the City Council.But the dispensary attracted the attention of federal authorities in September. 

A U.S. Treasury Department criminal task force alleged that the dispensary structured $102,713 in deposits in small amounts to skirt rules requiring financial establishments to report all deposits of $10,000 or more to the Internal Revenue Service. No charges have been filed since U.S. Magistrate Gregory G. Hollows approved a warrant to seize more than $80,000 from the dispensary's account. But the dispensary has faced additional pressure as Sacramento U.S. Attorney Benjamin Wagner sent out a notice threatening One Love's landlord with seizure of its property if marijuana sales continued on site.

"They have asked me to close down and … I think I have to," said Lino Catabran, the dispensary's founder. "The threat is huge."Catabran opened the dispensary after his former business at the same site – RV Brokers Inc. – closed due to the recession.

His RV business once had three Sacramento sales outlets and 40 employees with $15 million in annual sales. But in an interview after switching to a dispensary, Catabran said he was happy with his transition to the medical marijuana industry. "There is no service department. There is no warranty department. And there are very few unhappy customers," he said.

One Love Wellness said in a news release Thursday that more than 20 employees will lose their jobs. The establishment said it has paid $227,611 in state sales taxes through November, as well as $49,470 to the city of Sacramento under a local 4 percent gross receipts tax on medical marijuana that went into effect in July.

The city suspended permit applications for marijuana stores in the wake of federal actions targeting the marijuana industry in California, but it has allowed some existing dispensaries to stay in business.

About two dozen of them remain open with the city limits. Enforcement actions in Sacramento County, where supervisors asserted that marijuana stores weren't permitted in unincorporated communities, forced the closure of nearly 100 dispensaries.