State prosecutors say an unlicensed Southern California cannabis retailer quietly moved about $80 million in off-the-books marijuana sales, dodging roughly $7.1 million in state taxes before investigators moved in. The defendant, identified by authorities as Pin Hsien Hsu, is accused of running unlicensed dispensaries across Los Angeles, Orange and San Bernardino counties from April 2019 through November 2022. Investigators say search warrants turned up millions of dollars in cash along with untaxed product, and a 66-count felony complaint has been filed in Sacramento Superior Court. The case is being handled by the Attorney General's Office through the Tax Recovery in the Underground Economy Task Force.
What prosecutors say
Attorney General Rob Bonta announced the arrest and said the defendant failed to report about $80 million in sales and evaded approximately $7.1 million in sales tax, according to the California Department of Justice. "Evading taxes through hazy business tactics is not a victimless crime and it carries serious consequences," Bonta said in the department's statement.
Prosecutors say the 66-count complaint includes charges for failure to file sales tax returns, operating without a permit and alleged money laundering, all tied to the multi-year, multi-county cannabis operation.
Allegations and seizures
According to the criminal complaint naming Pin Hsien Hsu, the alleged unlicensed operation stretched across three counties between 2019 and 2022, as reported by Bloomberg Law. Investigators executed search warrants and seized about $2.2 million in cash, 125 pounds of untaxed cannabis products, 62 electronic devices and 14 boxes of evidence, according to MyNewsLA.
Why it matters for the legal market
Regulators and licensed retailers say operations like the one alleged here hit the legal market right in the wallet. Unlicensed sellers can skip taxes, product testing and costly licensing, which lets them undercut compliant storefronts on price while shifting the financial burden onto businesses that play by the rules.
The Department of Cannabis Control's annual report details how aggressively the state has been trying to shut that gap, documenting widespread enforcement and large seizures in 2024-25, according to the Department of Cannabis Control. Coverage by The Sacramento Bee also notes that authorities have removed hundreds of thousands of pounds of illegal product in recent operations aimed at cleaning up the underground cannabis trade.
What's next in court
The 66-count felony complaint, which includes allegations of failing to file sales tax returns, engaging in business without a permit and money laundering, was filed April 21 in Sacramento Superior Court, according to MyNewsLA. The case is being prosecuted by the Department of Justice's Special Prosecutions Section through the TRUE task force, and defendants are presumed innocent until proven guilty in court.
State officials say the investigation is part of a broader push to claw back revenue lost to the underground economy and to protect licensed cannabis retailers trying to compete in a high-cost market. Court proceedings and filings will eventually determine how much tax, penalties and restitution the state seeks. For now, everything laid out in the complaint remains an allegation, and the criminal process will play out in Sacramento.
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