NEW YORK (TheStreet) -- Many entrepreneurs are hearing about the huge sums of money to be made in medical marijuana, but the risks never seem to make the same headlines. Owners of these businesses are finding that the harsh reality of selling a federally illegal product never really goes away.
California, which was the first state to legalize medicinal marijuana, is experiencing raids on dispensaries from the Drug Enforcement Agency. Four locations were raided by the DEA in early March, even though the Attorney General had stated that this was not a priority and efforts should be focused elsewhere.
California law officials said it was just enforcing a law intended to cut back on the dispensaries that weren't operating within cities' guidelines. No arrests were made, but cash and cannabis were confiscated. In most of these cases, the owner rarely gets their property back, even if they are never arrested. Owners must put up a 10% "cost bond" of the value of the property and according to the Justice Department, 80% of forfeitures go uncontested in court. A study found that 80% of those whose property is seized are never arrested.
Small business owners should be aware that the DEA is heavily reliant on forfeiture money for its budgets. The Justice Department recovered over $1.7 billion in property in 2011 and it shares this booty among many departments including the DEA. Many small business owners have thousands of dollars invested in these businesses and to lose inventory, as well as cash on hand can be devastating.