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The former owner of a medical cannabis dispensary in Washington, D.C., pleaded guilty on May 13 to federal tax evasion charges, according to the U.S. Attorney’s Office (USAO) for the District of Columbia.
Jennifer Brunenkant, 68, who founded Herbal Alternatives, admitted that she failed to pay federal income and employment taxes tied to the dispensary and her personal income from tax years 2017 to 2021, according to the USAO. The Internal Revenue Service (IRS) Criminal Investigation unit investigated the case.
The government will seek more than $1.2 million in restitution at Brunenkant’s sentence hearing that is scheduled for Nov. 20, 2025. U.S. District Court Judge Loren L. AliKhan will determine the final sentence.
“Brunenkant further attempted to evade paying those taxes by falsely attesting on her annual Unincorporated Business Franchise Tax Forms, filed in the District of Columbia, that she had filed her federal income tax returns—when in fact she had not,” according to a release from the USAO. “Brunenkant continued trying to avoid detection when she repeatedly told law enforcement during a July 2023 interview that she had filed her returns.”
Herbal Alternatives, which began operating when D.C.’s retail program commenced in 2013, sells cannabis to medical patients and self-certifying adults just four blocks from Lafayette Square and prides itself as the first female and native Washingtonian-owned dispensary in the district.
Although the district’s voters approved a medical cannabis legalization measure in 1998, a federal rider spearheaded by former Georgia Congressman Bob Barr blocked city officials from using federal funds to implement the program until after the rider was lifted in 2009.
Brunenkant’s plea this week comes after she was charged in a 19-count indictment on March 6 related to the IRS investigation.
According to the indictment, Brunenkant was the sole owner of Herbal Alternatives from at least 2013 to 2021, during which time the dispensary generated millions of dollars in revenue. The income that Brunenkant earned from the dispensary should have been reported on her annual IRS Form 1040, U.S. Individual Income Tax Return, according to the USAO.
According to the indictment, she failed to file an income tax return and to make payments of roughly $800,000 to the IRS over multiple years.
“The indictment further alleges that Brunenkant employed dozens of employees at Herbal Alternatives,” according to the USAO. “Under federal tax laws, Brunenkant was required to collect, account for, and pay over to the IRS on behalf of Herbal Alternatives the employment taxes imposed on its employees by the Internal Revenue Code. According to the indictment, Brunenkant failed to pay over to the IRS approximately $130,000 in such employment taxes that were owed during the charged tax years.”
While traditional U.S. companies can deduct ordinary business expenses, such as payroll, from their federal taxes, cannabis companies are subject to Section 280E of the Internal Revenue Code, a punitive tax structure for drug trafficking a Schedule I or II drug under the Controlled Substances Act. This means cannabis operators can’t deduct their ordinary business expenses from their taxable income, providing the federal government billions of tax dollars annually from an industry it does not recognize as legitimate.
Those who evade taxes and fail to pay employment taxes face a maximum prison sentence of five years for each offense in addition to financial penalties.
