Owners of former Colorado Springs pot club didn’t pay $3 million in income taxes
The owners of a marijuana club that operated in Colorado Springs earned millions of dollars by selling cannabis to customers under the guise of a “private club,” but the IRS said they falsely claimed their income was near the poverty line and even claimed they needed a tax refund.
On Wednesday, The U.S. Attorney’s Office in Denver said Andrew Poarch, 31 and his wife owned and operated The Lazy Lion on Bijou Street from Jan. 2013 to Aug. 2016. 
Poarch and his wife pleaded guilty in a Denver federal courtroom last week to filing a false federal income tax return.
We reported in Jan. 2016 when federal and local authorities raided The Lazy Lion, and authorities never explained why until Wednesday.
U.S. Attorney Jason Dunn said Poarch let people join the Lazy Lion’s private club for a one-time membership fee, an entry fee for each subsequent visit and a set fee for the purchase of marijuana.
Despite not being registered as a recreational dispensary, which isn’t allowed in the Colorado Springs city limits, customers were able to buy marijuana and then consume it on premises, according to Dunn.
The Lazy Lion only accepted cash but still kept track of sales. The IRS says gross revenues from the business totaled about $10.7 million.
On Sept. 29, 2015, Poarch and his wife filed an income tax return claiming that their adjusted gross income was $19,294 and that they were due a refund from the IRS.
In reality, the IRS says, Poarch knew their adjusted gross income was roughly $2.8 million and that the couple owed taxes of $1,061,485.
The couple didn’t file returns for the 2015 and 2016 tax years, but the IRS says they earned a net income of $4,187,449 and $1,325,575, respectively. That means they owed the IRS a total of $3,126,245.
Poarch and his wife will be sentenced on May 22.
At the time of the raid in 2016, many people suspected the club was illegally possessing, selling or distributing marijuana. However, marijuana charges were not part of the case.
Prosecutors wouldn’t say how the couple spent the $3 million in unpaid taxes, saying that also wasn’t part of the investigation.
Neighbors and former customers had mixed reaction Wednesday.
“I went there once and I thought it was cool,” a former customer said. “It didn’t seem that they were doing anything wrong.”
“I know they had to be making a lot of money in there,” a neighbor said. “But if you’re making as much as they were, why not just go ahead and pay your taxes? Did they really think no one would notice? Greed, I guess.”
“They gave other clubs a bad name,” a nearby business employee said. “The ones that did everything right had to suffer because of clubs like the Lazy Lion.”
Cannabis clubs were declared illegal by the City Council in 2016, but two clubs were grandfathered in under the ban. Those clubs can remain open until March 2024.
