I agree that police overstepping the line is bad, but $20k in cash? Most states have limits of $10,000 undeclared. Anymore than that, and they can legally take it from whoever they like, unless they can prove they received it by lawful means. I know, its fucked up, but it's the law.
Not arresting the folks at the site, and taking their stash sounds like a shake down to me, but unless he can provide proof he garnered the funds legally, AND paid taxes on it, he can get it back. Granted, it sounds to me if they took his receipts, they are investigating him for either money laundering and/or tax evasion. This is where LEO and DEA get most growers and proprietors.
For some reason, hippies hate taxes.