A funny thing happened on the way to cannabis legalization: illegal pot is still big business.
In the decade since the first states legalized recreational marijuana, about half the country has moved to allow adults to buy regulated pot from authorized sources. But in some states, that's been more theory than practice.
In New York, which legalized marijuana in 2021, retail sales are dominated by ubiquitous illegal "smoke shops," while the state struggles to license legitimate ones. Governor Kathy Hochul has called the transition "a disaster," and has pledged to crack down on the illegal sellers.
In Maine, the congressional delegation last summer asked the Justice Department for help in combatting illegal cannabis producers, who outnumber the state's licensed operations and are believed to be funded in part by Chinese investors.
And in California, where voters approved recreational pot in 2016, state officials readily acknowledge the industry still operates mostly in the shadows.
"The black market is very pervasive and it's definitely larger than the legal market," says Bill Jones, the head of enforcement for the state's Department of Cannabis Control.
California is the biggest example of the unfulfilled promise of a legitimate cannabis market. Some entrepreneurs blame high taxes and start-up costs for licensed producers and retailers. Smaller operators often have trouble getting access to capital, as the continued federal prohibition on the marijuana business makes it virtually impossible for them to tap into traditional financial services.
Jones, however, focuses on what law enforcement did — or rather, what it didn't do — in the first few years after the vote to allow a licensed weed industry.
"Most jurisdictions — local jurisdictions — police or sheriff's departments and district attorney's offices, were very reluctant to do any kind of enforcement on cannabis," he says. "It really created an air of impunity, and the unlicensed activity really skyrocketed."
Washington state, by contrast, maintained law enforcement pressure on illegal marijuana after voters legalized pot in 2012, which gave the new licensed industry time to establish itself.
In California, the DCC is now trying to close the gap. It gathers anonymous tips about unlicensed cannabis stores, which operate semi-openly out of storefronts that aren't hard to identify.
"They'll occupy buildings [where] the business itself has moved or is out of business," says Wilson Linares, the DCC's head of enforcement for the Los Angeles area. His officers and local police recently raided a shabby storefront in Long Beach. The sign reads "Flores Cabinets," but inside they find cannabis edibles for sale, as well as loose marijuana flowers, sold in jars — a practice called "deli style," prohibited under California's cannabis regulations.
Linares says some of the unlicensed stores are identified with the green cross emblem, borrowed from the medical marijuana movement that predated recreational stores. Another clue, though, is the level of security. The ostensible cabinet store in Long Beach has a heavy metal door and security grates over mirrored windows.
"One of the biggest things that you can see is the cameras. The building itself is old but the cameras are new. That's a pretty good indicator for us," Linares says.
These raids have ramped up in the last couple of years, especially in Los Angeles. Some of the unlicensed retailers have shifted toward delivery services. But the penalty for getting caught selling unlicensed marijuana is relatively light — usually a $500 fine, unless the person has broken other laws — and Linares says his officers find themselves raiding the same storefronts over and over again.
"These places don't pay taxes, it doesn't help provide services for the people who live around here," Linares says. "And the individuals who run these places, they're often not the best," he says. "Gangs and organized crime."
This doesn't come as much of a surprise to an economist.
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Sun / Mar 31st by Johnny Green
Editor’s note: this article was originally published by ICBC, and has been republished with permission.
Image Credit:
- Department of Cannabis Control detectives, with Long Beach law enforcement, prepare to serve a search warrant on an unlicensed marijuana store in Long Beach, Calif., on March 5, 2024. Last year California's Cannabis Enforcement Taskforce served more than 300 search warrants on unlicensed operations in the state. - Alisha Jucevic for NPR
- Wilson Linares, commander of the L.A. County law enforcement division of the California Department of Cannabis Control, heads to the location to serve a search warrant on an unlicensed cannabis store in Long Beach, Calif., on March 5, 2024. - Alisha Jucevic for NPR
- Wilson Linares, commander of the L.A. County law enforcement division of the California Dept. of Cannabis Control, shows a sampling of the unlicensed cannabis edibles seized from a black market store in Long Beach, Calif., on March 5. - Alisha Jucevic for NPR
- Passersby watch as California Department of Cannabis Control detectives, with support of Long Beach law enforcement, serve a search warrant on an unlicensed dispensary in Long Beach, Calif., on March 5, 2024. Like many unlicensed cannabis stores, this one is unmarked and still has signage from a previous business. Photo by Alisha Jucevic for NPR - Alisha Jucevic for NPR
- California Department of Cannabis Control detectives lock the premises after serving a search warrant on an unlicensed dispensary in Long Beach, Calif., on March 5, 2024. The penalty for unlicensed cannabis sales is usually a fine. - Alisha Jucevic for NPR
Source : NPR
Link to original : Black market cannabis thrives in California despite legalization
