Tag Archives: recreational marijuana

No surprise: After legalization, illegal pot sales boom in California

As reported by Thomas Fuller for the NY Times (via SF Gate): In the forests of Northern California, raids by law enforcement officials continue to uncover illicit marijuana farms. In Southern California, hundreds of illegal delivery services and pot dispensaries, some of them registered as churches, serve a steady stream of customers. And in Mendocino County, north of San Francisco, the sheriff’s office recently raided an illegal cannabis production facility that was processing 500 pounds of marijuana a day.

It’s been a little more than a year since California legalized marijuana — the largest such experiment in the United States — but law enforcement officials say the unlicensed, illegal market is still thriving and in some areas has even expanded. “There’s a lot of money to be made in the black market,” said Mendocino County Sheriff Thomas Allman, whose deputies seized cannabis oil worth more than $5 million in early April.

California Gov. Gavin Newsom has declared that illegal grows in Northern California “are getting worse, not better” and two months ago redeployed a contingent of National Guard troops stationed on the border with Mexico to go after illegal cannabis farms instead.

Stepped-up enforcement comes with a certain measure of irony — legalization was meant to open a new chapter for the state, free from the legacy of heavy policing and incarceration for minor infractions. Instead, there are new calls for a crackdown on illegal selling.

Conscious of the consequences that the war on drugs had on black and Latino communities, cities like Los Angeles say they are wary of using criminal enforcement measures to police the illegal market and are unsure how to navigate this uncharted era.

The struggles of the licensed pot market in California are distinct from the experience of other states that have legalized cannabis in recent years. Sales in Colorado, Oregon and Washington grew well above 50 percent for each of the first three years of legalization, although Oregon now also has a large glut of pot.

But no other state has an illegal market on the scale of California’s, and those illicit sales are cannibalizing the revenue of licensed businesses and, in some cases, experts say, forcing them out of business.

Entrepreneurs in the industry, which spent decades evading the law, are now turning to the law to demand the prosecution of unlicensed pot businesses. “We are the taxpayers — no one else should be operating,” said Robert Taft, whose licensed cannabis business in Orange County, south of Los Angeles, has seen sales drop in recent months.

“This is starting to get ridiculous,” he said of the illegal pot shops, including nearby businesses that list themselves as churches and advertise marijuana as a kind of sacrament. “It’s almost like the state is setting itself up to lose.”

California gives cities wide latitude to regulate cannabis, resulting in a confusing patchwork of regulations. Los Angeles, San Francisco, San Jose and San Diego have laws allowing cannabis businesses, but most smaller cities and towns in the state do not — 80% of California’s nearly 500 municipalities do not allow retail marijuana businesses. The ballot measure legalizing recreational marijuana passed in 2016 with 57% approval, but that relatively broad support has not translated to the local level. Cities like Compton or Laguna Beach decisively rejected allowing pot shops.

Regulators cite this tepid embrace by California municipalities as one of many reasons for the state’s persistent and pervasive illegal market. Only 620 cannabis shops have been licensed in California so far. Colorado, with a population one-sixth the size of California, has 562 licensed recreational marijuana stores.

But the more fundamental reason for the strength of the black market in California — and what sets the state apart from others — is the huge surplus of pot. Since medical marijuana was made legal in California more than two decades ago, the cannabis industry flourished with minimal oversight. Now many cannabis businesses are reluctant to go through the cumbersome and costly process to obtain the licenses that became mandatory last year.

Of the roughly 14 million pounds of marijuana grown in California annually, only a fraction — less than 20% according to state estimates and a private research firm — is consumed in California. The rest seeps out across the country illicitly, through the mail, express delivery services, private vehicles and small aircraft that ply trafficking routes that have existed for decades.

This illicit trade has been strengthened by the increasing popularity of vaping, cannabis-infused candies, tinctures and other derivative products. Vape cartridges are much easier to carry and conceal than bags of raw cannabis. And the monetary incentives of trafficking also remain powerful: The price of cannabis products in places like Illinois, New York or Connecticut are typically many times higher than in California.

The state’s illicit cannabis exports appear to be increasing even now, well into California’s second year of legalization. New Frontier Data, a data research company that specializes in cannabis, calculates that high demand and more advanced growing techniques will contribute to approximately half a million pounds more illicit cannabis this year compared with 2018.

The federal government still considers marijuana illegal, and the Drug Enforcement Administration says it still investigates marijuana-related crimes. But a spokesman, Rusty Payne, said the agency has a bigger crisis to attend to.

“We’ve got our hands full with the opioid epidemic to be honest,” Payne said. In wildland areas, seizures of illicit pot by the California Department of Fish and Wildlife more than doubled in 2018, the first year that recreational cannabis was legal.

The department destroyed 1.6 million marijuana plants in 2018, up from 700,000 in 2017 and 800,000 the year before — all of them illegally grown.

“There’s a subset of people who are just refusing to get into the process,” said Nathaniel Arnold, the department’s deputy chief of enforcement.

Read the whole story here.

DCG

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