Throughout the past week, California regulators have been taking a wrecking ball to LA’s black market cannabis dispensaries. State officials carried out a massive attack on the black market in the form of raids, shutting down dozens of illegitimate dispensaries in the process.
California authorities have faced significant pressure from the legal industry to start addressing illegitimate dispensaries. Preceding this week’s raids, efforts to do so have been somewhat lackluster. In fact, many of these illegal businesses manage to operate in public storefronts, openly serving the public with no recourse.
According to state officials, the raids resulted in the confiscation of millions of dollars in cannabis products, over one hundred thousand in in cash, and around 10,000 illegal vaping devices. The mass raid was the first of its kind in California’s tenure of recreational legalization. It also serves as a signal of hope for owners of legal California dispensaries. Such owners have faced a significant struggle since their state legalizes recreational sales in January of 2018.
The Fight For California’s Cannabis Businesses
California’s black market threatens the very existence of its legal market. It may sound harsh, but the numbers are hard. to refute. Many estimates show that the black market accounts for as much as 75% of all cannabis-based transactions in California. The fact of the matter is that, despite the introduction of a legitimate cannabis market, California’s black market is thriving.
The reasons for this are varied. For starters, California levies steep taxes on cannabis products, forcing legitimate businesses to pass the cost to its consumers. The black market has no such concerns, and is able to sell products at a steep discount. Despite this, California plans to increase such taxes on Jan.1 of 2020. This move baffles business owners and threatens to widen the gap between the prices of street products and taxed products.
Illegitimate California dispensaries even benefited from the advertising of apps such as Weedmaps. Such complications, coupled with California’s failure to issue adequate business permits to meet demand, have left the state’s legitimate market in a rut.
Cracking Down On The Black Market
The United Cannabis Business Association is an organization that has formed to address California’s black market woes. It praised this week’s raids as a necessary step in the right direction.
CBA leader Jerred Kiloh laments that, prior to the raids, state authorities had been “playing a game of whack-a-mole,” shutting down individual illegal dispensaries that would simply reopen nearby or, in some cases, in the exact same location.
According to Kiloh, the systematic implementation of raids such as that seen this week will be crucial in helping California’s legitimate market step out of the black market’s shadow.
“Every day, illegal operators are distributing products that are not tested, taxed or tracked by the state, putting not only the ongoing vitality of the legal industry at risk, but also the health and well-being of Californians,” Kiloh said.
