Le­gal pot mar­ket un­der­cut

Cal­i­for­nia sees surge of il­le­gal mar­i­juana shops

Global Times US Edition - - USSOCIETY -

The Comp­ton 20 Cap Col­lec­tive just south of Los An­ge­les that was raided ear­lier this spring is one of hun­dreds of il­le­gal mar­i­juana stores op­er­at­ing in Los An­ge­les County, where mar­i­juana is le­gal for any­one 21 and over and re­tail­ers must be li­censed to sell to them.

Broad mar­i­juana le­gal­iza­tion ar­rived in Cal­i­for­nia at the start of the year. From the be­gin­ning, there was con­cern the le­gal mar­ket would be un­der­cut by the mas­sive black mar­ket that has ex­isted for decades.

And that’s what’s hap­pen­ing. Nowhere is it a big­ger prob­lem than in the state’s big­gest le­gal lo­cal mar­i­juana mar­ket: Los An­ge­les County.

The num­ber of out­law dis­pen­saries in the county greatly out­num­bers about 150 li­censed store­front re­tail­ers. That re­al­ity is a buz­zkill for those try­ing to play by the rules.

Le­gal pot shops are los­ing cus­tomers who can get prod­ucts more cheaply at il­le­gal out­lets that don’t charge or pay taxes, said Adam Spiker, ex­ec­u­tive di­rec­tor of the South­ern Cal­i­for­nia Coali­tion, a trade or­ga­ni­za­tion that rep­re­sents cannabis grow­ers, dis­trib­u­tors and dis­pen­sary own­ers. It’s an “un­fair com­pet­i­tive sit­u­a­tion for li­censed busi­nesses,” Spiker said.

One of the sell­ing points for le­gal­iza­tion was it would gen­er­ate a tax wind­fall for state and lo­cal gov­ern­ments. How­ever, dur­ing the first quar­ter, the state re­ported only $34 mil­lion from cul­ti­va­tion and ex­cise taxes, putting it on pace to fall well below the $175 mil­lion fore­cast for the first six months.

In April, state reg­u­la­tors sent nearly 1,000 cease-and-de­sist let­ters to cannabis busi­nesses they sus­pected were op­er­at­ing il­le­gally. An anal­y­sis by the trade pub­li­ca­tion Mar­i­juana Busi­ness Daily found about 64 per­cent of the busi­nesses were in the Los An­ge­les metropoli­tan area.

Last month, the Los An­ge­les city at­tor­ney’s of­fice charged 142 peo­ple as part of a crack­down on il­le­gal dis­pen­saries.

Los An­ge­les County boasts the na­tion’s largest sher­iff ’s de­part­ment, but even it has nowhere near the man­power to take down all the il­le­gal pot shops. A task force over­seen by Lt. Frank Mon­tez raids an av­er­age of one dis­pen­sary a week.

How­ever, the voter-ap­proved bal­lot mea­sure le­gal­iz­ing cannabis in Cal­i­for­nia in­cluded a pro­vi­sion that made pos­sess­ing more than 28.5 grams only a mis­de­meanor. That means of­fi­cers can seize busi­nesses’ cash and mar­i­juana, but em­ploy­ees and own­ers rarely face jail, and il­le­gal oper­a­tions of­ten quickly reopen.

“It’s a money-lu­cra­tive busi­ness so there are peo­ple will­ing to take the risk,” said Capt. Holly Fran­cisco, who com­mands the sher­iff ’s de­part­ment’s nar­cotics unit.

Mon­tez sees his work as more than code en­force­ment. Mar­i­juana sold il­le­gally may be tainted with il­le­gal pes­ti­cides and other harm­ful sub­stances. And li­censed mar­i­juana shop own­ers who pay their taxes should have a fair play­ing field, he said.

“When you have an il­le­git­i­mate, il­le­gal dis­pen­sary op­er­at­ing, that not only hurts the in­dus­try as a whole but that re­ally hurts the com­mu­nity,” Mon­tez said.

At the Comp­ton store, a sign above a se­cu­rity win­dow says cus­tomers must be at least 18 and have a physi­cian’s rec­om­men­da­tion to buy med­i­cal mar­i­juana and be 21 and have a valid photo ID for any­thing else. Like many oth­ers, the shop op­er­ated in plain sight and ad­ver­tised on­line, in­clud­ing on WeedMaps, a go-to web­site for peo­ple look­ing to buy cannabis.

In­side, white­boards on dirtsmudged walls ad­ver­tised the prices for dif­fer­ent types of cannabis and con­cen­trates.

Car­tridges for va­por pens and “Shat­ter,” a honey-like oil con­tain­ing cannabis ex­tract, cost be­tween $15-30. Large dis­play cases held jars of branded mar­i­juana strains – 28 grams of “Pur­ple Dragon” sold for $160.

“Peo­ple out here on the street are think­ing it is a le­git­i­mate op­er­a­tion and are smok­ing this cannabis with all these dan­ger­ous pes­ti­cides, and they are re­ally killing them­selves,” Mon­tez said.

Some il­le­gal pot shops look so le­git­i­mate that cus­tomers may not even re­al­ize they are il­le­gal un­less they fig­ure out they aren’t be­ing charged tax. But like any shop­per look­ing for the best deal, plenty know these places are il­le­gal and go be­cause it’s cheaper.

While some il­le­gal Los An­ge­les County pot shops grow their own plants, many are sup­plied by il­le­gal grows in the hills of North­ern Cal­i­for­nia, long a ma­jor source of all US pot.

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