The black market for marijuana in California is three times the size of the legal market, a recent audit has shown. The findings, made public in September, highlight the state’s ongoing battle to curb its illegal cannabis trade.
Approximately 2,835 unlicensed dispensaries were listed as trading across California, according to the audit conducted by the United Cannabis Business Association (UCBA), a trade association representing a wide variety of licensed marijuana businesses. Interestingly, the Bureau of Cannabis Control has only licensed 873 cannabis merchants to operate lawfully within the Golden State.
These comparative statistics reflect the continued hiccups California has faced since rolling out updated legal regulations beginning in 2018, which were intended to level the cannabis market’s playing field.
If you need help registering a cannabis business or initiating proceedings against an illegal marijuana dispensary, our Los Angeles marijuana business attorneys are here for you.
A Call for Authorities to do More
Many licensed cannabis business owners have criticized state lawmakers and law enforcement agencies for their inability to stamp out illegal marijuana operations. The issue is especially contentious with licensed pot store owners, as illegal outfits can afford to sell cannabis products at a heavy discount and significantly cut into the market share, since those without licenses skip paying regulation costs, as well as local and state taxes.
This year alone, it’s estimated the illegal pot market will generate approximately $8.7 billion in unregulated cannabis sales, while legal trading is expected to produce just $3.1 billion in sales by licensed and registered marijuana businesses.
Weedmaps – Popular and Polarizing
The UCBA conducted its audit using the Weedmaps website, which is also prickly because the site lists all cannabis dispensaries and products within a local area, regardless of whether those business operators are legitimate or not. In order to gather a sense of just how many illegal companies were advertising on Weedmaps, UCBA auditors compiled a database of all California-based marijuana dispensary or delivery services listed on Weedmaps. That search turned up 3,757 cannabis business listings, which may not even encompass all commercial pot outfits as there are likely others who do not advertise, and yet this total is still far greater than the number of the state’s registered cannabis businesses, which the BCC reports as 873 in total.
Dear Gov. Newsom
This data was then included by the UCBA in a letter addressed to Gov. Gavin Newsom, where the agency urged the state to clamp down on Weedmaps, who many industry stakeholders believe is at fault for allowing illegal sellers to advertise on its site.
The UCBA also called for the state of California to retroactively impose millions of dollars in fines on Weedmaps, under Assembly Bill 97, which allows for the issuing of up to $30,000 a day in fines to all marijuana based companies operating without a license.
Weedmaps Finally Steps Up
The Beaurea for Cannabis Control (BCC) also issued Weedmaps with a cease-and-desist letter in 2018, calling for the website to sever ties with unlicensed cannabis businesses. After initially arguing that it was protected under Section 230 of the 1996 Communications Decency Act, and free from responsibility for content posted by its users, Weedmaps has come around. Just last month, the company announced it would now require new advertisers to provide both a state identification and cannabis business license number before advertisers could promote thier businesses and/or products on the website.
Illegal pot businesses don’t appear to be going away, and critics within the industry would like to see more being done to make trading more difficult for those doing so without a license. But even with efforts being made from companies like Weedmaps, now only working with licensed marijuana businesses, more needs to be done.
The black market for pot is unlikely to subside until licensing opportunities are made more easily accessible, and a greater number of local communities allow legal cannabis stores to operate within their city limits.
Another ongoing issue is there’s little incentive for cannabis business owners to get licensed when permits are very expensive and licensing requirements are quite burdensome. With these ongoing obstacles, many pot business owners are quick to see, it’s much easier, far more cost effective and considerably more profitable, to run a bootleg cannabis outfit than it is to run a legitimate one. With no quick and easy fixes in site, all of these issues will need to continue to be addressed as time marches on.
About Cannabis Law Group
The Los Angeles CANNABIS LAW Group represents growers dispensaries, ancillary companies, patients and those facing criminal marijuana charges. Call us at 714-937-2050.
Assembly Bill – No. 97
United Cannabis Business Association
Bureau of Cannabis Control