By the time the sun came up on Friday the thirteenth, cannabis law enforcement agents had seized $8.8 million worth of cannabis products, including some 10,000 counterfeit vape pens and $129,000 cash, from two dozen unlicensed cannabis shops in Los Angeles, California. From December 10 – 12, investigators with the state’s Bureau of Cannabis Control and the Department of Consumer Affairs’ Cannabis Enforcement Unit served search warrants at dozens of cannabis retailers, rounding up and arresting staff and confiscating products and cash.
The week-long mass raids represent the largest crackdown on the illicit cannabis industry in Los Angeles. And chief cannabis regulators vow there’s more to come.
Mass Raids Target Unlicensed Cannabis Shops
California officials have long-known that the process of ousting the state’s illicit cannabis market and replacing it with a licensed, regulated industry wouldn’t be easy. Legalizing the sale of recreational cannabis, phased in January 2018 after November 2016’s yes vote on Proposition 64, was supposed to take a chunk out of the illegal market. But legal retail has barely made a dent in it.
About three quarters of all known cannabis sales in California happen between buyers and unlicensed sellers, according to recent estimates. Sprawling illegal grow operations and farms pepper the state, tucked away in remote forests and uninhabited park lands. Unlicensed shops dominate many areas, popping up elsewhere as soon as they’re shut down. In short, the illicit industry is dug in. And despite the promise of safer, higher-quality products, buyers have been slow to transition into the legal retail space.
The carrot hasn’t been working. And now California is trying the stick. Police raids of unlicensed cannabis shops happen at a regular clip across Los Angeles and other California city centers. But they haven’t been enough to deter illicit operators or significantly impact commerce. Now, however, officials say they’re going to pick up the pace.
Two dozen raids in three days is definitely an escalation in the state’s—and the legal industry’s—war against under-the-table businesses. And Lori Ajax, California’s top cannabis regulator, said there’s more to come. “We look forward to working with local jurisdictions and law enforcement as we continue to shut down unlicensed operators,” Ajax said.
Cannabis Industry Group Demands More “Systematic Action”
Since recreational cannabis became legal in California, industry groups have been pressuring state lawmakers, law enforcement and regulators to bring the hammer down on illicit businesses. From the industry’s perspective, every sale to an unlicensed seller cuts into licensed businesses’ profits.
State regulators also have a stake in shrinking the footprint of the illegal market. Unlicensed retailers sell unregulated, often untested products. And California in particular has struggled with the dangers of unregulated cannabis, especially vape pens and THC cartridges. Last week’s mass raids seized almost 10,000 counterfeit vape pens.
The United Cannabis Business Association, a Los Angeles industry group, applauded investigators’ enforcement escalation. Jerred Kiloh, who heads the industry group, told the AP that the raids were “the type of systematic action required” to crack down on the illegal market.
High Taxes, License Fees Shut Out Smaller Retailers
So far, it’s unclear whether scaling up raids of unlicensed cannabis shops will succeed. The fact remains that there are still major incentives for keeping out of the legal industry. Becoming a licensed cannabis business in California requires capital many small retailers can’t access. And consumers are being driven away from legal retailers by high sales taxes. The cost, of course, is a proliferation of untested, unregulated and potentially harmful products.