When the state of California legalized recreational marijuana at the beginning of the year, many wondered what would happen to the state's extensive illegal cannabis market. And the answer, at least in Los Angeles, is not much.
Many experts say that the Los Angeles illegal marijuana market is still thriving despite legalization. The issue is that the black market has existed for decades, while the legal one is only six months old. On top of that, there are only around 150 legal dispensaries operating in Los Angeles County, and illegal sellers can sell their product for cheaper since they don't have to pay the state's taxes.
The state of California is very aware of the situation. In April, they sent out nearly 1,000 cease-and-desist letters to cannabis businesses operating illegally, and about 64 percent of those letters were sent to people in the Los Angeles area. The early data also shows the state is likely going to not hit the cannabis tax revenues that they estimated for the first six months of 2018.
The question is what to do about it. Los Angeles County police are attempting to shut down illegal operations, but they note that the current law makes it difficult to punish dispensaries operating illegally. And considering the number of illegal operations, the police simply don't have enough resources to shut them all down.
Some in the cannabis industry have suggested that the state create more business-friendly policies that will allow legal marijuana dispensaries to sell their products for a cheaper price and compete on a more level playing field.
“I think if you turn the tables and took cannabis out of the equation — if it was another industry that didn’t have the stigmas — the government would do everything they could to give those licensed business paying taxes a level playing field," says Adam Spiker, executive director of the Southern California Coalition, a trade organization that represents cannabis growers, distributors and dispensary owners.
But in the meantime, LA will still be flooded with plenty of illegal cannabis.
(h/t Seattle Times)