As unlicensed pot dealers maintain their domination of the California cannabis market, lawmakers from the state are weighing in strict fines on those who aid illegal operations, such as providing building space and advertising platforms.
Businesses that arrange services to illicit operations could face civil penalties that can reach $30,000 a day under a new bill adopted unanimously by California Assembly due to be reviewed by the Senate.
The bill has been introduced by Assemblywoman Blanca Rubio (D-Baldwin Park) over concerns that more than 80% of the weed sold in the state originates from the illegal market, despite cannabis being made legal since 2018.
Apart from affecting tax revenues, the illicit market presents a threat to California’s public and health safety, Rubio told LA Times in July.
The proposal, however, has sparked a debate among legal cannabis advocates. The United Cannabis Business Association, the body which represents licensed cannabis businesses and which has successfully lobbied to list cannabis businesses as essential during the COVID-19 crisis, asked Rubio to introduce Assembly Bill 2122, saying it “brings much-needed support in enforcement.”
Legal pot businesses have grappled as Californians carry on buying pot from the illegal dealers due to lower prices. They don’t settle state taxes or follow state regulation, including security and testing requirements, hence the cheaper weed.
At present, there are some 570 licensed legal pot stores in California, without counting the medical dispensaries that have been operating in the state since 1996 when medical marijuana was first legalized in the state. However, they struggle to do business. In striking contrast, Colorado has more than a thousand shops where one could buy legal pot, and the state only has a sixth of California‘s population.
“The illicit cannabis market must be shut down to ensure that legal operators can see an increase of patients and consumers which creates union jobs while we contribute to local and the State of California’s tax revenues,” the UCBA said in a letter to legislators.
Nevertheless, The National Organization for the Reform of Marijuana Laws – NORML, has opposed the legislation, deeming it as overboard and overly forceful.
The deputy director of California NORML, Ellen Komp, told LA Times the group backs a current law that requires advertising for cannabis operations to feature a state license number. According to NORML representatives, illicit pot sellers disclose counterfeit licenses to deceive those they collaborate with. Thus it remains an issue to determine if certain cannabis businesses use a license for their operation or don’t.
According to Komp, the state can assist licensed operations, pointing out that over half of the cities in the Sunny State currently prohibit the licensing of weed businesses.
In 2019, state regulators seized $8.8 million worth in marijuana goods at 24 LA-based unlicensed shops, confiscating thousands of items such as illicit vape pens as well as cash made from illegal sales.
The newly-proposed bill, which also aims to punish landlords who rent spaces to unlicensed pot shops, is one of few bills related to cannabis that gets attention this year. For much of the year, legislators’ focus has been on the health crisis stirred by the pandemic outbreak.
For instance, reports suggest that a much-anticipated tax cut bill that concerns cutting California’s excise tax on cannabis sales from 15% to 11% for three years while removing a cultivation tax for that period, has been postponed for 2021. Assemblyman Rob Bonta has pushed this measure.