Pubdate: Sun, 28 Apr 2019
Source: New York Times (NY)
Copyright: 2019 The New York Times Company
Author: Thomas Fuller


COSTA MESA, Calif. - In the forests of Northern California, raids by
law enforcement officials continue to uncover illicit marijuana farms.
In Southern California, hundreds of illegal delivery services and pot
dispensaries, some of them registered as churches, serve a steady
stream of customers. And in Mendocino County, north of San Francisco,
the sheriff's office recently raided an illegal cannabis production
facility that was processing 500 pounds of marijuana a day.

It's been a little more than a year since California legalized
marijuana - the largest such experiment in the United States - but law
enforcement officials say the unlicensed, illegal market is still
thriving and in some areas has even expanded.

"There's a lot of money to be made in the black market," said Thomas
D. Allman, the sheriff of Mendocino County, whose deputies seized
cannabis oil worth more than $5 million in early April.

Legalization, Sheriff Allman said, "certainly didn't put cops out of

California's governor, Gavin Newsom, has declared that illegal grows
in Northern California "are getting worse, not better" and two months
ago redeployed a contingent of National Guard troops stationed on the
border with Mexico to go after illegal cannabis farms instead.

Stepped-up enforcement comes with a certain measure of irony -
legalization was meant to open a new chapter for the state, free from
the legacy of heavy policing and incarceration for minor infractions.
Instead, there are new calls for a crackdown on illegal selling.

Conscious of the consequences that the war on drugs had on black and
Latino communities, cities like Los Angeles today say they are wary of
using criminal enforcement measures to police the illegal market and
are unsure how to navigate this uncharted era.

The struggles of the licensed pot market in California are distinct
from the experience of other states that have legalized cannabis in
recent years. Sales in Colorado, Oregon and Washington grew well above
50 percent for each of the first three years of legalization, although
Oregon now also has a large glut of pot.

But no other state has an illegal market on the scale of California's,
and those illicit sales are cannibalizing the revenue of licensed
businesses and in some cases, experts say, forcing them out of business.

Entrepreneurs in the industry, which spent decades evading the law,
are now turning to the law to demand the prosecution of unlicensed pot

"We are the taxpayers - no one else should be operating," said Robert
Taft Jr., whose licensed cannabis business in Orange County, south of
Los Angeles, has seen sales drop in recent months.

"This is starting to get ridiculous," he said of the illegal pot
shops, including nearby businesses that list themselves as churches
and advertise marijuana as a kind of sacrament. "It's almost like the
state is setting itself up to lose."

California gives cities wide latitude to regulate cannabis, resulting
in a confusing patchwork of regulation. Los Angeles, San Francisco,
San Jose and San Diego have laws allowing cannabis businesses, but
most smaller cities and towns in the state do not - 80 percent of
California's nearly 500 municipalities do not allow retail marijuana
businesses. The ballot measure legalizing recreational marijuana
passed in 2016 with 57 percent approval, but that relatively broad
support has not translated to the local level. Cities like Compton or
Laguna Beach decisively rejected allowing pot shops.

Regulators cite this tepid embrace by California municipalities as one
of many reasons for the state's persistent and pervasive illegal
market. Only 620 cannabis shops have been licensed in California so
far. Colorado, with a population one-sixth the size of California, has
562 licensed recreational marijuana stores.

But the more fundamental reason for the strength of the black market
in California - and what sets the state apart from others - is the
huge surplus of pot. Since medical marijuana was made legal in
California more than two decades ago, the cannabis industry flourished
with minimal oversight. Now many cannabis businesses are reluctant to
go through the cumbersome and costly process to obtain the licenses
that became mandatory last year.

Of the roughly 14 million pounds of marijuana grown in California
annually, only a fraction - less than 20 percent according to state
estimates and a private research firm - is consumed in California. The
rest seeps out across the country illicitly, through the mail, express
delivery services, private vehicles and small aircraft that ply
trafficking routes that have existed for decades.

This illicit trade has been strengthened by the increasing popularity
of vaping, cannabis-infused candies, tinctures and other derivative
products. Vape cartridges are much easier to carry and conceal than
bags of raw cannabis. And the monetary incentives of trafficking also
remain powerful: The price of cannabis products in places like
Illinois, New York or Connecticut are typically many times higher than
in California.

The state's illicit cannabis exports appear to be increasing even now,
well into California's second year of legalization. New Frontier Data,
a data research company that specializes in cannabis, calculates that
high demand and more advanced growing techniques will contribute to
approximately half a million pounds more illicit cannabis this year
compared with 2018.

The federal government still considers marijuana illegal and the Drug
Enforcement Administration says it still investigates
marijuana-related crimes. But a spokesman, Rusty Payne, said the
agency has a bigger crisis to attend to.

"We've got our hands full with the opioid epidemic to be honest," Mr.
Payne said.

In wildland areas, seizures of illicit pot by the California
Department of Fish and Wildlife more than doubled in 2018, the first
year that recreational cannabis was legal.

The department destroyed 1.6 million marijuana plants last year, up
from 700,000 in 2017 and 800,000 the year before - all of them
illegally grown.

"There's a subset of people who are just refusing to get into the
process," said Nathaniel Arnold, the department's deputy chief of

The Bureau of Cannabis Control, the agency charged with regulating
marijuana in the state, has received around 7,500 complaints, most of
them about illegal operations, and has sent out more than 3,000
letters ordering illegal businesses to shut down.

"It's only a matter of time before we start making a dent in the
illegal market," said Alex Traverso, a spokesman for the agency, who
acknowledged there were probably more illegal shops in Los Angeles
alone than licensed shops in the entire state.

Cat Packer, the executive director of the Department of Cannabis
Regulation in Los Angeles, said that even when illicit businesses were
shut down, they often soon reappeared.

"It's been a game of whack-a-mole in the city of Los Angeles," she

But Ms. Packer also said the city was mindful that criminal
enforcement in the past had disproportionately targeted people of color.

The city is seeking to find an effective enforcement policy that does
not mimic the criminal interdiction policies of the past, Ms. Packer
said. One strategy is to turn off water and power services to
noncompliant businesses.

"We can't do Drug War 2.0," she said.

Mr. Taft, the cannabis entrepreneur, has sent 450 complaints to the
Bureau of Cannabis Control and is unapologetic about his calls for an
aggressive approach to illegal shops, which he says is the only way
that California's giant experiment will work.

His dispensary pays a cumulative state and local tax rate of 32.25
percent. Unlicensed shops pay no tax.

One of Mr. Taft's biggest complaints is about Weedmaps, a phone app
that allows users to locate marijuana businesses nearby, both licensed
and illegal.

In February last year, the Bureau of Cannabis Control sent a letter to
Weedmaps saying the company was aiding and abetting illicit businesses
and ordering it to "immediately cease all activity that violates state
cannabis laws."

Weedmaps replied that it was a technology company and not under the
jurisdiction of the bureau. More than a year later, the company still
lists hundreds of unlicensed shops.

Earlier this year, Mr. Taft resigned as a board member of the Santa
Ana Cannabis Association because half the members, he said, were
selling illegally and using legalization as a "shield."

"They are playing both sides of the market," he said.

On a recent weekday morning, Mr. Taft called the Bureau of Cannabis
Control to lodge a complaint against his neighbor, a cannabis business
that he said did not appear on the list of licensed businesses.

"We are being pillaged by these people," he said. "My lawyers are
ready to launch rockets!"