The black market bud sales are the bane of legitimate marijuana businesses throughout California. There are billions of dollars to be gleaned in the shadows of licensed, regulated industry. However, it’s getting increasingly expensive to operate on the fringes, and officials say that is precisely the point.
Now, a new proposed law targets not just the illicit marijuana operations themselves, but the companies doing business with them. A new bill, if passed, would impose $30,000 in fines for every single offense of aiding and abetting unlawful commercial cannabis activity in California. That would include advertising for these ventures as well as providing leases to them. That would put significant pressure on landlords and advertising companies that try to make a profit off the virulent black market. Penalties would be paid to the state’s general fund.
As our Los Angeles marijuana business attorneys can explain, existing law imposes triple the amount of a state license fee for any individual or entity caught engaging in commercial cannabis business activity that is not licensed. That figure may be adjusted depending on the company’s annual revenue.
This new measure, Assembly Bill 2122, would target companies that prop up illegal cannabis companies. These could include anyone from billboard advertisers to property management firms.
As it stands, California’s black market accounts for three-fourths of all marijuana sales in the state. Buyers are lured by lower prices, but often fail to grasp that these products aren’t necessarily harmless. For one thing, they aren’t subjected to the same rigorous testing that legal products must undergo. That puts the public at risk, particularly if the product contains a higher concentration of THC or if it is contaminated with substances that aren’t listed on the label.
Beyond that, illicit sales hamper the ability of the legal market to thrive. Illegal sales have been identified as the No. 1 threat to a healthy legal cannabis market.
Last year, the state’s Bureau of Cannabis Control was able to seize more than 24 tons of illegal product, but that’s only a fraction of what’s on the market. In Los Angeles just in December alone, more than 10,000 marijuana vape products. Many of those contained a chemical that was ultimately linked to an outbreak of deadly respiratory disease.
One effort to combat the illegal market involves encouraging legal stores to post their QR code, which customers can scan and immediately obtain licensing information for that location. Officials are seeking to make display of that code mandatory, but for now, it still remains voluntary.
AB 2122 has been backed by numerous cannabis industry trade groups, including the United Cannabis Business Association. However, others are hoping to include an exemption for communities where officials have refused to grant licences. Some have opined this could hamper efforts to initiate local regulations that could expand availability of the drug to more Californians.
An early version of the bill would have required violators to cover the cost of destruction of cannabis products associated with the violation, but that portion was later removed.
The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 949-375-4734.
Additional Resources:
California could crack down on illegal marijuana landlords, advertisers under proposed law, Feb. 7, 2020, By Andrew Sheeler, The Sacramento Bee