Los Angeles Marijuana Industry: Is Anybody Happy Here?

The legal market for marijuana sales in Los Angeles has become something of a Wild West free-for-all that has left very few feeling satisfied: Government officials, legal cannabis companies, law enforcement and those trying to edge their way into the local market.

Law enforcement say it’s like playing whack-a-mole, city officials say they’re overwhelmed, legal businesses planning to sue the city and those operating on the fringes without a legal license say they’re only doing what they’ve been doing for years, but operating on the fringe, thanks to being shut out by regulators.

The director of the Los Angeles Department of Cannabis Regulation cracked a joke when asked what she’d do if given an unlimited staff and budget – doing her best Oprah Winfrey impression while opining that, “You get a license! You get a license!” (And no one would be arrested.)  This spurred some laughter and applause from those listening at the retreat in Mendocino County where she spoke, but Los Angeles marijuana business lawyers know: Most of us aren’t laughing.

Trade Group Plans to Sue Los Angeles Over Lackluster Marijuana Law Enforcement

A trade group that represents legal marijuana businesses in Los Angeles argues the city has essentially ignored unlawful dispensaries and delivery operations in South Central Los Angeles, leading to a proliferation of unfair competition, siphoning potential customers and costing them hundreds of thousands of dollars.

The California Minority Alliance has reportedly met with several Los Angeles cannabis business lawyers throughout the area, with many expressing interest in taking on their case against the city. They are ready, a trade group spokesman said, to “declare war” on misfit marijuana operations – as well as the city for failure to act.

Soon after that statement was made, the Southern California Coalition sent another letter to the city attorney’s office, suggesting a series of potential plans of action that might help the city shut down unlawful retailers efficiently and thus avoid incurring the headache and expense of legal action.

The city’s legal counsel publicly declined to comment on any of its planned legal options, but reportedly has yet to send a response to either organization.

Los Angeles cannabis business attorneys know that these letters clearly illustrate that those within the legal marijuana industry here are at their wit’s end. When Proposition M was passed by voters in 2017, it was supposed to mean a clear new regulatory structure for Los Angeles cannabis companies. That has yet to happen.

Individuals are spending tens of thousands of dollars in hard-earned money trying to edge their way into the legal market, only to have their customer base usurped by those side-tracking the system. Those companies aren’t paying taxes, they aren’t shelling out the cost for state-legal compliance and they aren’t assuring consumer safety. And this has been going on since at least the beginning of last year.

Still, there is some question about whether the CMA could even make good on its litigation threat, as it’s being argued it’s within the purview of the district attorney – not the city attorney – to pursue criminal action against felony defendants.

How Likely is Increased Enforcement?

Despite the city attorney’s lack of response, it’s unlikely they want a legal fight with local cannabis entrepreneurs – and less likely they want to allow these unlawful shops to operate without consequence.

The city has taken some action, filing civil litigation against at least one unlicensed retailer in April that attempts to seek a $20,000-a-day fine for violations of local ordinance. It may not be the last.

Federal and state law enforcement has also been involved, cracking down on unlicensed retailers throughout the state, including Los Angeles.

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 cannabis trade group threatens to sue L.A. over lack of enforcement against illegal shops, June 5, 2019, By John Schroyer, Marijuana Business Daily