It seems like every week, there’s a new announcement of state or local enforcement actions or raids of allegedly unlicensed cannabis operators in California. Some time ago, this would have been welcome news to many licensed cannabis businesses in the Golden State that pay large sums of money to get licensed while illicit market operators can offer cheaper, tax-free products to consumers at a huge competitive (though not legal) advantage. Nevertheless, it’s becoming clearer that nothing the state is doing is really changing the illicit market, and this offers little solace to the participants in the regulated market.
To date, legislative efforts to ratchet up penalties haven’t really disincentivized unlicensed activity. For example, AB-97, a bill that passed in mid-2019 that authorized penalties of up to $30,000 per day for unlicensed activities, didn’t end California’s illicit market. In fact, a few months after that law passed, I wrote a post citing a then-recent audit that showed that there were nearly 3,000 unlicensed cannabis businesses in the state.
As I write this post, California continues to struggle with its illicit market. The state is considering adopting another bill (AB-2122) that would authorize similar, $30,000/day penalties against landlords and other third