California’s Illegal Cannabis Industry Three Times Bigger Than Regulated Market

It has been nearly three years since California voters overwhelmingly approved a measure legalizing recreational marijuana use, opening the door for boutique pot shops and cannabis bakeries. But a report this week found that the state’s illicit market is still plenty active in its own right.

In fact, according to a report released Wednesday by the United Cannabis Business Association that was reported on by the Los Angeles Times, California’s marijuana illicit market is three times larger than the regulated industry established by the 2016 referendum. The audit found that there remains about 2,835 unlicensed dispensaries and delivery services throughout the state, compared with only 873 licensed marijuana dealers. 

The figures were highlighted as part of an effort by the United Cannabis Business Association, which represents licensed pot dealers in California, to crack down on Weedmaps, an app that allows users to locate dispensaries near them. 

The group contends that Weedmaps is still rife with listings for illicit marijuana dispensaries, despite the company’s pledge to remove them from the app. 

In a letter Wednesday to California Gov. Gavin Newsom (D), United Cannabis Business Association president Jerred Kiloh called on regulators to enforce Assembly Bill 97, legislation passed and signed this year that enables the state to levy $30,000 a day fines for unlicensed dealers. 

The bill took effect on July 1.

In the letter to Newsom, Kiloh drew attention to the string of recent vaping-related deaths.

“The severity of this situation cannot be underscored. We know too well the dangers of the unlicensed and unregulated market,” Kiloh said. “Just last week, after a series of deaths, the federal Food and Drug Administration (FDA) formally warned consumers to avoid vapes containing THC. While still under investigation, all 57 cases so far in California have involved purchases from unlicensed “pop-up” shops.”

“This outbreak serves as a tragic reminder of the dangers that the unlicensed industry poses to consumers. Licensed retailers are required to adhere to strict testing mandates that help prevent incidents like this from happening – the reality is, unless you are buying from a legal dispensary there is no guarantee of safety.”

Given the volume of illegal dispensaries present on Weedmaps, Kiloh claimed that the “California could levy fines against the platform of up to $85 million per day” if it were to enforce AB97.

“There’s simply no reason to wait, Californians are in danger,” Kiloh said. 

Weedmaps promised to crack down on the illegal dispensaries shown on the platform in an announcement late last month, saying it was “restricting the use of its point of sale, online orders, delivery logistics, and wholesale exchange software-as-a-service (SaaS) platforms to licensed operators exclusively.” 

In his letter Wednesday, Kiloh said that the legislation should be enforced to ensure that “Weedmaps’ toothless announcements are followed with real action.”