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Passing Parade: Illegal marijuana shops undercut legal market

Nelson A. Pryor: Guest Columnist

So ran the Associated Press article in the July 8, 2018, “Atlanta Constitution,” 10a, on marijuana shops.

Broad marijuana legalization arrived in California this year. From the beginning, law enforcement and civic-minded citizens were concerned that the legal market would be swallowed up and not be allowed to exist, thus be undermined by the historic black market that had existed for decades.

Selling Point

One of the selling points, by the voter-approved ballot measure legalizing cannabis in California, was an attractive provision for some that made possessing even 28.5 grams only a misdemeanor. That only meant officers could seize businesses' cash and marijuana, but employees and owners rarely would face jail, with illegal operations often quickly reopening.

Another selling point for legalization by the referendum voters was the prospect of a tax windfall. Legalization, as it was proclaimed, would provide revenue for both the state and local governments.

Fool's Gold

During the first quarter, California generated only $34 million from cultivation and excise taxes, from legalizing cannabis. This puts the tax collection on a pace to fall well below the $175 million forecast, by proponents, for the first six months.

Expensive "Enforcement"

In April, California regulators sent out nearly 1,000 cease-and-desist letters to cannabis businesses they suspected were operating illegally. An analysis by the trade publication Marijuana Business Daily found about 64 percent of the illegal businesses were in the Los Angeles metropolitan area.

Hundreds of illegal marijuana stores operate in Los Angeles County, where marijuana is legal for anyone 21 and over and retailers must be licensed to sell to them.

Outlaw Dispensaries

The number of outlaw dispensaries in the county greatly outnumber about only 150 licensed storefront retailers.

Last month, the Los Angeles city attorney's office charged 142 people as part of a crackdown on illegal dispensaries. It also sent cease-and-desist letters but declined to say how many.

Los Angeles County boasts the nation's largest sheriff's department, but it has nowhere near the manpower to take down all the illegal pot shops. A task force overseen by Lt. Frank Montez raids an average of one dispensary a week.

Not Much of a Risk

"It's a money-lucrative business so there are people willing to take a risk," said Capt. Holly Francisco, who commands the sheriff's department's narcotics unit.

Montez sees his work as more than code enforcement. Marijuana sold illegally could be tainted with illegal pesticides and other harmful substances. And licensed marijuana shop owners who pay their taxes should have a fair playing field.

"When you have an illegitimate, illegal dispensary operating, that not only hurts the industry as a whole but it really hurts the community," said Montez.

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We need more people, like Nancy Reagan, who would say: "Just Say No!"

Some illegal marijuana shops look so legitimate that customers may not even realize they are illegal unless they figure out they aren't being charged taxes. But like any shopper looking for the best deal, plenty know these places are illegal and go because it's cheaper.

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