Illegal vs. Legal Weed in California: CA Struggles With Black-Market Dealers in 2021

The sale of recreational cannabis and cannabis products is legal in California and has been since 2018. The sale of medicinal marijuana was legalized several years before that. Despite the legalization, however, unlicensed sellers continue to flood the market with illegal marijuana sales. Recreational distribution licenses can be expensive and difficult to obtain; many counties and cities across the state either continue to prohibit sale or strictly limit the number of licenses allowed at any given time. Licensed sellers also have to contend with state taxes, which drive up prices. For those reasons, the cannabis “black market” remains nearly as strong as it was before legalization. Continue reading to learn about the state’s ongoing efforts to combat illegal weed sales, and call a dedicated cannabis business attorney for help setting up or managing a California cannabis enterprise.

California Tries, and Fails, to Increase Penalties for Unlicensed Cannabis Sales

According to one California lawmaker, as much as 80% of the cannabis sold across the state comes from the illicit market. Unlicensed distributors can take advantage of lower pricing by ignoring taxes, regulatory oversight, and required safety testing; these costs cause licensed distributors to charge significantly more. Worse, the quality and safety of the product on the street cannot be accounted for, given the lack of regulatory oversight. Lawmakers feel for the licensed industry professionals being undercut and worry for the safety of retail purchasers who will go for the cheaper option.

Unlicensed distribution of cannabis is illegal under California law and carries more than just civil fines. Unlawful sale or transport of marijuana is at base a misdemeanor, punishable by up to six months in jail and a fine of up to $500. If the defendant has a prior conviction, sells to a minor, or other aggravating circumstances apply, the defendant might be charged with a felony for unlawful sale. If the defendant is under the age of 18, or the amount transferred is less than 28.5 grams, the offense is an infraction.

For many licensed distributors, the penalties do not seem strong enough. Some licensed distributors hurt by the continued prevalence of unlawful sales have been pushing for stiffer penalties to curb the illegal market. Last year, a state assemblywoman introduced a bill to slap unlicensed distributors with gargantuan fines for unlawful sale.

The bill, which passed unanimously in the state Assembly, would subject illegal pot sellers to civil fines of up to $30,000 per day. The legislation was not supported by all cannabis advocates, however. The California chapter of the National Organization for the Reform of Marijuana Laws (NORML) opposed the bill, viewing it as overbroad and heavy-handed. NORML would like to see more “carrots” for licensed sellers rather than draconian punishments for unlicensed sellers. For example, NORML would like the state to do something about the two-thirds of California cities that still do not allow licensing of cannabis businesses.

Ultimately, the bill did not pass. From the Assembly, it went to the Senate, where the upper chamber took no further action. It remains to be seen whether further action will be taken by the state legislature in the near future.

Reach out to a Seasoned California Cannabis Business Lawyer for Help With Your Marijuana Business

If you are interested in setting up a cannabis business or are dealing with regulatory, tax, licensing, or other legal issues with your hemp, CBD, or cannabis business in Los Angeles or Southern California, call McReynolds Vardanyan, LLP, in Glendale at 818-855-2115. Our California cannabis business lawyers will work with you to get your budding business off the ground efficiently, effectively, and legally.

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