It’s no secret that California has a problem with black-market cannabis. Even seven years after the state legalized recreational cannabis, a number of illicit grow operations have popped up all over the state.
One of the most recent happened in Berkeley when a machine shop sold his business. Mysterious new owners moved in and placed a black tarp across the fence.
According to Victor Gascon, owner of Seventhirty.co, a neighboring facility said, “You couldn’t see anything past that line. It was all blocked off. It was dark.”
Most assumed the new owners were simply renovating. However, on February 8th, the California Department of Cannabis Control’s (CDCC’s) enforcement team raided the building. Inside, they found an illicit cannabis cultivation facility with more than 11,000 pounds of products.
According to new data, California has increased efforts for search warrants, seizures, arrests, and eradication of illegal cannabis operations. In the words of David Haftner, a spokesperson for CDCC, “We have been focused on cultivation efforts in 2022 which have a higher yield of illegal cannabis versus dispensaries.”
Such efforts have proven successful. With enforcement officers seizing more than 144,254 pounds of illegal cannabis across California. Compare that to the previous year’s raid which yielded 41,000 pounds of illegal marijuana.
“California is taking immediate and aggressive action to stop illegal cannabis and strengthen the burgeoning legal market throughout the state. By shutting down illegal grow sites and applying serious consequences to offenders, we are working to curtail the criminal organizations that are undercutting the regulated cannabis market in California.”
Why Does California Struggle with an Illicit Cannabis Market
Public safety is the chief concern when it comes to these recent efforts. As Hafner puts it: “There’s always a safety risk with these illegal operations because many of these are organized by criminal organizations who often are armed and dangerous.”
Yet, as Newsom pointed out, there’s a strong belief that illegal marijuana is “undercutting the regulated cannabis market.” There’s some truth to this statement as 2022 saw the first decrease in sales since sales began in 2018.
However, this decrease in sales may not be directly tied to the illicit market. Instead, it’s worth noting that the country’s skyrocketing inflation is likely causing a significant change in consumer behaviors.
So, why does California struggle with an illicit marijuana market?
Simply put, the Golden State has created the perfect atmosphere for such. In order to own and operate a legal cannabis cultivation site, you need a hefty sum of capital. On top of this, your chances of breaking even with your products are slim. This is due to the fact that California produces more cannabis than is in demand.
The price of cannabis has dropped so significantly that most cultivators wouldn’t be able to continue operations unless they turned to the illicit market. And that’s exactly what they’re doing, with most products ending up in states where cannabis remains illegal.
As you can imagine, the profits of such operations are much, much larger. Therefore, it really comes as no surprise the illicit market has blossomed in California.
Still, with Newsom’s new enforcement team, this may all change. The main reason for this is the team isn’t just interested in seizures and raids. Earlier this month, California launched a $20 million grant program to help local jurisdictions in licensing programs. Naturally, the goal is to encourage more of these operators to switch to legal efforts.
But money talks. And if the money’s worth the risk of illicit operations, California may continue to struggle with these issues.