In 2019, the illegal market for cannabis eclipsed the legal one by a rate of about 3 to 1. Roughly 75% of sales in California were under the table, which is a huge hindrance for statewide efforts to boost legitimate businesses and collect taxes. 2020 will be a make or break year for California's legal weed market.
“We have a big problem in California with thousands of unlicensed stores, a relic of the medical marijuana era,” says David Downs, the California Bureau Chief for Leafly. “By the end of the year, in 2019, Californians saw a much more systematic approach to going after the illicit market.”
In December of 2019, the Bureau of Cannabis Control announced that it had sent 400 letters to 400 different landlords who rent to illicit dispensaries, threatening fines of up to $30,000 per day if they continued the practice. Twenty-four stores across the Los Angeles area were also raided. Law enforcement officials seized $8.8 million in cannabis products and confiscated nearly 10,000 illegal vape pens and $129,000 in cash. But Downs says that shutting down a brick and mortar shop doesn’t always shut down the business.
“A lot of vendors move into the online space where they're selling through Instagram or where they go mobile only and offer just to deliver it to your house,” he says. “Only legal market access can drain the illicit market.”
But Downs isn’t confident that LA’s legal market will grow this year. He expects that red tape and slow moving government will translate into the amount of legal dispensaries holding at 185.
“But we're also, again, still on day one of legal cannabis,” Downs says. “And there's lots of good news, too.”