California has long had a strong culture of illegal cannabis cultivation in the backcountry of Northern California. Many of these growers have been supplying customers for decades. The simple existence of laws making it legal to grow cannabis doesn’t seem to phase them because they’re already growing and making money without having to jump through legal hoops. Business has been so good for the illegal producers that many have been able to ignore the need to get licenses to grow, distribute and retail the products they have been selling to the black market for years. Further, the current back-logs and confusion over changing requirements have done little to encourage compliance with the law.
What you, the Cannabis entrepreneur, should be aware of is a new report from the State Cannabis Advisory Committee on the first year of legal pot sales in California: “Fragmented and uncoordinated enforcement is blamed for allowing the black market in cannabis to flourish right next door to licensed and legal businesses.”
To solve the problem of Black Market intervention in the growing industry, Governor Gavin Newsom recently moved 150 California National Guard troops out of the Southern California border guard area into Northern California where they will work to combat illegal cannabis growing and distributing activity. He plans to encourage the licensing of more dispensaries, at the same time cracking down on illicit grow operations and Black Market delivery of cannabis products.
Black Market cannabis accounts for 80% of the marijuana sold in California, an approximate $4 billion problem for those who supported cannabis legalization as a way to provide tax and licensing income for state and local municipal budgets.
In a recent interview with the Los Angeles Times, Josh Drayton, a spokesman for the California Cannabis Industry Assn., said “We believe that this governor is committed to addressing our concerns, and he has a Legislature that is showing their willingness to author bills that will strengthen the regulated market while minimizing the illicit market.”
Law enforcement agencies have extra incentive to find, close and prosecute unlicensed businesses. Big cannabis companies are listing on stock exchanges and worrying about trying to increase their revenues. They don’t want to compete with Black Market producers who can drive prices so low that legal operations find it difficult to make profits. They represent a powerful force encouraging the crack-down on illegal production and sales.
An example of the problem rests in the 2,842 cease-and-desist letters that the California Bureau of Cannabis Control recently sent out to cannabis businesses that have been operating without state licenses. This action is particularly notable considering that there are only 634 pot retailers that have taken the time and effort to obtain licenses for their businesses.
If you are operating in the shadows and moving your product via the Black Market, your business is about to change. It will be easier for you to break down and hire a good cannabis consulting firm to help you apply for licenses and maintain compliance than it will be to deal with the costs of confiscation, incarceration, and an expensive attorney who is already busy trying to save other clients who have suddenly found Black Market operations too dangerous to continue.
“In April, my company 420College will be celebrating 10 years of working to make cannabis legal,” said George Boyadjian – CEO & Owner of 420 College, FTG Management, Inc., Abaca Staffing, and Emerald Spectrum Holdings. “We have been successfully helping cannabis entrepreneurs all over the United States plan and license their businesses,” said Boyadjian about his impressive record of helping to create some of the most successful cannabis companies in the industry.
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