California's licensed cannabis sellers want the state to crack down on illegal competitors

Six weeks after the state began licensing marijuana farming and sales, officials have received a flood of complaints about illegal cannabis operations and demands for a start to tough enforcement.

Many of the 304 complaints received in recent weeks are from newly licensed businesses that say they are being harmed financially by the continuing illegal market.

That was a prevalent concern voiced by license holders when a citizens panel providing advice on cannabis regulation received an earful this week from licensed operators in Sacramento.

“We really need enforcement in California given that the local licensees are really having to fight against the black market,” Stephanie Hopper, a representative of the firm Canndescent, which grows and sells marijuana in California, told the panel.

Hopper said illicit businesses are driving down the price of marijuana. Enforcement is needed “to make sure that we actually stand up this industry and that the regulated people actually have an opportunity to thrive.”

In this Sept. 29, 2017 photo, Calaveras County Sheriff Rick DiBasilio gestures while raiding a marijuana growing operation in unincorporated Calaveras County, Calif. (AP Photo/Noah Berger)

The state Bureau of Cannabis Control acknowledges the problem and plans to begin issuing citations to illegal pot businesses in the near future, said Lori Ajax, chief of the agency.

Ajax noted that marijuana firms only began operating with state licenses Jan. 1 and said her inspectors have responded to many early complaints with educational warnings about what the operations have to do to become licensed and comply with restrictions.

“We are getting complaints,” she said. “It’s from a variety of people, from reporting unlicensed activities to advertising to products and packaging and labeling issues.”

The agency has issued 1,204 licenses so far to firms transporting and selling marijuana.

Asked why no citations have been issued, Ajax said, “We dropped a lot of regulations on them, and I think there is a lot they are still trying to learn.

“This first round of inspections was more focused on education,” she added. “We’ve pointed out areas where we say, ‘This needs to improve or change.’ As we go back around again, you are going to see us starting to issue citations.”

Mark Pelter, owner of the River City Phoenix marijuana shop in Sacramento, urged state officials to investigate the many advertisements on the internet that appear to be from illegal marijuana operations.

“I would hope there would be a special task force for enforcement that would use these postings as an investigation tool, find out if these are illegal operations and take appropriate action,” Pelter told members of the state Cannabis Advisory Committee during its hearing on enforcement Tuesday.

A subcommittee of the panel agreed to seek better regulations of advertisements to identify illegal operations.

San Jose Police Sgt. David Woolsey, a member of the committee, said some illegal operations are hard to track down on the internet.

“Unlicensed activity is obviously a problem, and it needs to be enforced against,” he said. “It’s often hard to identify who is behind an illegal business if they don’t have a storefront that is bold and in your face on the street.”

Local police departments have asked the state for help in enforcement, citing their limited resources that are devoted primarily to dealing with violent crime.

The Los Angeles Police Department has shut down eight illegal pot shops since Jan. 1, including one last week near a school in Pacoima. But there are 200 to 300 other unlicensed marijuana businesses still operating just in Los Angeles, LAPD Deputy Chief John Sherman said.

Los Angeles Police Capt. Stephen Carmona, right, speaks at a news conference about cannabis enforcement in Los Angeles Wednesday, Feb. 14, 2018. At left, Los Angeles Police Deputy Chief John Sherman. (AP Photo/Mike Balsamo)

“We do have ongoing challenges with unauthorized establishments, with illegal clandestine operations,” Sherman told reporters Wednesday.

The coordination of enforcement efforts between the state and local governments was the focus of a meeting held this week by representatives of Gov. Jerry Brown and law enforcement, including the California Police Chiefs Assn.

Assemblyman Tom Lackey, R-Palmdale, a retired sergeant for the California Highway Patrol who has met with the governor’s aides, said the Bureau of Cannabis Control doesn’t have enough inspectors and the attorney general’s office doesn’t have enough agents to adequately help local authorities control the large illegal market.

“There’s a lot of conversation going with the attorney general’s office and the governor’s office,” Lackey said. “I voiced that my biggest concern is the illegal marijuana going out of California, because that clearly makes us a target for federal intervention.”

Lackey hopes more resources for enforcement will be included by the governor in his budget revision in May.

“We believe that local police departments need help when it comes to organized criminals operating across the state,” Lackey said. “We have cartel influence that is organized.”

Representatives of the governor and attorney general did not respond to requests for comment on the issue.

Lackey has proposed that the California Highway Patrol take the lead against the black market, including distribution networks that transport marijuana out of California to states where it is not legal.

Warren Stanley, who was appointed by Brown last week as commissioner of the CHP, said his officers are well trained and on the lookout for vehicles illegally transporting marijuana. He said his agency is prepared to take on any role approved by the governor and Legislature.

“We’re always concerned about illegal drugs on our roadways and in the communities that we serve,” Stanley said. “We do everything we can to help other law enforcement agencies with that and do what we can to get [drugs] out of our communities.”

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