By Lanny Swerdlow from MAPP
The cannabis industry is on the ropes because of the competition from illegal sales of cannabis which do not pay the usurious taxes and don’t have to jump through all the legal hoops and pay all the outrageous license fees and other hassles that legal sellers must.
It is estimated that 2/3rds of all cannabis sales are illegal. Not surprising considering how much less it can be sold for. Another reason such a big criminal market is still in operation is because 75% of all the cities and counties in California have banned its commercial cultivation, manufacture, and distribution meaning that their residents must either drive a lot of miles to a locality that allows its sale or, more likely, continue to deal with criminals.
Buying from an illegal source has its perils as the product they sell is usually not tested which means the buyer has no idea of its THC and other cannabinoid percentages as well as pesticides and other contaminants. We didn’t worry about that when it wasn’t legal, so why start worrying about it now.
There is also the romance of it. Always had kind of an excitement dealing with “criminals” – meeting in bars, homes, parks etc. Defying the powers that be – doing your own thing – giving the finger to the police and the puritans that goaded them to arrest us. You got what you wanted and then you would slink off with your prized purchase to enjoy your “taboo” substance.
Of course, there was always the chance of being arrested. Not that it was much of a traumatic experience after 1975 when California decriminalized marijuana with just a $100 fine if you were apprehended with less than an ounce in your possession. But if you had more and especially the dealers you bought from – lives were ruined with a criminal record.
So here we are almost 7 years after legalization and the criminal market is as strong as ever – maybe stronger as cannabis consumption has gone up since it was medically legalized in 1996 and fully legalized 20 years later in 2016 cannabis was selling for upwards of $2,000 a pound.
Now it is down to $500 a pound and even less. The only difference, and it is a big difference, is that the wholesale price of cannabis has plummeted.
Unfortunately, the retail price of cannabis in the legal dispensaries hasn’t come down as much as the wholesale price has. I really don’t know what the retail price the illegal sellers are peddling, but I am fairly confident that the price has not come down in proportion to the wholesale price either. No doubt, however, the illegal price is considerably less than the legal price with all its taxes and expensive onerous regulations.
The question that has been puzzling me is where all these illegal sales are taking place. I know in the Bay Area, there are “seshes” with vendors selling cannabis illegally that spring up in various locations for a couple days and then disappear only to open up somewhere else. I have spoken with people in Los Angeles and in the Inland Empire (IE) who should know where they might be operating, but no one seems to know.
There may be a dozen or so in the Bay Area. In Los Angeles, radio station KCRW released a story back in 2019 about a couple seshes, but no one seems to know where they are now. In any case even if there were dozens of seshes operating, there is no way they are capable of providing cannabis to the literally millions of cannabis consumers in the Bay Area and metropolitan Los Angeles. There has to be a thriving illegal market consisting of something like the pre-legalization dealer network if not the exact same old dealer network that never went away due to usurious taxation and regulatory system of the legal market as well as the bans on legal sales in most of the state that was set-up post Prop. 64 passed in 2016.
I have not seen any news articles about how the criminal network of dealers is operating. Are there seshes operating? I can’t believe for a minute that the police don’t know about them if they are operating especially with all their informants, and I am sure some very disgruntled neighboring businesses. That is why I feel they are not in the IE because I have never heard of single one being busted.
Speaking of marijuana busts, when was the last time you heard of an illegal dealer being arrested? I am sure it happens, but considering how many illegal dealers must be out there to provide upwards of 2/3rds of all cannabis sales, a person dealing pot is probably safer from being arrested then a tax-cheating, philandering, corrupt billionaire.
I have spoken with a number of cannabis movement folks and although they seem fairly well-versed on the illegal cultivation market, they don’t really know much about how the illegal market is operating. I have only spoken with one person who could tell me about seshes, and he is in the Bay Area where they appear to be pretty brazen. It is interesting to note that perhaps one of the reasons, at least for San Francisco, is because SF voters passed an initiative many years ago making cannabis enforcement the lowest priority for police so by law, they do not do much about seshes or dealers. As for other areas nobody else could tell me the location of a single sesh.
How and where are all these illegal sales to consumers being made? Is it the same old dealer network as before legalization or is it some new iteration? I have not seen any articles on how and where people are currently obtaining cannabis illegally. There is work to be done in the state legislature and with local county boards and city councils to solve the legal cannabis industry’s problems and it would be helpful to know just what is really going on in the criminal market. What do you think? What do you know?
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