Unlicensed cannabis operators in California may soon face stricter enforcement under a bill that easily passed the state House and is currently in the state Senate.
Assembly Bill 491, sponsored by Assembly member Greg Wallis would allow local jurisdictions to collect penalties for unlicensed cannabis operations by placing a lien on the land where they are located.
“Since California voters made recreational cannabis legal in 2016 with Proposition 64, the Legislature, as well as state and local jurisdictions, have struggled to drive unlawful operators out of the cannabis market,” Mr. Wallis, a Republican, said during the Senate’s Standing Committee on Local Government May 29.
“The existing penalty statutes were primarily designed for ordinary zoning and business violations, and these processes are not always well-suited for addressing large-scale, illegal commercial cannabis operations.”
Rural communities have been inundated with unlicensed and unregulated cannabis activity that’s undermining the health and safety of residents and the regulated cannabis businesses, he said. The bill has received support from the Rural County Representatives of California, which advocates on behalf of 40 California rural counties.
California’s Unified Cannabis Enforcement task force, created in 2022 by Gov. Gavin Newsom, said it seized more than $312 million in unlicensed cannabis during its first calendar year of operation.
“California is home to the largest legal cannabis market in the world,” Mr. Newsom said in an April press release. “As we continue to cultivate a legal marketplace, we’re taking aggressive action to crack down on those still operating in the shadows.”
In 2023, the task force said it seized nearly 190,000 pounds of illegal cannabis, eradicated about 318,000 plants, and confiscated 119 illegally possessed firearms.
Despite increasing legalization efforts across many regions in the United States, the black market for cannabis continues to thrive, undermining legal sales with a robust underground network that offers lower prices and easy access.
In 2019, such cannabis sales reached approximately $8.7 billion, more than double the legal market sales for the same year, according to Statista, an online platform, based in Germany, that specializes in data gathering.
According to the Department of Cannabis Control, only about 40 percent of local jurisdictions allow legal dispensaries. This creates a space for the black market operators, say law enforcement officials.
“Most jurisdictions, local jurisdictions, police or sheriff’s departments and district attorney’s offices were very reluctant to do any kind of enforcement on cannabis. So it really created an air of impunity, and the unlicensed activity really just skyrocketed,” said Bill Jones, chief of the law enforcement division for the Department of Cannabis Control, in an April press release.
Licensed dispensaries in the state are subject to significant taxation, with some jurisdictions imposing tax rates of nearly 40 percent.
The disparity in pricing creates an opportunity for unlicensed retailers to offer competitive products at a lower cost.
“Rural communities particularly, are dealing with a lot of unregulated cannabis businesses, which is impacting both our legal market and the public health and safety,” Sarah Dukett, Rural County Representatives of California policy advocate, said at the Senate committee meeting.
Unlicensed operators also pose a serious health risk to the public through their sale of potentially contaminated products, officials say. In 2018, 90 percent of illegal cannabis cultivation sites in California contained lethal, controlled or banned pesticides, according to law enforcement statistics.
The bill passed in the Assembly on May 4 in a 75–0 vote with five absentees. It’s now with the Senate Judiciary committee, and if approved, will head to the Senate floor.
