Black market operators are robbing the country of millions of tax dollars

It will take the Los Angeles Sheriff’s Department many yearsto shut down illegal pot shops operating in LA County if they continue to raid them at their present pace of one a week.

Right from the outset of legalization, the biggest fear was that the black market would undermine legal marijuana operations and that is exactly what is happening.

The magnitude of the problem is illustrated by the fact that in April State regulators sent more than 600 cease-and-desist letters to suspected illegal pot operators.

The SCC blames stigma for lack of action

The Southern California Coalition (SCC), a trade organization representing marijuana cultivators, dispensary owners and distributors, is critical of how the problem is being handled by authorities. Its executive director, Adam Spiker, believes that if it wasn’t for the stigma attached to the marijuana industry the authorities would be far more proactive in clamping down on illegal pot shops. He said authorities were doing little to level the playing field for those people running legitimate and legal enterprises.

Spiker labels the current situation as “unfair”because while legal marijuana businesses are paying taxes, the black market is not and is continuing to undermine the legitimate market by selling the product at cheaper prices.

There are about 150 licensed dispensaries in LA County, but they are far outnumbered by black market operations. Last month, the LA city attorney’s office once again sent out cease-and-desist letters but refused to disclose how many illegal operators were targeted. However, they did charge 142 people in a crackdown on black market dispensaries.

Misdemeanor law gives the black market a loophole

The problem is that when recreational pot was legalized at the beginning of the year, California included a provision that anyone having more than 28.5 grams of cannabis in their possession could only be charged with a misdemeanour. This means that illegal operators and their employees seldom face a jail sentence. While law enforcement officers are empowered to seize cash and pot in raids, these black market operations can virtually reopen their doors overnight because, in this cash-driven business, most black market operators are willing to take the risk of another raid and confiscation of their money and product.

Lack of manpower blamed for poor shut-down rate

LA County may boast the biggest sheriff’s department in the country but its manpower is nevertheless inadequate to successfully tackle the shut-down of illegal pot shops.

The sheriff’s department has established a task force headed by Lt. Frank Montez who voices his concern about the safety of members of the community who frequent black market establishments. Montez points out that marijuana sold at these illegal outlets can be tainted with harmful substances, such as pesticides. Like the SCC’s executive director, Montez too believes that legal marijuana businesses that pay their taxes should have a fair playing field on which to operate. Montez believes that the black market is hurting the legitimate industry as well as the LA community as a whole because it is being deprived of a stream of taxation.

Illegal farm grows

Many LA County black market operators source their marijuana from illegal farms situated in the hills of Northern California. Lake County is one of those hot-spots because its topography allows illegal pot farmers to hide from view. The area has also attracted several cartels which have set up operations on federal and state-owned land and forests.

And like their counterparts in LA County, Lake County law enforcement officers do not have the manpower needed to make any significant impact on these illegal operations. Lake County’s Sheriff Brian Martin says that his deputies destroyed in the region of 250,000 marijuana plants and arrested 46 people last year during land and air raids but believes that to be only a tip of the iceberg. Martin does not know how many illegal grows are operating in the county but estimates that there are several million marijuana plants under cultivation.

His under-manned department has only one full-time detective assigned to operation-marijuana-eradication and has to rely on state and federal agencies for assistance if and when it’s available.

At the end of the day, Lake County simply does not have the necessary manpower to effectively fight illegal pot farming operations.


It was estimated that taxes on the sales of marijuana would fatten state and local government coffers to the tune of $175 million for the first six months after California legalized pot at the beginning of the year. However, in reality, this figure dwindled to a dismal $34, once again underscoring the real and frightening damage the black market is doing to a fledgling industry fighting for recognition as a legitimate player in the wider business world.

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