Authorities shut down an unlicensed cannabis dispensary Wednesday in South Los Angeles, with city officials saying the crackdown is aimed at deterring other illegal operators.
Los Angeles police served a search warrant and closed the illegal dispensary located at 8931 S. Broadway. City Councilman Marqueece Harris-Dawson, who represents the area, said his district has “far too many illegal dispensaries.”
“We have over 70 illegal dispensaries in our district and dozens are still listed on platforms like Weedmaps,” Harris-Dawson said. “Illegal dispensaries poison our neighborhoods and their own customers by operating dangerous, unregulated businesses. Additionally, these illegal actors make it difficult for legal dispensaries to operate successfully, including Cannabis Social Equity Program participants.”
Last week, Weedmaps announced that it would stop listing unlicensed cannabis businesses on its platforms, but the Irvine-based company also said the solution to the problem is to give licenses to more businesses.
“Shutting down these persistent offenders will help to create more opportunities for legal cannabis businesses to contribute to their communities and the city while draining resources from the illegal market,” said Cat Packer, executive director of the Los Angeles Department of Cannabis Regulations.
Twenty months since licensing and regulation began of newly-legalized sale of cannabis for recreational use in California, licensed shops account for only 20 percent of sales, according to Ruben Honig, executive director of the United Cannabis Business Association. Its members are committed to growing a viable regulated industry. But in the current situation, Honig fears some licensed shops may fail in the face of competition from unlicensed sellers with a lower cost of doing business, in part because they avoid paying taxes that amount to 34.5 percent of sales.
Authorities worry that the transformation of cannabis from underground to regulated markets could be jeopardized if unlicensed sales continue to dominate, as they have in the eight decades since cannabis was classified as a conrolled substance.
Harris-Dawson said Wednesday’s enforcement action was part of a multi-pronged approach to close illegal cannabis shops. Cease-and-desist letters have been delivered to 231 illegal businesses and the property owners of those businesses.
The councilman joined Mayor Eric Garcetti, the chiefs of police and fire, and three of the city’s department heads at a news conference Wednesday announcing the Cannabis Enforcement Task Force, relying on multiple agencies using not only police action, but also civil pressure to keep shutdown unlicensed shops from reappearing.
Utilizing a new ordinance, the Department of Water and Power has shut off utilities at 193 illegal dispensaries. In some cases, dispensaries have brought in portable generators and installed them on rooftops to re-open. So authorities now plan expanding safety inspections by the Fire Department and Building and Safety.
Last week, a proposal authored by Harris-Dawson was advanced to the City Council that would allow officers to padlock, board up or fence off illegal cannabis businesses.
But the crucial question is whether the majority of cannabis customers will see value in supporting regulated shops, or continue to buy in the unlicensed market.