According to new data, consumers in California are almost three times more likely to buy cannabis products from an unlicensed marijuana shop than from a regulated one. This has resulted in lost tax revenue, and a flourishing underground pot industry. So what can we do to curb the growth of these shops? Here are some tips. But first, understand the situation. How do we define an illegal marijuana shop?
Unlicensed dispensaries and delivery services are more likely to sell cannabis products in California than regulated sellers
A recent study indicates that the unregulated cannabis market is three times larger in California than the regulated one. According to the state’s Bureau of Cannabis Control, there are about 2,835 unlicensed dispensaries and delivery services in the state. Only 873 of those retailers are regulated. The study’s authors say that the unlicensed cannabis industry is costing consumers money and damaging the environment.
While law enforcement is pursuing rogue operators to halt their business, many consumers are still skeptical. Many buyers believe that unregulated businesses are cheaper than legitimate retailers. After all, they do not have to pay state or local taxes. The fact is, consumers do not see a real incentive to pay higher prices when purchasing legal cannabis. However, the reality is that unregulated stores are a blight on local communities.
According to the Bureau of Cannabis Control, people in California are 3 times more likely to visit an unregulated shop than a regulated seller. While the official market is estimated to be around $3 billion, the unregulated market is more than three times larger. Additionally, these sellers face stiffer criminal penalties for selling marijuana to underage users. Therefore, they operate in secret. However, the results of the study are still far from definitive.
The findings were presented to Gov. Gavin Newsom, who has pledged to crack down on the Weedmaps app, which lists cannabis businesses regardless of state approval. However, Weedmaps, a popular website for dispensaries, is also being criticized by the cannabis industry for amplifying the reach of unlicensed sellers. Furthermore, the United Cannabis Business Association has proposed that the state retroactively impose millions of dollars on Weedmaps.
Despite being the largest legal marijuana market in the world, California’s unregulated marijuana market is growing in size and popularity. And despite the recent legalization of marijuana, consumers are increasingly turning to unlicensed dispensaries and delivery services to purchase the product. Ultimately, this has resulted in a thriving underground marijuana market and reduced tax revenue for the state.
The Weedmaps platform claims to have information on 3,757 active dispensaries in the state and 922 potential licenses. The report also shows that Californians are nearly three times more likely to visit an unlicensed marijuana shop than regulated ones. Although this isn’t the sole cause of the increased demand for cannabis, it is a clear indication that unregulated stores are a problem.
Californians are 3 times more likely to shop at an unlicensed retailer than a licensed retailer
Recent research reveals that Californians are more than three times as likely as non-cannabis consumers to shop at an unlicensed cannabis outlet. Despite legalization in California, there are still a large number of unlicensed retailers in the state, especially in low-income areas. The study also found that the majority of unlicensed stores are in low-income neighborhoods, and minority consumers are most disproportionately exposed to such retailers.
While unlicensed alcohol vendors have virtually disappeared in the state since the repeal of prohibition in 1933, the marijuana underground market is flourishing in California. Indeed, more than 80 percent of law enforcement officers said that unlicensed marijuana vendors provide marijuana to underage users. Additionally, nearly a third of respondents reported that the illicit market has increased since recreational marijuana use became legal. However, the government is doing little to address this problem. The first step is to reduce the amount of taxes on cannabis, which would help the state’s licensed retailers compete with unlicensed sellers.
In addition to the increased risk of illegal shops, an unlicensed cannabis retailer may be more shady than a licensed retailer. For example, in Los Angeles, the cannabis department makes random visits to licensed cannabis stores to ensure compliance. Another step is a proposal by Council President Nury Martinez that would create a cannabis enforcement program similar to the Tobacco Enforcement Program (TEP).
The lack of retail stores in California is also a problem in areas that allow for recreational cannabis sales. This lack of competition is a source of oversupply in California, which in turn increases the price of wholesale cannabis. Many lawmakers, however, have expressed concern that unlicensed cannabis shops could encroach on legitimate retail space. However, industry leaders say that state lawmakers are unlikely to overturn the local marijuana laws despite the widespread support from city and county officials.
The Insurance Institute for Highway Safety commissioned a study to determine why Californians are so likely to purchase marijuana from an unlicensed retailer. The researchers recruited young people and asked them to visit marijuana stores. They found that only about one in 10 young people in California would shop at an unlicensed store. They also found that there were more unlicensed stores in California than licensed ones.
This study also found that there are racial disparities in cannabis arrests. Compared to non-marijuana retailers, Black adults are three times more likely to commit crimes associated with cannabis sale and distribution than non-marijuana outlets. The researchers attribute this to the lack of diversity in the industry, as only 3% of licensed cannabis outlets in the state are owned by people of color.
California has more illegal marijuana shops than the data shows
According to the latest data from the Department of Cannabis Control, California has more illegal marijuana shops than the data suggests. But some of these establishments aren’t illegal. These are regulated businesses, and they have to follow certain laws in order to remain open. However, some communities in California are still against marijuana dispensaries. For instance, Manhattan Beach, a coastal community, has banned dispensaries because of concerns about advertising to minors and criminal activity. Yet, this year, the city may approve two licensed cannabis businesses, sparking a battle between a local entrepreneur and the city.
While cannabis use is legal in California, cities and counties can still ban marijuana shops. This patchwork of legal and illegal jurisdictions is apparent on a map. This map shows the cities and counties that allow cannabis businesses. In some areas, there are fewer than one per 100K residents. Therefore, a single storefront could be illegal in many places, and this can make it hard to find the right cannabis product for patients.
However, legalization of the marijuana industry has also benefited banks. While legalization has made the industry more accessible to banks, the restricted access to banking still perpetuates inequities between legal and illegal producers. Meanwhile, the illegal, unlicensed industry remains a huge cash-based sector. There are even more illegal marijuana shops in California than the data shows. So, there are many reasons for this.
The first and most obvious is the privacy concerns that many marijuana companies have. They don’t want the public to know what they are doing, especially in a state where marijuana is legal. The privacy concerns of these businesses are understandable, but many marijuana companies are not ready for the new law. As a result, they haven’t yet embraced it. Nevertheless, some businesses are trying to take advantage of the California law to gain a foothold in the cannabis industry.