Why Police Are Raiding California Pot Growers & What Can Be Done About It

The cultivation, sale, and consumption of cannabis is legal in California under state law. So many people across the country were shocked last week to see footage of Alameda County Sheriff’s deputies hacking marijuana plants with hedge trimmers during a bust in 18 Bay Area locations which brought in up to 500,000 plants and millions in cash.

The truth is, even though California has a state-sanctioned and highly regulated cannabis market, illegal crops still exist and are in fact flourishing. The Bay Area seizures illustrate just how lucrative and incentive this modern illicit cannabis trade has become.

California cannabis growers are reshaping a national and global market much like state winemakers have done with the wine industry. But the burdensome legal environment for regulating cannabis threatens to squander this economic opportunity.

Most of the responsibility lies with the federal government. The continued federal prohibition of cannabis created a web of compliance issues and economic imbalance that would be alleviated by reform. But California’s prohibitive excise taxes and excessive licensing costs make the Golden State system ripe for abuse and put compliant operators at a competitive disadvantage.

The latest development is the use of so-called “burner licenses,” in which gray market operators benefit from the characteristics of the California legal market, while diverting legal cannabis to illegal out-of-state markets.

The benefits of this setup are obvious to anyone who has tried to operate in the state’s legal market. By using a distribution license to acquire legally grown cannabis, then flagging the crop as “lost”, “damaged” or even in cold storage, illicit operators can sell to impatient customers across state lines, where California grass gets a premium and state regulatory scope ends. Ultimately, they avoid the taxes and compliance costs of running a legal business by letting the license expire and switching to a new license.

California is a victim of its own success in cannabis. Growers in the state are harvesting an incredible amount of high-quality flowers – more than Californians can consume – as cannabis connoisseurs everywhere else are paying the jackpot to the illicit actors who bring it out of California.

This is happening at a tremendous speed.

“California produces 13.5 million pounds of marijuana a year, but Californians only consume 2.5 million pounds,” according to a 2017 study by the State Department of Food and Agriculture. ‘Agriculture, which means illegal operators export more than 10 million pounds a year.

Unregulated crops cause problems for California’s environment and wildlife. A UC Davis study found that “an anticoagulant in rat poisons like d-Con” affects wildlife in California due to chemical runoff from unregulated crops. On public lands in California and elsewhere, illicit pot growers harm the environment in many ways.

By exploiting California’s decriminalized environment, illegal operators are taking over legal businesses that struggle to follow the rules. State and local social equity programs in California cannot compete on price. Legal weed is more expensive and the illicit market offers a selection of comparable product brands. Conversely, illegal operators face few penalties if they avoid taxes and sell products outside the legal market. Ultimately, communities lose tax revenue, businesses lose customers, and the environment loses responsible stewardship.

The Justice Department reports that using law enforcement to tackle unregulated drug production is neither effective nor effective, and catching illicit polluters after they pollute always leaves behind problems of extensive and damaging remediation. The only fair solution lies with the federal government: open the country to the interstate cannabis trade with the fewest barriers to entry possible.

This would level the playing field and give law-abiding businesses access to the tools and opportunities they need to be successful: intellectual property protection, federal assistance, crop insurance, and small business tax breaks.

Interstate commerce does occur, but it occurs without federal public health and safety regulations or tax enforcement. The serious policy answer is for Congress to allow and regulate the cannabis trade between states and legal nations. Congress ended alcohol prohibition in 1933 with the Blaine Act, and in doing so, it reduced organized crime, protected the public from tainted alcohol, and allowed taxes to be collected.

California licensed and compliant businesses deserve an opportunity to truly compete. Congress should let them do it.

Randal John Meyer is executive director of the Global Alliance for Cannabis Commerce and co-coordinator of the Cannabis Freedom Alliance.

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