California Gives Up on the Illegal Cannabis Market: More of the Same – Cannabis Business Executive

By Griffen Thorne, Attorney at Harris Sliwoski

Last week, California’s Department of Cannabis Control (DCC) released illegal market enforcement data for quarter 1 of 2024. It’s become a new tradition of mine to compare this quarterly data and see whether the state is actually doing anything to fight the illegal market (for example, see my posts for Q4 2023, Q3 2023, and Q2 2023).

What does California’s Q1 2024 data show?

Below is a side-by-side comparison of the enforcement data published by the DCC from Q1 2024 as compared to Q4 2023:

[**Note that the DCC’s Q1 2024 data does not have the same chart as prior data sets, and some of the data points were characterized differently. For example, the amount of cannabis allegedly seized was referred to as the “retail value” in Q3 2023, but not in Q1 2024. It is therefore unclear exactly what DCC means and how it reached these value calculations.]

Interpreting the illegal market data

Q1 2024 saw an increase in seizure of plants and pounds of harvested cannabis. I don’t think we can extrapolate too much from the agency’s valuation, but the numbers certainly increased. So by that metric, the needle has moved a bit.

At the same time, we saw a 25% decrease in the number of warrants served. That means that the locations that were raided (1/3 of which were in Orange County) had a lot more cannabis and plants than those raided in Q4 2023. I interpret this to mean that most or all of these 18 warrants were served on illegal grows, warehouses, or manufacturing operations, and not on retail facilities. While that may be a slight disruption in supply to the illegal market, it is undoubtedly just a drop in the bucket.

Anything else to add?

I’ll keep this post relatively brief for today. There isn’t much else to report on the enforcement front. There are a host of potential cannabis-related bills making their way through the legislature, some of which may do good (see here and here for example), and some of which may make life even harder for licensed businesses.

It’s worth noting for the trillionth time that anything the state does to make life harder for legal operators will make things better for the illegal market. And the state seems to be aggressively committed to making things as difficult as possible for people who invested years and endless amounts of money to get licensed.

Then there are these crazy stories we sometimes hear about people who did nothing wrong and got penalized, or who followed all the rules and got in trouble regardless. Here’s an example of an alleged crazy fact pattern I recently say a lawyer write about on Twitter:

Joined my @IJ colleague Jared McClain in San Francisco this morning for oral argument before the Ninth Circuit (screenshot of the argument below).

We’re representing a group of property owners in Humboldt County, CA, who are facing massive fines imposed because other people… pic.twitter.com/hv2gQHzSJz

— Rob Johnson (@FreeRangeLawyer) April 9, 2024

I’ll be back next quarter to report on the state of affairs with California’s so-called enforcement against the illegal market. I hope to have better news, but doubt I will.

Reprinted with the permission of Harris Sliwoski