California’s frustrating fight to end illegal weed

ARCADIA, California — Law enforcement officers from the California Department of Cannabis Control converged on a shabby off-white storefront in the Los Angeles suburb of Arcadia around 7 a.m. on a Tuesday in June, clogging up traffic with a half dozen mostly unmarked police cars. Within half an hour, two of the storefront’s employees were in handcuffs, while officers used a set of pliers to break open its safe.

Inside, they found cash and unlicensed marijuana products like counterfeit “Nerds Rope” edibles.

What was advertised outside as a tax office was actually an illegal dispensary, its windows boarded up from the inside so nobody could peer in. The two detained employees both claimed it was their first day on the job, and didn’t know the shop was unlicensed — despite its location directly beside a preschool, a blatant violation of California’s cannabis licensing rules.

California legalized recreational cannabis in 2016, with hopes it would bring illegal operators out of the shadows. But the unlicensed market was already robust and the regulated market set high taxes and fees that made it hard to compete with unlicensed growers and sellers. To make matters worse, it was unclear from the start which agencies were supposed to enforce the new rules.

The June raid that began in a dramatic flurry ended simply. Bags filled with marijuana products and a ziplock bag full of cash were toted out of the shop. And the two employees left, released by law enforcement.

“We don't want to put humans in jail. We don't think that the consequences of that are appropriate,” said Nicole Elliott, director of the California Department of Cannabis Control, in an interview after the raid. “We've targeted black and brown people … The way that we've done this has been done wrong. And so what is the right way to do it?”

The raid was a relatively mundane part of the DCC's larger mission to eradicate thousands of unlicensed dispensaries across the state. It’s a task that feels a bit like ridding a summer night of mosquitoes.

California is far from alone in this fight. As legalization has spread across the country — 26 states and the District of Columbia have legalized recreational marijuana, and 38 now have medical marijuana programs — the illegal market has refused to disappear, instead reimagining itself by finding new regulatory loopholes to exploit. In Oregon , illegal operators posed as hemp farmers. In Oklahoma , illicit growers used the state’s medical marijuana program as camouflage. And in New York City , a slow license rollout gave thousands of cannabis trucks and smoke shops time to claim space.

The cannabis market in the U.S. was worth an estimated $103 billion in 2023, according to Whitney Economics, which tracks the industry. But due to the unlicensed market’s tenacity, just $31 billion of that came from legal shops. By 2026, the firm estimates that illegal sales will still account for 61 percent of the cannabis market.

States like California are now scrambling to figure out how to finally stop the seemingly never-ending reincarnation of illegal shops and cultivation facilities without reverting to the packed paddy wagons of old.

“What is the right way to drive accountability in this space from a penalty standpoint? ... I don't know that anyone has the right answer,” Elliott said. “We're all trying to work through what that looks like now.”

'Break in accountability'

Los Angeles County is a vast puzzle with 88 cities and about 120 unincorporated areas — and most locales do not allow marijuana sales. When California legalized cannabis in 2016, the ballot measure included an “opt-in” clause. While possession is legal anywhere in the state, cities and counties have the power to decide whether cultivation, production and retail storefronts are permitted in their jurisdictions.

More than half of California’s cities and counties still do not allow retail sales of cannabis. Weed companies cannot operate in unincorporated LA County (where 1 million people live), nor in 61 of 88 cities.

There are 1,202 licensed retail dispensaries in California, according to the Department of Cannabis Control. Just 373 of those are in Los Angeles County — a ratio of one dispensary for every 27,000 residents. In contrast, Michigan’s market began two years after California, yet has one dispensary for every 12,000 residents. Oregon has one for every 6,000 residents.

Weed sales are legal in the City of Los Angeles, but the license rollout and regulatory enforcement was a misadventure from the start. When California’s recreational market launched on Jan. 1, 2018, there were no legal shops in the state’s largest city.

“If you want weed in LA, go to WeHo,” Curbed LA exclaimed on Jan. 2, directing readers over the city line to West Hollywood.

But what truly exacerbated the problem is that Los Angeles also did not have a clear plan for enforcing regulations and shutting down unlicensed businesses, according to Cat Packer, the first executive director of the city’s Department of Cannabis Regulation. Unlicensed dispensaries popped up like chicken pox, drastically outpacing licensed shops and breeding public confusion.

“I could see this break in accountability of who was going to be responsible for what,” Packer, now director of drug markets and legal regulation at legalization advocacy group Drug Policy Alliance, said in an interview. According to Packer, the LAPD chief at the time, Charlie Beck, told her before legalization took effect that cannabis enforcement was not going to be a priority for the police force. Instead, the Department of Cannabis Regulation, which was still staffing up, could take over. Beck declined to be interviewed for this story.

At the time, the city did not have a central place to receive cannabis-related complaints. Packer set up a central line for the public to report infractions and problems, but failed to get adequate buy-in from other city agencies and law enforcement.

“[We] spent time and resources building this complaint portal, and then everybody acted like they didn't know how to use it,” she said.

It’s been more than four years since Packer left L.A., but agencies there are still passing the buck on enforcement: In fact, not one city or county agency in Los Angeles — including law enforcement, the Department of Cannabis Regulation, and the DA’s office — agreed to an on-the-record interview with POLITICO for this story.

“What everyone wants to tell you, it's not popular right now,” said Brad Rowe, a researcher and author of “Cannabis Policy in the Age of Legalization.” Rowe is conducting a study for the City of Los Angeles intended to figure out which tools are most effective in eliminating the unlicensed market without locking anybody up. “We need more enforcement. And no one wants more enforcement, ever.”

Targeting business owners and landlords is a big part of the California Department of Cannabis Control’s enforcement plan. Rather than use expensive policing resources to put everybody in jail, city and state regulatory agencies now levy citations and fines against the business owners and their landlords.

A similar approach is being used in New York City — where the city launched an operation titled “Padlock to Protect” which gives law enforcement more authority to shut down unlicensed shops. The city can then keep the shop padlocked for up to a year. New York City had about 4,000 shops before the program launched, but authorities have closed about 1,000 locations in the city since.

“They have been more aggressive than we have,” Elliott said, on holding building owners accountable for knowingly allowing unlicensed marijuana companies to operate. “And I would like to see us be more aggressive on that front.”

Overhauling enforcement

In 2022, Gov. Gavin Newsom retooled the decadesold Campaign Against Marijuana Planting program into the Eradication and Prevention of Illicit Cannabis task force. The task force received more funding, staffing increased from one to five and operations are now year-round. But gone is the CAMP of old, helicoptering into the mountains of Humboldt County and throwing growers in prison for years. The state agencies have new methods now: Dispensary workers are often held for questioning and then let go, for example, and law enforcement focuses efforts on the top of the criminal organization. It’s paired with the laborious process of targeting landlords with fines and by locking up their buildings.

These tactics have made some headway: In 2020, 35 percent of California’s cannabis was sold in legal shops, according to the industry tracking firm Whitney Economics. In 2023, that number rose to 43 percent, and it’s projected to hit 50 percent in 2025.

San Diego County Sheriff Department Sergeant Nicholas Backouris says his agency has made headway against the unlicensed market through interdepartmental collaboration. A single law enforcement raid on an unlicensed cannabis grow in his county may include the state water authority, land use regulators, county code officers, the local power company and financial investigators, among others.

The state and county agencies levy a combination of fines against unlicensed operators that, when added up, could pay off a mortgage in many U.S. cities: $270,000 for power theft and a combined $570,000 from multiple agencies for tax evasion.

“I don’t know what’s better — the fines, the jail, I don’t know,” Backouris told POLITICO. “It’s not like there’s no penalty. There’s still a penalty.”

While cannabis is often compared to liquor, the fines for selling those products without a license in California are not the same. Illegally selling liquor is a criminal misdemeanor, punishable by a fine of up to $5,000 and up to six months in jail. Illegally selling marijuana, meanwhile, is a civil penalty — meaning no jail time — but has much higher fines of up to $30,000.

And for the LAPD, that’s actually just fine — according to Packer.

“The chief of police said pretty plainly, [that] this was not a good look for them. Cannabis enforcement was no longer a good look for them,” Packer recalled. The LAPD did not respond to requests for comment for this story.

Theoretically, the move away from a law enforcement solution is what activists have worked toward for decades. But practically, a lot of resources and cooperation are required to move enforcement from local police departments to other city and state agencies, and that doesn’t happen overnight.

“Law enforcement has expressed frustration that the penalties for cannabis related offenses have been reduced. But aggravating circumstances still carry serious consequences,” Elliott said via email. “When you think about all the harmful activities often associated with illegal cannabis — environmental harm, human trafficking, stealing electricity, involvement in organized crime — those circumstances still merit serious consequences.”