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Audit finds nearly 3,000 illegal marijuana businesses in Calif., dwarfing legal trade

James Queally and Patrick McGreevy, Los Angeles Times on

Published in News & Features

The trade association also called on the state to retroactively impose millions of dollars in fines on Weedmaps under AB 97, a bill that passed in July and allows for $30,000 in penalties for each day a cannabis retailer operates without a license. Some have interpreted the law to mean that Weedmaps should also be subject to those fines for allowing unlicensed dispensaries to advertise without a license.

Alex Traverso, a spokesman for the Bureau of Cannabis Control , said the agency has been diligent in trying to combat the state's sprawling illegal marketplace.

"The bureau would love to be able to license more cannabis retail locations in California," he said. "Unfortunately, there are a number of factors that prevent us from doing that. It's not all under our control. As far as illegal activity is concerned, the bureau will continue its enforcement efforts and continue looking out for the public's health and well-being."

Earlier this year, the agency said it had served 19 search warrants at illegal dispensaries and seized roughly $16.5 million in unregulated cannabis products in the first six months of the year. Both totals were more than the entirety of enforcement actions taken by the agency in 2018.

The BCC also sent a cease-and-desist letter to Weedmaps last year, demanding that the website stop working with unlicensed operators. But Weedmaps has argued in the past that it is protected from such orders under Section 230 of the 1996 Communications Decency Act, which has shielded platforms like Facebook and YouTube from responsibility for the content their users post.

Late last month, however, Weedmaps said it would stop allowing unlicensed businesses to advertise on its platform, an announcement met with a mixture of praise and skepticism from those who consider the website the bane of California's legitimate cannabis industry.

In a statement issued Wednesday, the company said that in addition to requiring new advertisers to provide a state license number, customers will also need to provide a state identification. Despite the effort, Weedmaps Chief Executive Chris Beals said California's black market would not truly be affected until more municipalities allow legal cannabis sales.

"While these policy changes will only have a symbolic impact on the size of California's unlicensed market without more licensing opportunities and other large listing platforms following suit, we want to continue to lead by example," Beals said in a statement.


Fewer than 20% of cities in California -- 89 of 482 -- allow retail shops to sell cannabis for recreational use. While many large cities, including Los Angeles, San Diego and San Francisco, allow for the sale of commercial cannabis, even those cities have struggled to curb the black market.

Earlier this year, a Los Angeles Times audit of Weedmaps found there are at least 220 unlicensed dispensaries in Los Angeles. By comparison, the city has issued only187 temporary licenses for legal storefronts.

(Queally reported from Los Angeles and McGreevy from Sacramento. Times staff writer Ben Welsh contributed to this report.)

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