(The Center Square) – After a long period of leniency towards illegal marijuana, California has recently started cracking down, and has seized over $70 million in illegal products since the start of July alone. The crackdown comes as California cannabis operators received $120 million in bailouts but still owe nearly $1 billion in back taxes, 72% of which is from companies that no longer exist.
“Our communities are safer with over 42,000 pounds of illicit cannabis taken off the streets since the beginning of the year,” said California Gov. Gavin Newsom in a statement. “Through the UCETF, California continues the charge in cracking down on the illicit cannabis market for the safety of consumers and the support of the legal cannabis industry.”
In California, a 15% cannabis tax rate on top of a typical 10% or so local tax rate means legal retailers are unable to compete with the illicit market — and with the excise tax set to rise to 19% on January 1, 2025, even more sales could move back to the black market, leaving legal sellers with no choice but to go bust.
15.4% of California’s cannabis retail license holders are in default on taxes, and legal sales have been plummeting, falling to 2020 levels earlier this year. This decline could leave Michigan, which is a quarter of the size of California, soon surpassing the state in marijuana sales.
Since the start of the year, California has sized $191 million of illicit pot. Illegal pot is often the same as that sold in stores, but could include dangerous pesticides and additives — and even other drugs.
“These illegal schemes not only threaten California’s legal cannabis market, but the use of illegal pesticides and unregulated practices harm California’s environment and water quality,” said Newsom’s office in its statement on the seizures. “California is also focused on ending the exploitation of vulnerable workers at these sites, who are often victims of labor violations and human trafficking.”
Many illegal grows in California utilize indentured servants who are often smuggled across the border and subjected to abuse and wage theft.
