Managing California’s Cannabis Industry Requires Vigorous Law Enforcement
Corruption Pervasive Across California Cannabis
There are roughly 5,000 greenhouses illegally cultivating marijuana in Siskiyou County, Calif., according to the county’s Sheriff’s Department in March 2023. (Courtesy of the Siskiyou County Sheriff’s Department)
By John Moorlach
May 11, 2023Updated: May 14, 2023
Let me confess that while I served in the California State Senate, I tried my best to expedite the state’s efforts to assist the birthing efforts of the legal cannabis industry’s efforts to get established and functioning. As vice chair of the Senate Governance and Finance Committee, I can remember long meeting sessions to assist the Department of Cannabis Control in establishing regulations and policies.
Proposition 64, the California Marijuana Legalization Initiative, was passed in November 2016 and the implementation date was Jan. 1, 2018. This did not allow much time to approve the legislation required to establish a seamless infrastructure for this budding industry.
We even had the then-Governor of Colorado, John Hinkenlooper, testify in the Capitol, sharing his state’s experiences in addressing all of the details that come with this new and emerging market.
As a member of the Senate Budget and Fiscal Review Committee, I can remember a lighter moment when I discovered a typographical error in budget documents the members were provided. When I brought it up to then-chair, and now Los Angeles County Supervisor, Holly Mitchell, the room had a good laugh. Jonathan J. Cooper of the Associated Press would send out a tweet: “@SenatorMoorlach catches this epic typo in Senate budget committee staff report”—“Bureaus of Cannibals Control.”
It provided me an opportunity to point out how quickly the process was moving that even tools like spell check were not helpful in catching certain typos.
Some problems we could not fix. With my accounting background, I worked on ways to assist this cash-only business to participate in the banking system, as a federally chartered bank may not transact with an illegal business. Consequently, I was a cosponsor of a Senate Resolution requesting the federal government to remove marijuana as a Schedule 1 controlled substance.
Here we are, some six years later, and the conundrum of having an illegal substance now available in a legal framework, and there are still dark and disturbing forces making this transition awkward and unseemly. As they say, no garden is without its weeds.
In February, California Assemblyman Reginald Jones-Sawyer, Sr. (D-57th Assembly District) wrote to the chair of the California Joint Legislative Audit Committee requesting approval for the state auditor to review perceived conflicts of interest and corruption in municipal cannabis licensing.
“Allegations of corruption during the awarding of municipal cannabis operating licenses are far from new, especially in California, where tales of backdoor wheeling-and-dealing between companies and public officials have been circulating for years as legislators work to stand up a regulatory framework for honest brokers,” he wrote.
The request would highlight recent plea agreements in three California municipalities involving the granting of business licenses:
- Baldwin Park—A city councilmember admitted to soliciting bribes in the form of a campaign donation.
- San Bernardino—A county planning commissioner acted as an intermediary in funneling bribes.
- Huntington Park—This city still has not issued its audited financial statements for the year ending June 30, 2020. Its city manager has been distracted as he allegedly doubled as a consultant for a cannabis business and participated in a pay-to-play scheme.
Last month, the former executive director of the Democratic Party of Orange County pleaded guilty to wire fraud charges and admitted that she had tried to bribe two Irvine city councilmembers on cannabis-related matters. Regretfully, the city council decided not to pursue an independent investigation.
This week, Oregon Secretary of State Shemia Fagan resigned after it was revealed she had accepted a lucrative consulting arrangement with a cannabis company, causing ethical concerns.
One would think that the city of Costa Mesa has more than fifty applications for cannabis retail locations. With this type of growth for a narrow product, one would expect the saturation to impact prices. This is already occurring in Northern California, and in a dramatic fashion. Growers are seeing prices per pound drop from $4,000 to a range between $300 and $500.
I’m not going to advocate that you purchase and consume cannabis products. But I do want to give those who want to be legitimate retailers a sporting chance.
I am someone who has been opposed to those who operate in the underground economy. And with marijuana, there have been and continue to be plenty of illicit sellers. This makes competing even more difficult for those who are operating their businesses in a legal fashion, along with paying fees and income taxes in an appropriate manner. Those who skirt the rules should be arrested, prosecuted, and penalized with heavy fines for their illegal behavior.
Transitioning from illegal to legal is a challenging endeavor. And there are plenty of individuals who would like to be legitimate manufacturers and retailers without the fear of being arrested and jailed. Proposition 64 received 57 percent of the vote in 2016. That means that nearly 6 out of every 10 voters approved of this effort to move “Mary Jane” out of the shadows. And since it is now the law of the land, law enforcement multi-agencies, known as Eradication and Prevention of Illicit Cannabis (EPIC), and the Department of Cannabis Control need to do their best to assist those who are abiding by the new recreational use rules.
The marketplace may solve the growth of cannabis retailers, as the pie can only be broken up into so many pieces.
But having this unique niche business, which is trying to move into the legal marketplace, undermined by those who still sell cannabis illegally, bribe local officials (for licenses or to eliminate potential competitors), or find those in government in the pockets of vendors, must be vigorously eliminated. Or California will see this conversion effort result in a new variation of bootlegging.