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LA Cracks Down on Its Massive Black Market. Will It Be Enough?

The city has aggressively gone after unlicensed, illegal cannabis businesses, filing misdemeanor charges against more than 500 people and shutting down 105 illegal cannabis businesses. But the authors think they could go farther.

Opinions expressed by Entrepreneur contributors are their own.

The City of Los Angeles recently launched a massive crackdown on black market cannabis businesses, including cultivation operations, extraction labs, and delivery companies across the city. In Los Angeles, a charge of unlicensed commercial cannabis activity within the city carries a potential sentence of six months in jail and $1,000 in fines.

Gerard Burkhart | Getty Images

Los Angeles’ City Attorney Mike Feuer, who has a track record of going after illegal cannabis businesses within the city, summed up the city’s reasoning behind its recent enforcement actions succinctly, saying, If they’re going to go through this process, it just cannot be the case that others that flout the rules are allowed to function. It’s bad for those who buy from them, it’s bad for the communities in which they’re located and, again, it threatens to undermine the viability of a system that’s predicated on lawful licensing.”

Although there are currently around 165 approved cannabis storefronts and delivery businesses in Los Angeles, there are many more operating without the necessary approvals, a problem that has plagued the city for years and will likely be an ongoing issue.

What the law says

“Commercial Cannabis Activity” includes the cultivation, possession, manufacture, distribution, processing, storing, laboratory testing, packaging, labeling, transportation, delivery or sale of cannabis and cannabis products.

A current listing of the penalties of cannabis offenses in California can be found here. A quick check of the Federal rules found the following:

“Marihuana CSA Penalties

  • 1000 kilograms or more or 1000 or more plants  $10/50 million 10 years to life
  • 100 to 999 kilograms or 100 to 999 plants $5/25 million 5 to 40 years 
  • 50 to 99 kilograms or 50 to 99 plants $1/5 million Up to 20 years
  • Under 50 kilograms, 10 kilograms of hashish, 1 kilogram of hashish oil, or 1 to 49 plants $250,000/$1 million Up to 5 years”

How the law could be more effective

We truly have no desire to revive the “War on Drugs” however, we at the Cannabis Law Report can imagine a scenario where Penal Code Sec. 1170(h) is amended to adopt the Federal penalties for second and subsequent offense convictions for Illegal Commercial Cannabis Activity. We would be willing to bet that while “padlock” procedure might have a small impact, the possibility of up to 40 years of incarceration just might be sufficient to get a substantial number of the recalcitrant black market to come out from underground into the light.

It would certainly provide law enforcement with the tools they need to either stamp out a large portion of the black market or scare some of them straight. The authorities have telegraphed a willingness to charge felonies for environmental damage. It is truly unfortunate, but it might be just what is needed to destroy the black market.

It a reincarnation of the carrot and stick approach – you shove the carrot up their ass and beat them with the stick. As we think this through, it might be possible to implement something like this without requiring legislation. The state and local authorities could selectively turn offenders over to federal law enforcement for prosecution. A very similar approach was deployed in Virginia a number of years ago to deal with illegal firearms and it was incredibly successful.

A successful model in Project Exile?

Project Exile was a crime reduction strategy launched in 1997 in Virginia, by the U.S. Attorney’s Office, as a result of the spike in violent crime rates in the late 1980s and early 1990s. During these years, Richmond, Virginia consistently ranked among the top 10 U.S. cities in homicides per capita. Specifically, in 1994, Richmond was ranked 2nd for homicides per capita, with a homicide rate of 80 per 100,000 residents. Overall, the goal of the project was to deter felons from carrying firearms and decrease firearm-related homicides through both sentence enhancements for firearm-related offenses and incapacitating violent felons.

Essentially functioning as a sentence enhancement program, Project Exile targeted felons who were caught carrying firearms (i.e., felon-in-possession-of-a-firearm [FIP]) and prosecuted them in federal courts where they received harsher sentences, no option of bail, and no potential for early release. Prior to Project Exile, FIP cases could be processed in state courts. Through increasing the expected penalty for firearm-related offenses, Project Exile sought to deter both firearm carrying and criminal use. Additionally, through sentencing more violent offenders to longer prison sentences, the program sought to reduce crime through incapacitating violent felons.

In addition to incapacitating offenders, the program sought to deter would-be offenders. To make the public aware of the sentence enhancements surrounding firearms, a broad “outreach” campaign was implemented using media outlets. The public campaign was implemented to increase community involvement and to send a message of zero-tolerance for firearm offenses. The goal of the message was to indicate a “swift and certain” federal penalty for firearm offenses. Advertised in both electronic and print media outlets, the campaign was featured on city buses and business cards displaying a specific message: “an illegal gun will get you five years in federal prison” (Rosenfeld, Fornango, and Baumer 2005).

The program consisted of a number of distinct elements:

  • A felon in possession [“FIP”]  of a firearm would be remanded and denied bail until trial.
  • A conviction would result in a MINIMUM sentence of five years in federal prison.
  • The convicted felon would be denied commissary, library and mail privileges for the duration of their sentence
  • The incarceration would be in a facility AT least a thousand miles from the felon’s home

We think that a similar program would put some black market operators in a “world of hurt”