California’s legal marijuana businesses blow whistle on unlicensed operators

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(This is an abridged version of a story that appears in the May-June issue of Marijuana Business Magazine.)

A number of permit-holding marijuana retailers in California view unlicensed competitors as serious threats.

While fully compliant cannabis retailers across the Golden State are being forced to pass high tax rates on to their customers, some brazen unlicensed dispensaries advertise that they don’t pay state or local taxes, meaning their marijuana is far cheaper than prices at law-abiding shops.

The disparity has led licensed retailers to file complaints with the California Bureau of Cannabis Control about many of those unlicensed competitors, plenty of whom were identified by the bureau through their ads on Weedmaps.

But Weedmaps is incidental to the real conflict.

The real story pits former political allies – California MJ companies were largely united behind full legalization in 2016 – against each other as the economic pie gets divided into haves and have-nots.

The situation even led Alameda County District Attorney Nancy O’Malley to try to soothe industry concerns over “snitching” on competitors when she took part in a March panel sponsored by the California Cannabis Industry Association in Sacramento.

O’Malley specifically raised the possibility of businesses being hesitant to inform on unlicensed competitors that are breaking state law.

“That’s not snitching,” she said. “That’s business.”

That represents a culture shift. Taxpaying marijuana businesses are incentivized like never before to get the entire industry’s act together, which means blowing the whistle on bad actors.

Legalization, in other words, has turned plenty of former rebels and outlaws into narcs, in a strange twist of fate.

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