Tag: black market marijuana

Amid Michigan Legalization, Black Market Weed Goes Unchecked

“We’re literally seeing hundreds of businesses that have opened up across the state and sell recreational marijuana without a license,” said one police official.

Voters in Michigan legalized recreational marijuana use last year, but legal dispensaries won’t be operating until 2020 in the state. However, illegal dispensaries are popping up all over the place, and law enforcement is doing little to combat them, according to a recent report.

“We’re literally seeing hundreds of businesses that have opened up across the state and sell recreational marijuana without a license,” Michigan State Police Lt. Chris Hawkins told MLive. And yet, he added,”The resources we have to address black market unlicensed marijuana are very limited.”

Going Undercover

Recently, Hawkins sent undercover officers into a medical marijuana dispensary, and they were able to purchase cannabis without showing any identification or a medical marijuana card.

That’s illegal, but Hawkins said that it’s unlikely anything will happen to the dispensary, since many prosecutors and others in law enforcement have decided not to use their limited resources going after black market cannabis.

The issue is so pervasive in the state that Michigan Attorney General Dana Nessel and Andrew Brisbo, director of the Marijuana Regulatory Agency, met about the problem. However, they have not yet reached a solution.

“We talked about, at some point we really have to start coming down on those who are operating illegally,” Nessel said. “Just the same way we would, by the way, if you were selling cigarettes illegally. Just the same way we would if you had manufactured moonshine in your bathtub, and nobody had tested that to find out if it was safe and you didn’t have a license to sell it. So, at some point, you know, that’s going to be part of the function of our office is to make certain that the laws are enforced and that it’s properly regulated.”

Michigan’s Black Market

Michigan’s medical marijuana law allows caregivers to grow cannabis for as many as five people: up to 72 plants total. They are allowed to sell the excess weed to licensed dispensaries, but many turn to the black market instead.

One caregiver who spoke with MLive said that he sells to illegal dispensaries because it is safer than selling himself, but he makes a higher profit and a faster sale than he would be able to make at legal dispensaries.

Some medical dispensaries are already feeling the pressure of competing with the black market, said Stuart Carter, who owns a licensed medical dispensary. “We’re seeing a downturn in our sales,” he said. “For every dispensary, there’s four illegal delivery services.”

As the state begins to accept applications for recreational dispensaries, Hawkins says that the legal market will only survive if law enforcement clamps down on the black market.

“I don’t know how the licensed industry survives when there’s a thriving black market where marijuana can be sold untested,” he said.

View the original article at thefix.com

9 August 2019
California's #Weedwise Campaign Aims To Combat Illegal Pot

The public information campaign will highlight the potential health risks of consuming illegal marijuana.

In an effort to stem California’s flourishing black market marijuana trade, the state’s cannabis regulatory bureau has launched a digital public information campaign called “Get #weedwise,” which will encourage consumers to buy marijuana products from licensed businesses.

The three-year, $1.7 million campaign, which kicked off June 21, is also intended as a warning to unlicensed businesses and growers, which will be targeted for shutdown as part of a larger campaign that is also focused on expediting business licenses.

The #weedwise campaign will be disseminated via ads on mobile phones and social media sites as well as billboards; Lori Ajax, chief of the state’s Bureau of Cannabis Control, which is overseeing the ads, noted that its focus will “directly impact consumer safety by clarifying that only cannabis purchased from licensed retailers has met the safety’s standards.”

Digital ads will detail health risks that can be incurred by purchasing illegal cannabis, including exposure to chemicals, mold, metals and even fecal matter.

Consumers who wish to confirm that their retailers of choice are licensed are directed to the state’s online database, where they can enter information about businesses by address or license number.

A confluence of high taxes and buyer loyalty to black market sources has helped to undercut California’s attempt to earn a revenue windfall from cannabis since Proposition 64 legalized it for recreational use in 2016.

Legal business owners have also complained to state officials about these issues, as well as a perceived lack of action against illegal businesses, which are estimated to number more than 1,000 in Los Angeles alone. However, the ad campaign has been largely met with a positive response.

“It’s overdue, said Virgil Grant, a dispensary owner and co-founder of California Minority Alliance, a cannabis industry group. “If consumers turn against unlicensed shops, then they can’t exist.”

Bureau spokesperson Alex Traverso told KOVR, the CBS affiliate in Sacramento, that the Get #weedwise campaign is one part of a larger, three-pronged effort to curb illegal sales that will include the closure of illegal businesses and growers, and expediting licenses to business.

“When you have a government agency saying here’s how you know what’s legal and illegal, we feel like that’s a linchpin for success,” said Jerred Kiloh, president of the United Cannabis Business Alliance in Los Angeles.

View the original article at thefix.com

1 July 2019
California’s #Weedwise Campaign Aims To Combat Illegal Pot

The public information campaign will highlight the potential health risks of consuming illegal marijuana.

In an effort to stem California’s flourishing black market marijuana trade, the state’s cannabis regulatory bureau has launched a digital public information campaign called “Get #weedwise,” which will encourage consumers to buy marijuana products from licensed businesses.

The three-year, $1.7 million campaign, which kicked off June 21, is also intended as a warning to unlicensed businesses and growers, which will be targeted for shutdown as part of a larger campaign that is also focused on expediting business licenses.

The #weedwise campaign will be disseminated via ads on mobile phones and social media sites as well as billboards; Lori Ajax, chief of the state’s Bureau of Cannabis Control, which is overseeing the ads, noted that its focus will “directly impact consumer safety by clarifying that only cannabis purchased from licensed retailers has met the safety’s standards.”

Digital ads will detail health risks that can be incurred by purchasing illegal cannabis, including exposure to chemicals, mold, metals and even fecal matter.

Consumers who wish to confirm that their retailers of choice are licensed are directed to the state’s online database, where they can enter information about businesses by address or license number.

A confluence of high taxes and buyer loyalty to black market sources has helped to undercut California’s attempt to earn a revenue windfall from cannabis since Proposition 64 legalized it for recreational use in 2016.

Legal business owners have also complained to state officials about these issues, as well as a perceived lack of action against illegal businesses, which are estimated to number more than 1,000 in Los Angeles alone. However, the ad campaign has been largely met with a positive response.

“It’s overdue, said Virgil Grant, a dispensary owner and co-founder of California Minority Alliance, a cannabis industry group. “If consumers turn against unlicensed shops, then they can’t exist.”

Bureau spokesperson Alex Traverso told KOVR, the CBS affiliate in Sacramento, that the Get #weedwise campaign is one part of a larger, three-pronged effort to curb illegal sales that will include the closure of illegal businesses and growers, and expediting licenses to business.

“When you have a government agency saying here’s how you know what’s legal and illegal, we feel like that’s a linchpin for success,” said Jerred Kiloh, president of the United Cannabis Business Alliance in Los Angeles.

View the original article at thefix.com

26 June 2019
Black Market Cannabis Thrives In California, Despite Legal Options

Some customers would rather give their business to the black market to avoid the highly taxed, legal option.

A combination of high taxes, buyer loyalty and legal red tape has allowed black market sales of marijuana in California to flourish, despite its legality for both medical and recreational use.

That’s the opinion of High Times, which detailed the conundrum faced by buyers and sellers in the Golden State: the 15% tax imposed on marijuana from licensed state dispensaries is too steep for some consumers, who turn to street dealers despite the threat of legal repercussion.

Complicating matters are a lack of manpower and resources to fight black market sales and the relative complexity of licensing for prospective cannabis dispensaries. Stuck in the middle of this push-and-pull are consumers, especially medicinal marijuana users, who don’t want to turn to street sales, but can’t afford California’s tax rates.

To underscore the choices faced by consumers, High Times cites 2016 figures from Statista, which list the street value of an ounce of marijuana at $218 dollars, while the same amount from a legal dispensary costs $299. For Jake Heraty, a college student at San Francisco with serious health issues, that price differential determines whether or not he’ll eat dinner on a given day.

“I’d prefer to go to a store and pick out just what I want,” he told High Times. “But when you have to pay an extra 15% in taxes, there’s really no questions. I just can’t afford to throw down 20 extra dollars so the state can get their share of the cannabis market.”

High Times also spoke to “Marco,” a Bay Area dealer who illustrated why trust is also a factor in consumers choosing black market buys over dispensaries. An abundance of new growers and distributors without the years of experience earned by those in the illicit trade has resulted in what he called “B to C grade product floating around.” That undercuts return customers and trust, which according to Marco, is key to his transactions.

“People don’t often consider family and relations that’s been built through the years between seller and buyer,” he explained. “The legal market just doesn’t have that yet.”

And if those new industry participants manage to get their product to a legal market, they still face a host of regulations from both state and federal agencies that challenge the basic operations of many new businesses.

As High Times noted, regulations established in 2018 required new labels for many cannabis products, which effectively forced dispensary owners to remove salable goods from their shelves.

The Times also quoted criminal defense attorney Marc Wasserman, one-half of Pot Brothers at Law, which provides representation to California marijuana businesses.

According to Wasserman, a lack of tax deductions has hindered the ability of legal dispensaries to move into black market business; write-offs for expenses allowed to most businesses are prohibited for cannabis companies. “Cannabis businesses have to deal with form 280-E of the IRS,” he said. “When you fill out this form, you’re saying, ‘We’re dealing an illegal Schedule 1 drug, but the government still wants its cut.’ Yet, they don’t allow you to take typical write-offs.”

This confluence of restriction, taxation and bureaucracy is what has sent California pot consumers back to dealers like Marco—a situation that isn’t preferred by individuals like Jake Heraty.

“I’ve seen the stores, and they’re much more attractive than a trap house,” he told High Times. “If I could afford it, I’d be in those shops. It’s unfortunate California’s government is more concerned about getting their share of the cut rather than providing their residents with an affordable service.”

View the original article at thefix.com

9 April 2019
Woman Accused Of Running Multimillion-Dollar Black Market Pot Operation

The Massachusetts resident was charged with conspiring to distribute more than 100 kilograms of marijuana.

Recreational marijuana may be legal in Massachusetts, but black market operations will not be tolerated in the state, judging by the experience of one woman who is now facing federal drug-trafficking charges for allegedly operating a black market pot service.

Milton resident Deana Martin was charged with conspiring to distribute more than 100 kilograms of marijuana, according to a press release by the U.S. State Attorney General’s Office. Martin allegedly operated a black market business between 2015 and 2018 that had about 25 employees and grossed more than $14 million from 2016 to 2018.

The company, Northern Herb, claimed to be a medical marijuana company, but did not check that clients had medical marijuana licenses. It was not clear whether Northern Herb was a licensed medical marijuana provider in the state. The company operated online, selling marijuana, pre-rolled joints and marijuana-infused edibles that were delivered to clients.

In addition to operating outside the medical marijuana field, the company got into trouble for leaving packages unattended at homes and in apartment hallways. This would allow the drugs to potentially be picked up by someone other than the person who had ordered them.

Martin apparently planned to incentivize her employees for selling a certain amount of marijuana each month.

“One such incentivized tier, for instance, would be for selling more than 10 pounds of marijuana per month,” the Attorney General’s Office said.

Despite the fact that cannabis became legal in Massachusetts in 2017, Martin was not interested in joining the legal market. In Massachusetts, marijuana is taxed at 17% and local governments can add an additional tax on top of that. In an email discussing tax rates for legal cannabis businesses, Martin wrote, “Zero taxes is still better.”

Although she didn’t file taxes for the businesses, Martin claimed an income of $80,000 a month during the time that she was operating Northern Herb. She used the money to pay down her mortgage, which was about $300,000, and to purchase a Porsche, court documents said.

She did not pay any taxes for the business, or provide employees with proper tax documentation, the Attorney General’s Office said. In fact, she laundered the money that came through the business and hid it in accounts that were not in her name, the Attorney General’s Office said.

If Martin is convicted of the federal charges, she faces a mandatory minimum sentence of five years, and up to 40 years in prison. She could also be fined up to $5 million.

View the original article at thefix.com

9 April 2019
DEA Plans To Burn Tons Of Marijuana This Summer

Tons of seized marijuana will go up in smoke in the coming months.

The Drug Enforcement Administration (DEA) wants to burn tons of weed over the next six months, and is looking for the right contractor to help with the job.

According to a contracting notice, the agency wants to burn 1,000 pounds of marijuana an hour between March and September. The contract is for the “destruction by incineration of evidence located in the following cities in the state of Texas—McAllen, Brownsville, Corpus Christi, Laredo, and Eagle Pass.”

Despite putting out the notice, the DEA already has a partner in mind for the epic pot burn: Tucson Iron & Metal in Tucson, Arizona.

“Research has shown there is only one vendor in close proximity to the district and resident offices of McAllen, Brownsville, Corpus Christi, Laredo, and Eagle Pass capable of providing the services necessary for this requirement,” the notice says.

That’s because the DEA has strict requirements for disposing of marijuana seized from the black market, according to Quartz.

“The integrity of the destruction process shall be such that the material to be destroyed cannot be redirected or retrieved once it is committed to destruction,” the notice reads. The cannabis must be destroyed “to a point where there are no detectable levels, as measured by standard analytical methods, of byproduct from the destruction process. DEA shall inspect the incinerator to ensure no drug residue remains.”

In addition, there will be tight DEA regulation of the entire process, and a need to privacy. The DEA requires that the company that destroys the pot have a large fence on their premises, and drug test employees yearly. The DEA sends staff to oversee the burns, and also records them.

The agency “reserves the right to access the video feed as necessary to ensure the proper destruction of its drugs and safety of its representatives.”

The Atlanta office of U.S. Customs and Border Protection is also looking for a contractor to help dispose of drug evidence, including marijuana, meth, cocaine and more.

Recently the DEA put out a different type of contracting notice, asking for help finding a product that could assist agents in differentiating between hemp (which is legal federally) and psychoactive marijuana as we know it (which is not). The different species of cannabis plant can confuse DEA agents.

In addition to destroying drug evidence, the DEA is also responsible for approving applications to grow marijuana for research. The agency has promised to make more permits available, but the process has been slow, further delaying marijuana research.

“The DEA continues to review applications for registration and registers the number of bulk manufacturers of a controlled substance that is necessary to produce an adequate and uninterrupted supply,” the agency wrote last year.

View the original article at thefix.com

27 March 2019
Black Market Marijuana Thrives In New Jersey

A New Jersey police chief says that with legal marijuana expected to be taxed at $42 an ounce, people will keep buying their weed illegally.

Lawmakers in New Jersey are moving ahead with legalizing recreational marijuana, but when legal businesses come to the state they will have to compete with a thriving black market where customers can buy high quality, low cost cannabis products.

When Mike Davis, a reporter for Asbury Park Press, attended a pop-up marijuana event near Trenton, New Jersey, he found an array of marijuana products from bud to edibles, for sale. Davis’ experience at the event illustrated how sophisticated illegal sellers have become.

The products at the pop-up event were professionally packaged and the merchants accepted mobile payment—essentially everything you’d expect to see in a legitimate marijuana retailer.

The buyers and sellers at the underground event were confident in the illegal market for cannabis.

David, who was DJing the event and selling marijuana, said he’s not concerned about legalization. “People want legalization until they get here and see what the black market has to offer. They see that what we have is cheaper than legalized weed, that it’s much better,” he said. “You can change their mind.”

One woman selling marijuana brownies for $10 each said that she would love to make a living selling marijuana products, but she was wary of the cost of starting a legal business.

“I would love to quit my 9-to-5 and open a cannabis bakery full-time. That’s my dream,” she said. “But they make it so hard. You have to take out loans, and have certain qualifications to even think about it. Why are we adding greed to the equation? That’s when it becomes evil.”

Even if the state legalizes marijuana and legal businesses enter the space, she is confident that she will continue to have customers. “The state has no idea what they’re doing. They have no idea what the people want. The underground will always stay in business, whether they legalize, decriminalize or not.”

John Zebrowski, police chief in Sayreville, New Jersey, agreed—although for different reason. He said that with legal marijuana expected to be taxed at $42 an ounce, people will keep buying their weed illegally.

“Clearly, there’s always going to be a demand—and some of that demand is going to be satisfied by the black market, where there’s a reduced price and higher potency,” said Zebrowski. “And it’ll be very hard for the state to compete with the black market when, obviously, part of what they’re trying to do here is create an income base through taxes.”

Although he hadn’t heard of pop-up events like the one the reporter attended, he said that the black market is becoming more accessible.

“The black market has adapted and become more customer-friendly. They’ll always have different ways to survive.”

View the original article at thefix.com

6 March 2019