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Illicit marijuana operations having negative impact on legal dispensaries

Looking at illicit marijuana's impact on California
Looking at illicit marijuana's impact on California 03:12

Even though recreational use of marijuana is permitted in California, operating a licensed marijuana dispensary is tougher than many would think, especially as illicit operations continue to fuel the red hot black market. 

"It's affecting our business," said the owner of iLyfted, a Studio City dispensary. 

The matter made headlines across the nation this week after six men were found dead in the Mojave Desert in what allegedly stemmed from a dispute over marijuana. 

Since Proposition 64 passed in 2016, legalizing use of small amounts of marijuana in California, dispensaries have become commonplace on Los Angeles County streets, but many still operate illegally. 

Cal Poly Pomona Assistant Professor of Criminology Peter Hanink says that while recreational use is legal, the highly-regulated cultivation process has allowed for the black market to continue to thrive. 

"It's the fact that you have a market, if you can't meet demand for the market — the legal supply — you will get a black market; and that can turn violent," Hanink said. 

In San Bernardino County last year, authorities targeted illegal growers with Operation Hammer Strike, which led to the seizure of nearly 190,000 pounds of illegal cannabis and the eradication of nearly 318,000 plants, all of which is worth an estimated $313 million. 

Defense Attorney Allison Margolin, who specializes in cannabis law, says that barriers to set up a legal dispensary may also push some to illegal operations. 

"Access to distribution and cultivation is limited both by the amount of time it takes to the permits from either the city or county and the state," she said. 

She refutes SBCSD Sheriff Shannon Dicus' claim that the violence sometimes surrounding these illegal grow operations is due Prop. 64, which also lessened marijuana-related charges from felony to misdemeanor status. 

Margolin says that his rhetoric comes from the old school playbook on the war against drugs. 

"It's just a way for police departments to try to get more funding," she said. "Because there's funding available for marijuana interdiction from the state level and the federal level."

The owner of iLyfted says that prosecutors have the tools to crack down on illegal operations, but they just don't do so. 

"They can charge them $30,000 a day for every single day there's illegal activity on the property," he said. "They're not doing it."

He says that legal dispensaries often have to charge 30% above their costs to cover taxes and fees that come with the sale of marijuana, which illegal operations can easily undercut. 

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