Welcome to our Q&A with partner, Jennifer Gumer!
As a partner at CGL and our Regulatory and Compliance Practice Lead, Jennifer provides strategic counseling, practical advice, and expert advocacy to clients with production needs. As an Adjunct Professor of Law and Bioethics, she is uniquely qualified to handle all interactions with federal, state, and local regulators who oversee product development, manufacturing, and marketing activities, including the FDA and Local Hemp Regulators.
Q: An article in the Los Angeles Times stated that around 80% of cannabis purchased in CA is still black market. Why is this the case and is anything being done about it?
So, before the last election the majority of California jurisdictions still outlawed cannabis businesses because MAUCRSA, the law that legalized recreational cannabis, allows local jurisdictions to decide whether, and how, to allow cannabis operations. As a result, the majority of Californians that voted for legal cannabis still live in jurisdictions that outlaw it, which means they have to turn to the black market if they want to purchase marijuana. But, in the November election many, many more CA jurisdictions allowed cannabis businesses to operate for the first time, or expanded the cannabis activities they allowed. As more jurisdictions allow legal cannabis, the less opportunities there are for black market operators.
California also approved emergency regulations in early 2020 requiring retailers to display a QR Code certificate issued by BCC that consumers can scan to ensure the shop is licensed. The purpose of the regulation is to help consumers identify whether a shop is licensed. California is rife with “trap shops”, which are unlicensed cannabis retail shops that for all intents and purposes are largely indistinguishable from licensed shops from a consumer perspective. That means that even consumers who want to purchase legal rather than black market cannabis end up inadvertently purchasing black market cannabis from trap shops. The QR code is supposed to help such consumers stay away from trap shops. Namely, if they don’t see a QR code or if the QR Code doesn’t properly scan, they know the shop isn’t legal. It’s supposed to help reduce black market competition.
I had hoped that regulators would crack down on black market cannabis stores in 2020, but coronavirus through a wrench into that plan. I’m hopeful we’ll see more enforcement in 2021 as the pandemic hopefully subsides. California has a major economic incentive to squeeze out the black market so they can collect taxes on licenced cannabis businesses.
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