$OGI California Audit Uncovers 3,000 Illegal Marijuana Businesses

September 13, 2019

An audit done by a marijuana business association has revealed that the number of black market cannabis industry players is thrice the number of the licensed marijuana businesses in the state.

The audit, whose findings were made public on Wednesday, indicates that there are 2,835 illegal marijuana businesses operating within California while the statistics from the Bureau of Cannabis Control show that only 873 companies are licensed to conduct marijuana-related business activities within the state.

This means that the number of illicit players dwarfs those who are within the licensed marijuana space. The audit was done by an industry group called the United Cannabis Business Association.

Their findings are the latest indicator of how rocky the marijuana industry in California is, even at a time when the state promised that it was going to crack the whip on the black market starting in 2018.

Earlier this year, a financial audit backed by industry players estimated that approximately $8.7 billion was lost to unlicensed cannabis products in the state while licensed businesses sold marijuana products worth only $3.1 billion.

Such information has led players in the legal marijuana industry to put their elected leaders, law enforcement and industry regulators on the spot for failing to curb the illicit trade of marijuana within the state.

This frustration with the slow progress in dealing with the marijuana black market has even prompted some licensed marijuana businesses in Los Angeles to recommend that tougher measures, such as prosecuting offenders in federal courts and incarcerating them thousands of miles away from their homes, could be tried to send a strong message that illegal commercial marijuana activities wouldn’t be tolerated or handled with kid gloves.

However, California’s marijuana industry isn’t faced with only the black market as a stumbling block. The industry is also grappling with the bans imposed on marijuana business operations by most of the local authorities.

The bans have put the state and the local authorities on a collision course since the state says that marijuana deliveries can be made anywhere within the state while the local authorities insist that the law allows them to either accept or ban marijuana companies from operating within their jurisdictions.

This conflict may also be fueling the marijuana black market since there are people who would wish to access marijuana in those areas where cannabis businesses aren’t allowed to operate, and where there is a need, supply will always show up one way or the other.

It isn’t clear what experienced industry actors like Neutra Corp. (OTCQB: NTRR) and Organigram Holdings Inc. (TSX: OGI) (NASDAQ: OGI) would propose as a comprehensive way to fix the major problems facing the largest marijuana market in the U.S.

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