Saturday, May 18, 2019

After Prop 64 Passage, Black Market Pot Shops Still Thrive -- What Happened?

The Modesto Bee has reported that Stanislaus County sheriff's deputies are cracking down on illegal pot shops, which are eating away at the legal marijuana businesses, all recently established following the passage of Proposition 64. 

Wait a second!

I thought that legalizing recreational marijuana would do away with the black market? Certainly that's what the proponents of Prop 64 believed, and one of the reasons why the initiative passed by a significant margin in 2016.

What went wrong? What was in the iniative, and thus the reasons why I opposed the initiative, even though I believe that people should not be locked up, placed in jail for using a drug that simply makes you ... stupid.

Image result for california no on prop 64

I voted NO on Prop 64 precisely because there were so many poison-pill provisions in the legislation, including language which would undercut one of the goals of the bill--shut down the black market and bringing marijuana sales into the open. The initiative imposed a massive sales tax on recreational marijuana products. The initiative also included stiff penalties for marijuana related crimes, including the loss of one's Second Amendment Rights for a non-violent misdemeanor. These two problems, along with a host of other issues (the fact that marijuana use, sale, and distribution remains illegal at the federal level; the impossibility of banking because marijuana sales violate federal law, etc.) made Prop 64 a bad proposition.

But the biggest problem was that stiff added sales tax of 15%. Lo and behold, because the costs of legal marijuana are so high, much higher than the drugs pushed on the street, the black market survives and even thrives in the state of California. Why bother buying legal pot, which is excessively expensive, when you can buy it cheaper from the seedy drug dealer?

I favor decriminalization for possession and use of marijuana, since locking people up does not get them sober nor does it set them free from the addition. One reason why? It's even easier to get drugs in prison than on the street? However, Prop 64 was the wrong approach for many reasons to phase out onerous legal consequences for drug use or possession. The proof is the fact that the black market has not be closed down or forced out of business by the legal compte

Proponents expected a collect greater tax revenue with the passage of Prop 64. What happened instead is that the black market has only gotten bigger, while the marijuana revenue failed to meet projections. No end to the black market, lower-than-expected tax revenue, and now police officers throughout the state of California must divert their already strained resources to crack down on these illegal pot shops.

Image result for california no on prop 64

It's time to have a thoughtful discussion about decriminalization of controlled substances, one that recognizes the potential unintended consequences of marijuana use, one which allows law enforcement to stop down serious crimes and track down those criminals, but most importantly one which understands how markets work, how free enterprise works, and which recognizes the power of competition as well as government control.

MAY 16, 2019 01:18 PM, UPDATED MAY 17, 2019 08:32 AM
 Play Video
Duration 1:55Take a look inside a legal marijuana business in Modesto

Bob Blink of Lyfted Farms and Michael O'Leary with Medallion Wellness describe the production and sales of Marijuana on Monday May 6, 2019 at Lyfted Farms in Modesto, Calif. BY JOAN L LEE
Since the outdoor growing season for cannabis began last month, the Stanislaus County Sheriff Department’s Special Investigations Unit has dedicated at least one day each week to eradicating illegal grows.

Critics say cannabis is legal now and it’s safe; law enforcement should focus their efforts on dangerous drugs like methamphetamine and heroin. The multi-jurisdictional SIU investigates those drug crimes as well, in addition to others like gang crimes and human trafficking.

But law enforcement and the businessmen who’ve obtained permits and licenses to grow and sell cannabis in Stanislaus County say the illegal grows not only undermine the legal operations but attract violent crime into neighborhoods, produce untested, sometimes unsafe products and create environmental hazards.

Sgt. Bruce Mitchell, supervisor of the SIU, said they are focused on large-scale operations, not small grows just over the 6-plant limit for personal use.

He said the large grows are targets for robberies and burglaries and both the criminal and the victim are usually armed, bringing gun violence into neighborhoods.

“We have had a number of incidents where people will try to break into places like this and grab five or six plants and there ends up being a shooting,” Mitchell said earlier this month at a 2,200-plant illegal grow in Patterson.

About 2,200 plants were eradicated from illegal indoor and outdoor marijuana grows at a property in the 2900 block of Orange Avenue, just outside of Patterson, on May 2. By Erin Tracy
Sheriff Jeff Dirkse said there was a period of time during changes in the law that illegal grows were not a priority.

“Beginning this year, we have a renewed our enforcement activities against illegal grows and removed over 22,000 plants in March alone,” he said. “If people want to use marijuana recreationally or medicinally, they have nothing to worry about from us so long as they follow the appropriate laws, no different than alcohol.”

But he said illegal grows “create a number of public safety hazards that we are concerned with, including illegal pesticides, black mold, armed robberies and general increased complaints and calls for service.”

The Sheriff’s Department estimates there are 1,500 illegal grows within the county at any given time. Mitchell believes as many as half of those involve Mexican drug cartels.

He said marijuana appeared to have motivated a 2017 unsolved double homicide near Riverbank in which two men were found dead at an illegal grow.

One man was found dead outside a warehouse behind the house on Claribel Road; a broken wooden bat next to him, according to court documents. A second deceased man was found tied to a chair inside the warehouse, where marijuana was being dried and processed. A grow inside the house had been cleared out.

Legal operations have safety plans approved and maintained through compliance checks by the Sheriff’s Department.

Those plans vary depending on the operation but include background checks on owners and their employees, burglar alarms, exterior and interior cameras, on-site security guards, panic buttons and plans in place in the event of takeover-style robberies or other crimes.

Michael O’Leary, owner of Medallion Wellness, a dispensary on north McHenry Avenue, has a surveillance system that is linked to a 24-hour crime center from which a dispatcher can send a security guard, sound an alarm and speak directly to the suspect.

In addition to keeping his business free from crime, he said it’s stopped a break-in at a neighboring business and interrupted a suspect who was trying to siphon gas from a vehicle in the parking lot.

His dispensary also has a panic button, as does the cultivation site from which he purchases product.

Bob Blink, owner of Lyfted Farms, currently is producing about 2,000 pounds of cannabis a year and continuing to expand in warehouses on Jerusalem Court.

Blink said he accidentally pushed the panic button shortly after it was installed and four sheriff’s deputies were at his business within five minutes.

“Illegal operations are completely clandestine so (when there’s) some sort of security event, they are on their own. They can’t pick up the phone and call the local sheriff’s office to come help them,” said Zach Drivon, an attorney who represents both O’Leary and Blink.

The businessmen, both Modesto natives, first started operating nonprofit medicinal cannabis collectives in 2015. Drivon said they were integral in passing a measure in Stockton that lifted the ban on medical cannabis dispensaries and cultivation and worked with Stanislaus County to fund a poll that showed majority support for cannabis businesses here. They also have been transparent with county officials who asked to tour their businesses.

So when the county started reviewing 33 applications for cannabis permits last year, O’Leary and Blink were at the front of the pack. They received the first cultivation and dispensary permits in the county in February and April, respectively.

Since then the county has issued permits to three other businesses for cultivation and four more businesses are going through the approval process now for nurseries, cultivation, distribution and retail, said Tera Chumley, senior management consultant for Stanislaus County.

The county has a cap of 61 cannabis permits, only seven of which can be dispensaries.

To grow cannabis, Blink not only is regulated by the Sheriff’s Department but by the state Water Resources Control Board and the County Agricultural Commissioner, which ensure the businesses are not polluting the water or using harmful pesticides.

In the rooms where cannabis is grown, Blink uses insulated metal paneling, typically utilized in cold food storage, to prevent mold.

The rooms are cleaned with bleach between each harvest.

He uses only organic pesticides that are so mild the plant must be treated weekly. There are other pesticides that will kill any insect with one treatment per harvest, O’Leary said, but they are dangerous to humans and become carcinogenic when heated and inhaled, which is how most people consume cannabis.

Mitchell said he sees those toxic pesticides being used at illegal grows and marijuana being grown in moldy, unsanitary conditions that can be harmful to the consumer and the environment.

Samples are tested from every strain of cannabis in every quarterly harvest at Lyfted Farms. A lab tests for 66 types of pesticides, as well as microbials (bacteria), toxins from mold and heavy metals like arsenic and lead. If any were ever detected (none have been), the batch would be destroyed.

Blink also tags every plant with a unique number that is entered into the state’s track and trade system.

“It tells me when it was created, when it was flowered, when it was sprayed, what was sprayed, who had hands on it; the whole history of the plant from seed to sale,” he said.

Processor Brad Nunes trims marijuana product at Lyfted Farms Monday May 6, 2019 in Modesto, Calif. Joan Barnett Lee JLEE@MODBEE.COM
But O’Leary said most consumers don’t consider all the safeguards in place by legitimate businesses and the potential dangers of cannabis grown illegally.

“In the cannabis market, as long as your flower looks pretty and smells pretty, you’re going to give it a shot, ” he said.

As a result, many consumers are still willing to purchase cannabis on the black market because it costs half of what you’d pay in a dispensary. The taxes alone are 33 percent, O’Leary said.

“We as legal operators have shelled out hundreds of thousands of dollars to become compliant and it is hard for us to even recoup what we put in when there is such a lucrative black market out here right now,” O’Leary said.

In addition to operating costs and state taxes, they must pay the county a community benefit fee, which funds enforcement, and a community benefit contribution, which supports local charities, community programs and public projects with a focus on youth.

Blink pays $70,000 a year for the fee and $35,000 for the contribution. That number will increase annually as profits grow. O’Leary will pay a fee of 8 percent on every sale and a community benefit contribution of $12,000, which also will increase annually.

Mitchell said the money that is coming in from the community benefit fee will soon fund two new deputies to join the SIU to combat illegal operations and conduct compliance checks on the legal businesses.

“There is more of a focus now because the county is getting pressure from these businesses … for us to go out and (eradicate) the illegal grows,” he said

Still, for now their efforts to fight illegal grows are “barely scratching the surface.” They take one down and another pops up, Mitchell said.

“Not only is the black market undermining the price of cannabis for the legal operators but it’s detracting from the best interest of the community, the health, safety and welfare of the general public,” Drivon said. “It only makes sense from a policy perspective to control this market, to control this agricultural commodity.”


  1. Wow, awesome weblog layout! How lengthy have you ever
    been blogging for? you make blogging look easy. The whole glance
    of your web site is wonderful, let alone the content!

  2. Woah! I'm really enjoying the template/theme of this blog.

    It's simple, yet effective. A lot of times it's
    tough to get that "perfect balance" between superb usability and appearance.

    I must say you've done a fantastic job with this.
    Also, the blog loads very fast for me on Opera.

    Outstanding Blog!

  3. This site was... how do you say it? Relevant!!
    Finally I have found something which helped me. Many

  4. It's remarkable for me to have a web page, which is useful in support of
    my know-how. thanks admin

  5. Great delivery. Solid arguments. Keep up the good

  6. Undeniably imagine that that you said. Your favourite reason appeared to be on the internet the easiest thing
    to keep in mind of. I say to you, I definitely get irked while people think about concerns that they
    plainly do not realize about. You managed to hit the nail upon the highest and also outlined
    out the entire thing without having side effect ,
    folks can take a signal. Will probably be again to get
    more. Thanks

  7. I am really grateful to the holder of this web site who has shared this enormous article at at this

  8. Unquestionably imagine that that you said. Your favorite justification appeared to be at
    the web the simplest thing to bear in mind of. I say to you, I definitely get irked whilst other folks consider worries
    that they just do not recognize about. You controlled to hit the
    nail upon the highest and also outlined out the whole thing with no need side
    effect , people can take a signal. Will
    probably be back to get more. Thanks

  9. Hello.This article was extremely motivating, especially because I was investigating for
    thoughts on this issue last Sunday.

  10. I read this article completely on the topic of the difference of most up-to-date and preceding technologies, it's remarkable article.

  11. If you are going for finest contents like me,
    simply go to see this web site every day
    for the reason that it provides feature contents, thanks

  12. hey there and thank you for your info - I've definitely picked up anything new
    from right here. I did however expertise several technical points using this site,
    since I experienced to reload the web site many times previous to I could get it to load
    properly. I had been wondering if your web hosting is OK?

    Not that I am complaining, but sluggish loading instances times will
    very frequently affect your placement in google and could damage your quality score if
    ads and marketing with Adwords. Well I am adding this RSS
    to my e-mail and could look out for a lot more of your respective interesting content.
    Make sure you update this again very soon..

  13. Thank you for the sensible critique. Me & my neighbor
    were just preparing to do a little research on this.
    We got a grab a book from our area library but I think I learned more from this post.
    I am very glad to see such great info being shared freely out there.

  14. Hey, you used to write great, but the last few posts have been kinda boring...

    I miss your great writings. Past few posts are just a little bit out of track!
    come on!

  15. Very interesting points you have noted, thank you for posting.

  16. Wow, superb blog layout! How long have you been running a blog for?
    you make blogging glance easy. The overall glance of your web site is excellent,
    let alone the content material!

  17. I used to be able to find good information from your content.

  18. Thank you, I have recently been searching for information about this subject for ages and yours is
    the best I've found out till now. However, what concerning the
    conclusion? Are you certain about the supply?

  19. I genuinely appreciate your piece of work, Great post.

  20. Today, while I was at work, my cousin stole my apple ipad
    and tested to see if it can survive a thirty foot drop, just so she can be a youtube sensation. My iPad is
    now destroyed and she has 83 views. I know this is
    entirely off topic but I had to share it with someone!

  21. Howdy would you mind letting me know which webhost you're using?
    I've loaded your blog in 3 completely different browsers and I
    must say this blog loads a lot quicker then most.
    Can you suggest a good web hosting provider at a reasonable price?

    Thank you, I appreciate it!

  22. Appreciate it for this post, I am a big big fan of this site would like to
    continue updated.

  23. I'm really inspired along with your writing talents and
    also with the format on your weblog. Is that this
    a paid theme or did you modify it yourself?

    Either way stay up the nice quality writing, it's uncommon to see a great
    weblog like this one these days..

  24. First off I would like to say fantastic blog! I had a quick question which I'd like to ask if
    you do not mind. I was curious to find out how you center yourself and clear your head prior to writing.
    I have had difficulty clearing my mind in getting my thoughts
    out. I truly do take pleasure in writing however it just seems like the
    first 10 to 15 minutes are lost simply just trying to figure out how to begin. Any recommendations or tips?

  25. Enjoyed reading this, very good stuff, thank you.

  26. I simply couldn't go away your web site before suggesting that
    I really loved the standard info an individual supply in your visitors?
    Is gonna be back ceaselessly in order to investigate cross-check new posts

  27. As I website possessor I conceive the written content here
    is rattling excellent, appreciate it for your efforts.

  28. If you want to grow your know-how simply keep visiting this web site
    and be updated with the latest news update posted

  29. I have been exploring for a bit for any high-quality articles or
    weblog posts on this sort of house . Exploring in Yahoo I at last stumbled
    upon this web site. Studying this information So i
    am glad to show that I have a very just right
    uncanny feeling I discovered just what I needed.
    I so much certainly will make certain to don?t forget this site and give it a glance on a constant basis.