Editorial: What legalization? California is still the Wild West of illegal marijuana

Nearly five years after Californians voted to create a legal marijuana industry through Proposition 64, the illegal weed market is as big as or even bigger than it was before the ballot measure passed.

The end of prohibition at the state level was supposed to be the beginning of a highly regulated marijuana market served by legitimate, taxpaying companies (even though marijuana remains illegal under federal law). Legalization was billed as a way to tame the Wild West-style marijuana industry, which often flouted environmental and health strictures and was a bastion for organized crime.

It hasn’t worked out that way for a variety of reasons. Nowhere is the failure of Proposition 64 more apparent than in the deserts of Southern California, where a booming illegal marijuana industry has spread across the arid landscape.

In the last several years, more than a thousand marijuana plantations have sprung up between the Antelope Valley and the Colorado River, Times reporters Jaclyn Cosgrove and Louis Sahagún found. Authorities say the illicit farms are responsible for forced labor, violence, water theft and the destruction of fragile desert habitat and wildlife.

The Los Angeles County Sheriff’s Department has identified 500 illegal farms in the area in recent flyovers. In one raid, the department seized 373,000 pot plants and more than 16 tons of harvested marijuana with a street value of more than $1 billion. The San Bernardino County Sheriff’s Department has come across 860 illegal growers.

Residents feel threatened by the increase in illicit operations. Growers have been seen carrying weapons, and they’ve threatened people who get too close to their operations. The Times found at least five killings in 2020 and 2021 that investigators said were related to pot farming in the Mojave Desert.

And then there is the environmental threat. While residents are being told to cut water usage during the drought, illegal growers have stolen water from wells, aqueducts and fire hydrants. The growers destroy plants and wildlife, use dangerous pesticides and send trucks barreling through sensitive habitat.

Proposition 64 was never going to eradicate illegal marijuana operations. Even before the ballot measure, cannabis was a billion-dollar industry in California. There’s simply too much demand across the U.S. for weed and too much profit to made selling it. But supporters of the ballot measure — including The Times editorial board — argued that it would be better for public health, for law and order and for society if marijuana was a legal, regulated and controlled product for adults.

The thinking was that by welcoming the cannabis industry to come into the light and get licensed, it would be easier to crack down on the continued scofflaws. There would also be more money for enforcement from the tax revenues generated by licensed operations.

Now, several years into California’s transition to legal marijuana, the flaws of Proposition 64 and its rollout are apparent. They are numerous.

From the beginning, California did not make it easy for legitimate operators to get licensed. There are complicated, expensive regulatory hurdles that growers, manufacturers and retailers have to overcome to obtain permanent licenses; about 80% of the licensees still have only provisional permits. Proposition 64 also allowed local governments to ban marijuana cultivation and retail sales, and as many as two-thirds of jurisdictions did so.

Gov. Gavin Newsom signed a bill this week that consolidates cannabis industry regulation in one department, provides businesses more time to qualify for permanent licenses and hands out $100 million to help cities expedite approvals. That will help.

But there’s another hurdle for legitimate businesses. High state and local taxes can add 50% or more to the price of the product in legal shops. Add in the expenses of labor, product testing and packaging, and running a legal pot business often doesn’t pencil out. Not when the competitors are unlicensed operators who don’t adhere to any of those taxing, testing and safety requirements. The illicit market remains three times as large as the legal market.

And that’s yet another problem: There has never been enough enforcement against illegal cannabis operators. Even repeated crackdowns haven’t made a significant dent in the black market because of weak and underutilized penalties.

Proposition 64 downgraded illegal cultivation from a felony to a misdemeanor punishable with a $500 fine and up to six months in jail. That was intended to address a real disparity — enforcement of marijuana laws had disproportionately affected Black and Latino men, leaving them with criminal records that make it harder to get a job or to advance in their careers. But the practical effect is that the penalties are not stiff enough now to deter illegal pot businesses.

The incentives in California’s marijuana marketplace are totally out of whack. The state has made it tremendously challenging and expensive to become a legitimate cannabis business, while it’s extraordinarily profitable and relatively low-risk to stay in the black market. And the result? Just look at the Southern California desert, where residents are living with Proposition 64’s missteps.