Business

Calif. retailer sues state for abetting illicit market

By Alex Halperin
Sep 20, 2021
Photo by Sterling Davis on Unsplash

A California retailer is suing the state alleging regulators have allowed criminal to win distribution licenses and divert “untold millions of pounds” of weed to the illicit market. 
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It alleges these operators buy huge amounts of legally-grown wholesale product and sell it in or out of state through illicit channels. Industry executives have long complained about the practice which they refer to as using “burner” licenses.

  • The result, says plaintiff Elliot Lewis, CEO of Catalyst Cannabis, is that the legal market supports the illicit, rather than replaces it.
  • “The suit also alleges that state authorities –  in particular, the Department of Cannabis Control (DCC) – are aware of the problem but have refused to fix it by addressing a loophole in the state’s seed-to-sale tracking system.”
  • It claims the state hasn’t done so because it receives cultivation taxes from the rogue distributors who evade California’s other pot taxes.
  • It further alleges that the state’s tracking system, run by Metrc, could help by enabling a “flag suspicious activity” function which regulators have “refused to authorize.” 
  • California regulators and Metrc declined to comment. 
  • Read the story.
  • Read the suit.
  • And here’s Lewis making his case “real fucking clear… [to the] arrogant ass bureaucrats” in a video message. 

Related: More California companies are suing the state over revoked licenses.
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Also: Former WeedWeek California editor Donnell Alexander has an anonymous questionnaire for unlicensed market participants.