Licensed marijuana business leaders are fed up with pervasive scofflaws, saturating the market with unfair competitive advantage (they’re not paying for exorbitant taxes, seed-to-sale tracking and quality testing). Customers are swayed by lower prices, and some may even be tricked by ripped-of branding/copyright violations.
One of those companies is now threatening the city with legal action if they don’t start enforcing statutes and ordinance against unlawful business practices. The licensed cannabis company sent a letter to to the city attorney specifically requesting beefed up enforcement against illegal pot shops. By some estimates, these number in the hundreds.
In that letter, the cannabis company opened by saying that during the slow roll-out of regulated recreational marijuana sales, the city attorney’s office as well as the city attorney himself “overlooked” and “ignored” the businesses interests of licensed, regulated shops, as well as city residents – South Los Angeles especially, where there seems to be the greatest concentration of illegal pot stores.
What Duty Does the L.A. City Attorney Have to Address Illegal Pot Shops?
Following a 2017 special election, voters approved Measure M, which spelled out the city’s regulatory and tax framework as well as plans for criminal and civil penalties imposed on unauthorized shops. These included various civil fines for nuisance offenses by these operators and landlords, as well as enhanced punishments/fines for actions like disconnecting power and water utilities.
According to Measure M, better known as the Los Angeles Cannabis Enforcement, Taxation and Regulation Act (CETRA), is now city ordinance allowing $20,000-a-day civil and $1,000-a-day criminal fines, plus up to six months in jail for those who tamper with public utilities. Employees and volunteers of these operations can face these same penalties also.
However, this cannabis shop owner – and others – say that despite these sites posing a nuisance and a critical public safety risk, the city attorney’s office has been either slow to act or has done nothing at all.
In addition to competition for customers, the letter noted legal marijuana ventures are competing with black market shops for valuable real estate – particularly for Phase 3 applicants, the most recent to be welcomed to the legal cannabis market in Los Angeles.
- The company recommended the city attorney pursue legal against owners, operators and landlords of these cites by:
- Shutting off utilities.
- Handing out code violations.
- Issuing formal notices regarding the illegality of operation and warn them either to shut down immediately or face prosecution.
- Keep the local media informed of these enforcement efforts, naming violators who are arrested.
Neither the mayor nor city attorney’s office returned calls to industry media, though the council president in an email responded the city need to prioritize this matter using every tool at its disposal to enforce the law.
If these actions aren’t taken swiftly, the company warned, class action litigation was likely in the cards. Los Angeles cannabis attorneys know this is fairly new territory for a cannabis business. Cases against the government are trickier in general because of sovereign immunity laws and difficulty proving a government agency/agent owes a duty of care to anyone one individual. There are also immunity exceptions when a government employee’s conduct is considered discretionary (the employee had discretion) versus ministerial (they were simply following orders as set forth by policy/nature of the public service provided). It’s worth a discussion of your options with an experienced cannabis attorney.
Between May 2018 and April 2019, the city has closed down 113 illegal pot shops, but many more remain in our communities.
The Los Angeles CANNABIS LAW Group represents growers, dispensaries, ancillary companies, patients, doctors and those facing marijuana charges. Call us at 714-937-2050.
California cannabis trade group threatens to sue L.A. over lack of enforcement against illegal shops, June 5, 2019, MarijuanaBizDaily.com