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. 

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.

Also: Former WeedWeek California editor Donnell Alexander has an anonymous questionnaire for unlicensed market participants.