MJBizMag August 2020 - 54

How to Compete With the Illicit Market
Alternative
ENFORCEMENT Measures
Levying fines and targeting landlords provide ways for authorities
to shut down illegal businesses without resorting to jail time
By Omar Sacirbey
W
hile other industries with
illicit-market issues can call
on law enforcement to punish
perpetrators by closing them down,
fining them and even jailing them, that
doesn't work quite so well in cannabis.
Why? Advocates of marijuana
legalization campaigned partly on the
promise that state-legal cannabis markets
would create opportunities for those
groups harmed by the war on drugs,
and locking up people for conducting
business others are doing with the state's
blessing would be frowned upon by those
inside and outside the legal industry.
" Punitive measures that can be taken
that don't involve jail: fines or similar
punishments. Just like slumlords are
fined for violations, landlords who allow
illicit operators should also be fined, " said
Kyle Kazan, CEO of Glass House Group
in Long Beach, California, and retired
officer from the Torrance, California,
police department who is active in the
Law Enforcement Action Partnership,
an anti-prohibition and harm-reduction
group based in Medford, Massachusetts.
" I want to see fewer people go to jail
for marijuana. ... So I would be going
after any landlord with massive daily
fines. The landlord will be the agent for
the government to get rid of them, and
it won't cost the government that much
money. If the landlord is asleep at the
wheel, there are civil penalties. "
More traditional enforcement can
also have a role in reducing the illicit
market. Steve Lopez, CEO of The
Green Solution, a vertically integrated
company in Colorado, said hundreds of
illegal indoor grows have been closed
in the state over the past year or so,
diminishing illegal supply and driving
customers to legal outlets.
" They hit that market pretty hard to the
point where we have people coming into
our dispensary and telling us that they
hadn't been in the dispensary in a couple
of years because they had been buying
illegally, but now, because that market's
drying up, they felt like they were forced
back into the dispensaries, " Lopez said.
" Colorado has actually done a much
better job than some states like Washington
and Oregon, where you had a price
per pound under $100 because there was
just so much supply, " he said. " Colorado
did a good job of regulating the legal
supply, and then they've also been doing
a good job also closing down a lot of
these illegal grows (and) limiting the
product that's out there. "
52 Marijuana Business Magazine | August 2020
Kyle Kazan is CEO of Glass
House Group. Courtesy Photo.
And once consumers try the legal market,
Lopez added, they are often positively
surprised by the variety of products,
giving licensed stores a chance to convert
them for good.
" Once people start realizing the cost
difference for what you get, what the
value of it is, we've been able to hold on
to them, " Lopez said. " We're addressing
those price points with a much-higherquality
product. So people come back,
a lot of them start joining our loyalty
program, and then they just change
their habits from the guy down the
block. "
As regulators get smarter about
employing alternative-enforcement
measures, along with revising regulations
in a way that makes operating a legal
cannabis business less expensive, the
illicit market will diminish if not entirely
disappear, Kazan said.
" I'll be stunned if we're having this
conversation in five years, " he said.

MJBizMag August 2020

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