San Francisco cannabis dispensaries struggling as they continue to compete with illegal market
The co-owner of a San Francisco marijuana dispensary says it's a challenge to draw in customers lately.
Nate Haas operates Moe Greens Dispensary & Lounge in San Francisco as co-owner and CEO.
"We're charging our customers way too much. As a dispensary, it's tough for us to compete with the illicit market," said Nate Haas of Moe Greens Dispensary & Lounge.
That black market includes illegal grow operations, distribution, and unlicensed dispensaries. California Governor Gavin Newsom touted California as the largest legal cannabis market in the world, but licensed cannabis dispensaries are struggling to compete with the black market.
Meanwhile, a team of law enforcement officers are cracking down on illegal operators. It's one part of the state's efforts to even the playing field and cultivate a legal marketplace.
Kevin McInearny is a commander with the California Unified Cannabis Enforcement Task Force.
"We exist to specifically deal with the illicit market," said McInearny.
UCETF officers raided what they say is an uncommon unlicensed dispensary in downtown San Rafael, serving a warrant, detaining two individuals, and seizing all products.
"Instead of single dispensaries, our focus is on organized crime. The more significant violations associated with the cannabis market, including labor trafficking tax evasion the weapons charges," said McInearney.
The state task force has seized more than $53 million in illegal cannabis in the first quarter of this calendar year and shut down several indoor operations in the Bay Area.
"It starts with the cultivators. There is a lot of indoor cultivation in the area, especially in the East Bay mostly run by Chinese organized crime," said McInerarney.
Legal dispensary owners like Haas are skeptical law enforcement can make enough of a dent in the illegal market. They believe the only way to survive is if lawmakers slash taxes on cannabis products and more.
"If you tax them out of existence which has happened to a lot of our growers, manufacturers and distributors, it's going to be difficult for a lot of people to continue," said Haas.
A national survey conducted in 2022 by Whitney Economics, a cannabis industry research firm, found that fewer than one in four cannabis businesses were profitable.
"We want them to be successful. So in essence everything we do is either to protect the public or to support the legal market and generally those are the same thing at the same time," said McIneraney.
"We keep cutting and cutting and cutting. With all those cuts, it's just a tougher environment," said Haas.
Haas is optimistic despite the hurdles and challenges, and that everything won't go up in smoke just yet.
Newsom created the Unified Cannabis Enforcement Task Force in 2022. Since inception, UCETF has seized $371,199,431 in unlicensed cannabis through 236 search warrants.