More than $1.5B worth of illegally grown marijuana plants seized in California
Authorities seized more than $1.5 billion worth of illegally grown marijuana plants in California this year — an amount an industry expert said is roughly equal to the state’s entire legal market — as part of an annual eradication program, officials said Nov 4.
Legal operators said it is so difficult to get a license to grow cannabis that people are growing it illegally and trucking it out of state.
The raids netted more than 950,000 plants from nearly 350 growing operation sites this year through the Campaign Against Marijuana Planting program, an effort known as CAMP that dates to 1983 and is considered the nation’s largest illegal marijuana eradication program.
California Attorney General Xavier Becerra’s office did not respond by press time to a request regarding how many of the grows were in the North Bay.
Authorities could not estimate a street value of the plants seized and based their figures on wholesale prices of $1,600 per plant.
But Jerred Kiloh, president of the United Cannabis Business Association, said wholesale costs are doubled for the retail market — meaning the enforcement operation netted more than $3 billion worth of illegally grown marijuana plants.
“That’s a lot of product,” Kiloh said of the program’s seizures. “That’s equal to our entire regulated market.”
“I feel bad for a lot of the cultivators,” said Sam Magruder, owner of Petaluma Hill Farms, Sonoma County’s largest approved legal cannabis grow to date. Magruder previuosly told the Business Journal it took him over $1 million and two and a half years to get a conditional use permit to grow up grow up to an acre of cannabis indoor and outdoor.
“A lot of the cultivators were hoping to become legalized but a lot were not able to because of the barrier to entry,” of time and cost Magruder added.
Strict permitting schemes and tightly-regulated track and trace programs for legally produced cannabis mean that the legal market is short on cannabis, Magruder said. That’s different from other states like Oregon which found itself with a surplus, some of which left the state illegally. Cannabis is still illegal at the federal level and crossing state lines with it is a federal crime.
“As long as there are states where it’s illegal there will be people growing it and shipping it there,” Magruder added.
Despite the preevalanece of illegal grows, he said, prices per pounds are relatively strong, estiamting them at around $900 to $1,300 for outdoor grown cananbis to $1,800 to $2,500 for indoor.
Consumers are projected to spend $3.1 billion in California’s legal cannabis industry and $8.1 billion in the illicit market this year, according to a report from industry advisers Arcview Market Research and BDS Analytics.
Attorney General Becerra said nearly 150 people were arrested statewide and 168 weapons were seized during the execution of more than 120 search warrants. The state partners with local and federal agencies, including the Drug Enforcement Administration, to target growing operations on public lands.
Officials said they encountered sophisticated growing operations that help fuel the state’s large black market, where consumers can avoid steep tax rates by buying in unlicensed dispensaries.
“Folks are going to grow this stuff because you can make money,” Becerra said.
But Kiloh pointed out that it’s not clear if the illegal grown plants were headed to California markets or other states. He said the raids gave him hope that they would be a deterrent to other illegal growers and retailers who use their products, but he noted that the CAMP program has been around for decades while the illicit market continues to thrive. In 2018, officials said they seized more than 614,000 plants from 254 sites during their CAMP operations
“Enforcement is going to be a long process,” he said.
Business Journal staff writer Chase DiFeliciantonio contributed to this report.