Property Owners Who Lease to Illicit Weed Businesses May Soon Face Stiff Fines

The City of Los Angeles is on the brink of taking a dramatic measure against illegal cannabis businesses. At a panel event on Jan. 24, Cat Packer, the executive director of the Los Angeles Department of Cannabis Regulation, said the City Council will be voting on a measure to fine property owners $20,000 a day if they are found renting to unlicensed marijuana enterprises.

That amount may sound drastic, but technically it’s the law. Measure M, which was passed by LA voters last year, does include a provision that states landowners renting to unlicensed weed businesses are liable for the $20,000 a day amount. But that part of the law has never been enforced.

But that oversight may soon be corrected. “Without enforcement, there can’t be any change,” said Jennifer Tung, who works as chief risk officer at local edibles company Plus Products and who also spoke on the Jan. 24 panel.

City officials have stated that currently, Los Angeles is home to over 170 unlicensed cannabis businesses. The United Cannabis Business Association estimates the number of illegal cannabis enterprises is at 700-800 nationwide.

Business owners have stated that stringent regulatory processes have made it difficult to obtain licenses in a timely manner.

“We thought when the legalization kicked in … a lot of [unlicensed cannabis businesses] would go legit but it’s taken so long and it is so expensive,” United Cannabis Business Association executive board member Chris Malcolm told Bisnow. “I think there was definitely excitement, a lot of energy moving forward but I think it’s taken so long that it’s taken the wind out of the sail and slowed the momentum.”

This is not the first time LA has taken steps to crack down on companies that have not complied with regulations. In September, City Attorney Mike Feuer filed criminal charges against more than 100 business. The flurry of legal activity involved 515 defendants.

“Los Angeles voters wanted common-sense rules to regulate recreational marijuana so public safety is protected in our neighborhoods,” Feuer stated in a press release at the time. “Our message is clear—if you are operating an illegal cannabis business you will be held accountable.”

But Packer said the LAPD is overwhelmed by the situation. In addition to the fines, she recommended starting a public campaign that would tell consumers how to recognize illegal cannabis enterprise and encourage them to rat out illegal business. As part of this awareness campaign, she said that city officials are working on an emblem that licensed business could post on their storefront.

She also made a plea to the LA Department of Water and Power to restrict utilities to properties that have not completed the licensing process to sell cannabis. Echoing a motion that was introduced at an LA Council meeting in October, Packer announced at the panel discussion that she wants permission to be given to the Department of Building and Safety to padlock such properties, and that the city dole out cease and desist letters to ensure that all are abiding by the regulations approved by Los Angeles voters.