City officials review reports on unlicensed cannabis activity, cite data gaps and enforcement limits

Los Angeles City Council Government Operations Committee members heard reports on unlicensed commercial cannabis activity and discussed gaps in data, enforcement practices and potential regulatory steps to reduce illicit sales and recover revenue.

City staff and police told the committee that estimates of unrealized tax revenue from unlicensed retail and cultivation ranged roughly from $18 million to $20 million based on 2022 data, but departments cautioned the figure is a very rough estimate. Matt Crawford of the Office of Finance said, "these are very, very rough estimates," noting the office lacks authority to collect taxes from unlicensed operators under current law.

The nut of the discussion: committee members and presenters said illicit retail and grow operations undercut licensed social equity operators and that enforcement and data collection are uneven. Detective Mike Boyles, officer in charge of the Los Angeles Police Department cannabis unit, told the committee that "when this report was generated, there were 201 unlicensed cannabis locations" in February 2022 and that the number had fallen to 49 verified unlicensed retail locations in the department’s most recent counts. Boyles also said LAPD averages about 350 search warrants a year for unlicensed cannabis locations and that many unlicensed grow houses are subject to separate enforcement activity.

Department of Cannabis Regulation staff said the department can expand permitting capacity for cultivation applications beginning Jan. 1, 2026, and described a possible referral model similar to tax sweeps: when the Office of Finance identifies businesses not registered for business tax, those operators could be referred to permitting departments for evaluation. Jason Glien, assistant executive director at DCR, said the city could set up a referral process and, if the municipal code were amended, "we could bring these operators into the regulated market."

LAPD and Council members also described practical limits to enforcement. Captain Ahmad Zaraqani said that after legalization, the department "got basically out of the business of enforcement regarding cannabis" as routine activity; the department now pursues enforcement primarily when complaints are received or when unlicensed cultivations are identified.

Public commenters who identified themselves as social equity applicants and small-business cannabis operators urged faster action from the Department of Cannabis Regulation and pointed to delays in licensing and permitting. Alfredo Ogano, who said he is a social equity operator in District 10, said illicit operations are "killing my business" and asked for parity in any grandfathering of existing medical dispensaries. Several other operators described high rents, lengthy processing times and a perception that legacy operators with established clientele have an unfair advantage.

DCR and Finance staff told the committee they can update and expand the data underlying the reports, but that several pieces remain outstanding: the committee was told a report from the Department of Building and Safety and the City Attorney on nuisance abatement and revenue recovery was still pending. Council members asked for additional methodological detail about the estimates and for a report back with legislative options that could reduce the illicit market and increase regulated revenue.

At the meeting’s close the committee voted to note and file the reports heard that day and requested that DCR provide a report on potential legislative options for license types and other changes to reduce illicit activity and increase compliance. The motion passed on a recorded voice vote with committee members voting in favor (recorded vote count: yes 3, no 0).