Illegal pot dispensaries brazenly operating in East LA; unlicensed, no taxes, no regulations

EAST LOS ANGELES, CA (FOX 11) - It's been five months since the sale of recreational marijuana became legal in California, but an undercover FOX 11 investigation found that an alarming number of illegal dispensaries continue to operate without consequence.

Many of them are located in the unincorporated areas of Los Angeles County, where marijuana dispensaries are banned and there are no licenses.

These illegal dispensaries are unregulated, untested, they don't pay taxes on the marijuana they sell, and their product can potentially be full of pesticides, mold, and fungus.

FOX 11 went undercover to 25Cap, one of many illegal cannabis dispensaries in unincorporated LA county. It's located at 4728 Whittier Blvd. in east Los Angeles.

25Cap had the product organized and laid out on shelves. Various different types and amount of pot, including Indica, edibles, and private reserve, but none of it is allowed to be sold there.

Under California law, during legal transactions at licensed dispensaries, only up to one ounce of cannabis can be sold or purchased, but 25Cap offered to sell FOX 11 sixteen times that amount.
"I mean, we go up to a pound," an employee said. "We don't limit how much you spend, it depends on how much you want."

The employee said the price for a pound would be $1,500.

25Cap never responded to FOX 11's requests for comment, so we stopped by the dispensary in person.
An employee shut a window in the face of a FOX 11 reporter when he asked if there was anyone in charge we could speak to, and they declined to comment.

"It's amazing to me that they don't follow any state laws or regulations, they violate everything that they know is out there already with prop 64," said Brian Blatz, the CEO of Verdant Distribution , one of the largest legal cannabis distribution companies in Southern California.

FOX 11 showed Blatz our undercover video, and he was shocked by what he saw.
"They're selling pounds of cannabis, they know that's gonna be resold into a secondary market with people that aren't gonna be concerned about the ages of the people they're selling it to," Blatz said.

He told FOX 11 that people are attracted to illegal pot dispensaries like 25Cap because their sales aren't taxed by the state. That means the product is sold much cheaper, sometimes up to a fifty percent discount from what you would buy at a licensed dispensary, but it comes with a risk.

"I think the most important thing for the general public to understand is by shopping at any illegal dispensary, you're 100% guaranteed to get products that are untested and are filled with pesticides, chemicals, fungus, and mold," Blatz said.

Records show that LA county currently has a civil case against 25Cap's owner for violating LA county code and unlawful business practices.

This was after the Los Angeles County Sheriffs Department made an undercover purchase of marijuana from the dispensary in March 2017.

The case was filed in June 2017, and almost a year later, nothing has happened, and 25Cap is still up and running.

"You know, when you take a look at this [undercover] videotape, you realize there are no rules," said Bob Lindsey, a former LASD commander who is now running to be the next LA county sheriff. He's been sounding the alarm about illegal marijuana dispensaries in the county.

"There are no regulations in there," he said. "[The employee] is willing to go ahead and sell up to a pound. That's not medical use, that's not personal use. This is a danger to the entire community."
Captain Hollly Francisco with LASD told FOX 11 that despite frustrations with the system, their deputies work hard to crack down on illegal dispensaries.

"We have to allow the court system to play out, we can't control that," she said. "Just since January we've served 30 warrants in the unincorporated area of LA county, arrested approximately 60 people, recovered over 200 pounds of marijuana, it's just a system."

In the meantime, Los Angeles County leaders remain concerned.

County Supervisor Hilda Solis sent FOX 11 the following statement:

"For the past year and a half I have been working closely with many community members from my district to address our collective concern: unpermitted marijuana dispensaries illegally operating despite a ban on such businesses in unincorporated County communities such as East LA. These dispensaries are open at all hours, create parking issues, and are not equitably distributed throughout LA County, thus widening existing gaps in public health and contributing to a lower quality of life. Many dispensaries are in communities that are already overburdened by liquor stores and in low income neighborhoods and communities of color. Illegal dispensaries also place tremendous additional pressures on neighboring small businesses. To combat illegal dispensaries, I've authored and passed several motions at the Board of Supervisors to direct funding to address enforcement and inherent inequities that too often fall upon our unincorporated communities. Unfortunately, until the County develops comprehensive regulations and licensing protocols, we are still playing 'Whack-a-Mole' with illegal dispensaries. I am committed to developing and passing cannabis regulations that protect our local communities from unequal and negative impacts while respecting the intent of the majority of California's voters who supported legalization. I share in my communities' frustration with the status quo, and I will continue to advocate for a quick and permanent solution through regulation and licensure."

Los Angeles County officials told FOX 11 they too are concerned about the potential hazards of illegal pot dispensaries, and they're committed to shutting them down.

The county sent FOX 11 the following statement:

"Los Angeles County shares the public's concern about illegal cannabis dispensaries and the potential harm they may bring to residents and communities. We are committed to doing all we can through the legal system to shut them down--and to simultaneously educate the public on the importance of not patronizing establishments operating outside the law. In regard to the dispensary at the heart of your report, the County has undertaken a series of enforcement actions since it was brought to our attention by the office of Supervisor Hilda L. Solis, including an undercover purchase. In June, 2017, the County filed a civil complaint. The defendant has failed to respond or appear on numerous occasions--a failure that prompted the judge to finally set a default judgment hearing for August 17, 2018. The County is confident it will prevail. Again, make no mistake, the County is determined to put unlicensed dispensaries out of business, even if the judicial process is a protracted one."