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When the new marijuana shop opened up just down the street from his own marijuana shop, Greg Meguerian, owner of The Reefinery in Los Angeles, kept an eye on it. When that shop stayed open past the legal closing time of10 p.m. and sold customers over a quarter-pound of cannabis at once,four times more than the legal limit, Meguerian knew he wasn’t competing with a licensed dispensary.
“It’s so shady, if you look at it,” Meguerian said. “It looks like a shady crack house.”
The 15 Spot – as the tarp sign hung in front reads – doesn’t appear on Los Angeles’ list of authorized retail businesses. Meguerian and his lawyer reported the illegal dispensary, but it’s still open—and Meguerian is paying a price. He said his sales are down noticeably since his illicit competitor moved in. (Calls to the 15 Spot went unanswered because its phone is disconnected.)
“I told the state, ‘If I lose 20 percent, you just lost 20 percent in taxes.’” He told POLITICO Magazine. “You feel like your words are falling on deaf ears.”
What’s happening to Meguerian is a window into one widespread side effect of marijuana legalization in the U.S.: In many cases it has fueled, rather than eliminated, the black market. In Los Angeles, unlicensed businesses greatly outnumber legal ones; in Oregon, a glut of low-priced legal cannabis has pushed illegal growers to export their goods across borders into other states where it’s still against the law, leaving law enforcement overwhelmed. Three years after Massachusetts voters approved fully legal marijuana, most of the cannabis economy now consists of unlicensed “private clubs,” home growing operations and clearly illicit sellers.
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