California Seized $534 Million in Illegal Cannabis in 2024, as Challenges Remain for Legal Market

Police officers raid an illegal cannabis site in Lancaster, Calif., on Aug. 14, 2024. John Fredricks/The Epoch Times

California enforcement officials seized an estimated $534 million in illegal or unlicensed cannabis in 2024, the governor’s office announced March 4.

Enforcement teams served 425 search warrants across the state last year, according to a statement from the California governor’s office.

The enforcement was focused on three types of illegal operations: indoor cultivation, outdoor cultivation, and retail, which resulted in $269 million, $198 million, and $17 million worth of cannabis seized, respectively.

Los Angeles is at the top of the state’s 58 counties for enforcement activities, with seized cannabis valued at $104 million. Coming in second is Alameda County, which includes the city of Oakland, at $101 million.

Since 2019, officials have seized and destroyed about 1.6 million pounds of illegal cannabis worth an estimated retail value of $2.8 billion through more than 1,400 operations. During that period, 632 firearms were seized and 733 individuals were arrested, the governor’s office said.

Illegal cannabis activities compete with the regulated cannabis industry. The market conditions for licensed cannabis businesses in California “have been challenging since 2021, through 2024,” according to a January 2025 cannabis market outlook report commissioned by the California Department of Cannabis Control.

While production of licensed cannabis is increasing, inflation-adjusted wholesale prices and retail prices have been decreasing since 2020, the report said.

In 2024, the state’s licensed cannabis production was about 1.4 million pounds, reflecting an 11.8 percent increase from last year.

However, the estimated illegal cannabis production in California was 11.4 million pounds yearly, eight times more than the regulated businesses, according to the report.

Legal Businesses Face High Taxes and Fees

California voters in November 2016 approved Proposition 64, which legalized the recreational use of marijuana under regulations including taxation.

Proposition 64 also gives local jurisdictions the authority to regulate or ban commercial cannabis activities, although they cannot ban consumption in or transportation through their jurisdictions.

Besides regulation fees and cannabis exercise taxes from the state, some local jurisdictions also impose additional restrictions, taxes, and fees for cannabis businesses, which can result in an “effective local tax rate of more than 30 percent,” the market outlook report said.

Excise taxes and licensing fees for cannabis are not only higher compared to other states, but also higher compared to alcohol and tobacco in California.

For example, state excise taxes and fees for cannabis are roughly 77.5 percent of wholesale value. For alcohol and tobacco, excise taxes and fees are about 8.4 percent, and 29.5 percent of wholesale value, respectively, the report said.

California has increased its enforcement efforts to ensure cannabis licensees comply with regulations, while combating the illegal market. However, the “steadily increasing” cost of enforcement may cause further increases to regulation fees or taxes, according to the report.

Support for Regulated Cannabis

A survey in June 2023 showed that despite the challenges, Californians were still positive about cannabis legalization.

The survey by the Public Policy Institute of California showed that 64 percent of Californians said that the use of marijuana should be legal.

However, when it came to whether there should be cannabis retail sales in their communities, fewer Californians—56 percent—said yes.

Sixty-one percent of Californians thought that California’s legalization of marijuana had turned out to be mostly a good thing for the state, with Democrats at 75 percent, Republicans at 35 percent, and Independents at 72 percent.

According to a supplemental report issued this week by the Department of Cannabis Control, 250 out of California’s 539 cities and counties—or 46 percent—have permitted at least one type of cannabis business. The remaining 54 percent of cities and counties do not allow any type of cannabis business.