Mar 15

Legal? Illegal? Some players still work both sides of state marijuana industry

Technically, the marijuana shops in Santa Ana and Costa Mesa are on opposite sides of the law.

Santa Ana allows cannabis retailing, so the city welcomes and collects tax money from some 18 licensed cannabis stores in the city’s boundaries. Costa Mesa doesn’t, and it would like to shut down the eight rogue shops in town that are selling weed in defiance of state and local law.

But the distinction between many of these shops — and between legal and illegal marijuana shops throughout Southern California — is far from black and white.

Many illicit shops sell products also offered in legal shops, even though licensed cannabis farmers, manufacturers and distributors can’t legally peddle their goods in unlicensed shops.

Some of the underground shops are owned by people who also have stakes in legal stores, with the owners using a complex scheme of limited partnerships and proxy owners — sometimes called “go to jail guys” — to hide their dual roles.

And unlicensed business are promoted side by side with legal operators on the online directory Weedmaps, whose principals are also invested in the legal cannabis industry.

More than a dozen sources who spoke to the Southern California News Group on and off the record over the course of several months say the blurring of legal and illegal worlds is the cannabis industry’s most widely known yet difficult-to-prove secret.

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