+100k Weed Plants Busted in East Bay Est. 10 Mil in Cash
Alameda County Sheriff’s Office posted about the bust on their Facebook page Wednesday night close to midnight, calling the bust, “one of the largest illegal grow operations in the state.”
Sgt. Ray Kelly of the Alameda County Sheriff’s Office wrote:
“On Wednesday, September 29, 2021, ACSO Detectives conducted over a dozen search warrant operations throughout the East Bay taking down one of the largest illegal grow operations in the state.”
Sgt. Kelly: “This organized and sophisticated network of individuals were making tens of millions of dollars in profit and avoiding California Marijuana Regulations. We estimate at this time that we have seized over 100,000 plants and upwards of $10,000,000 in cash. In addition, there are millions of dollars in infrastructure, equipment, lighting, generators and supplies used to facilitate the grows.”
Kelly finished his post with, “The enormity and complexity of this illegal grow operation cannot be expressed in words or pictures, it’s unbelievable.
We will be on scene the next several days processing and accounting for this enormous amount of evidence.”
The East Bay Times took photos of one of the busts in East Oakland, and reported several arrests being made near the 800 block of 81st Avenue in East Oakland.
You may be asking yourself “why would someone try and avoid the law, isn’t growing marijuana legal in California?” In the words of Tony Kornheiser, “the answer to your question is always, ‘money’.” To be specific in this case, it’s about paying taxes.
Taxes on marijuana are very high, especially in Oakland which has an extra 10% local cannabis business tax on gross receipts, one of the highest in the state. On top of that you have state sales tax, cultivation tax, then regular payroll tax, then federal taxes, and on and on.
Making the effective price for $100 dollars of weed in Oakland retail at $138.20 after taxes. Making it incredibly expensive to sell weed legally in Oakland.
If you avoid regulation, not only can you sell your weed tax-free to vendors in California, you don’t have to pay for cultivation permits, and you can export your product to states where Marijuana is still illegal, for an even higher (and obviously untaxed) premium.
You can see why illegally growing marijuana would be enticing.
What makes this type of operation dangerous, is that illegal grows can act without the government imposed safety regulations. Theoretically they could use unsafe or banned chemicals or pesticides, or not follow proper fire safety regulations, it also forces their employees to all work ‘under the table’.
But, the big ticket item here is tax money. California’s legal cannabis market revenue hit an estimated $3.7 billion in 2020, but the state’s illicit market is estimated to be three or four times bigger.
The passage of Prop 64 in 2016 had a major impact on our state. That initiative erased most marijuana crimes from the state’s legal code (thankfully!) and replaced unregulated medical collectives with tested, and taxed, retail licensees.
This resulted in California’s cannabis excise tax revenues soaring. Total Prop 64 state revenue hit $2.07 billion by 2020’s end, and that included $1.04 billion in excise taxes, $256.6 million in cultivation taxes, and $771.7 million in sales taxes, according to the California Department of Tax and Fee Administration.
Prop 64 also allowed cities to pass whatever local cannabis business tax they liked. Hoping to add more cops and teachers, localities enacted outsized weed tariffs ranging from 1% to 15% of gross receipts.
Many in the cannabis market in the Bay Area would tell you that the Alameda’s 10% tax, is way too high. San Francisco’s is 5%, and SF dispensaries will tell you THAT is too high. It’s all too HIGH man.
The Alameda Sheriffs Department did not release the names of those arrested in this bust or list the other locations where warrants were served.