Burner Distros – How Thousands of Pounds of Legally Grown Cannabis End Up on the Illicit Market

I don’t often sit up in bed with a frozen shoulder, but when Kaitlin Domangue wrote about weed for this week’s WorkWeek about “burner distros” I wasn’t familiar with, I nearly threw my other shoulder out. If you haven’t already subscribed to WorkWeek’s newsletter, you really should because Kaitlin is a rising superstar in the cannabis industry.

I digress.

What is a “Burner Distribution” and how does it help bring literally tons of legally grown and state-licensed weed to the illicit market? While it always seemed like large MSOs had tremendous growing capabilities to grow far more cannabis than their dispensaries had paying customers, did they? If so, what did they do with the extra stock, no pun intended, they grew? Did it “fall off the back of the truck”? Well it turned out just under a crazy term called “Burner Distributions”.

As Kaitlin and WorkWeek explain, a “burner distribution” is the following:

The illegal market and the legal market do not always fight each other as legal cannabis growers have been caught selling products to the illegal market.

This has become such a problem that HNHPC Inc, the parent company of Catalyst Cannabis Co, a privately held California cannabis retail company, filed a lawsuit last September to try to resolve the issue.

The lawsuit alleges that criminals use straw men to buy cannabis distribution licenses called “distiller distributions.”

These burner distributions buy large quantities of legal cannabis at wholesale prices and then sell it through the back door, avoiding California taxes and often selling the product through interstate channels.

So, to be clear distiller is just that, a distiller’s license is a cannabis license to buy cannabis wholesale and sell it retail (distribution), only it is assumed that the license allows for some quick steps to selling weed on the black market is used, and then will not continue the qualification path to make the license more durable, such as B. Setting up a retail site, compatible software, etc. Burner phone meets burner cannabis license.

“Distro” is short for distribution license, so distiller distribution licenses are just that: get a legal license to buy wholesale cannabis legally in the legal market, but with intent to sell it in the illegal market you will make much more profit by avoiding the high California taxes.

If you read the WorkWeed article, you’ll see that this whole setup was due to the loophole in the seed-to-sale laws and the Metric tracking software. Lawsuits have been filed in California to try and fix the problem, but so far the California Department of Cannabis Control has done nothing about the legal backdoor.

Why buy on the legal market and sell on the illegal market? Greater profits by avoiding the taxes and other costs associated with legally selling cannabis from a store to a delivery service. Some tax rates in California have reached 45% on cannabis purchases, and that’s a massive incentive to take the product and sell it on the black market for cash to boost your margins and profitability.

This is a growing trend and not just a California issue, as WorkWeed in Canada points out:

In Canada, it has also long been known that certain medicinal cannabis license holders seek permission to grow more cannabis than they need under Canada’s medicinal cannabis system in order to legally grow cannabis entering the illicit market.

Fortunately, as prices for legal cannabis products continue to fall in Canada, the impact of this issue has diminished.

New York, while waiting for licensing to kick in and kick in, has seen an onslaught of illegal vendors taking to the streets on foot, in vans and trucks selling unlicensed cannabis to consumers. Cannabis gift giving, an early workaround in states like Massachusetts and DC, is now taking place in New York. With the cannabis gift, the retailer sells something like orange juice or a t-shirt to a consumer and also receives a certain amount of weed as a free gift. States have updated laws on gifting and mixing cannabis with other sales much faster than California has moved to close the seed-to-sale tracking gap.

The question is, if California is serious about the issue, why not just go into the chambers, make an amendment or decision, vote on it and boom, the issue is resolved. Apparently this didn’t happen and is taking so long to fix that the DCC is now part of a lawsuit for not trying to fix this issue. Which leads to the next question, why not?

Money.

Someone is making a lot out of this loophole opening, and it can also be more than just one or two people.

You’ve heard of a speakeasy, a backdoor deal, and now a burner distribution.

CALIFORNIA WEED IS A BLACK, READ MORE…

73% OF WEED SOLD IN CALIFORNIA COMES FROM THE ILLICIT MARKET!