Since California legalized recreational cannabis in 2016, licensed operators have faced stiff competition from the illicit market. Based on current estimates, only about 40% of California consumers purchase cannabis from legal sources. However, if new enforcement measures proposed by Gov. Gavin Newsom come to pass, the tides may soon be turning in favor of the legal cannabis industry.
Gov. Newsom’s budget proposal, announced May 14, 2025, proposes statutory changes that authorize the Department of Cannabis Control (DCC) “to seal an unlicensed premises when it is involved in illicit commercial cannabis activities.”
This move mirrors New York’s “Operation Padlock to Protect,” an initiative that has generally been viewed as a success, although it has also faced some legal challenges.
Understanding ‘Operation Padlock to Protect’ in New York
In response to the proliferation of unlicensed cannabis retailers, New York State’s April 2024 budget negotiations resulted in granting municipalities enhanced enforcement powers to inspect and padlock smoke shops illegally selling cannabis products. Leveraging these new powers, New York City launched “Operation Padlock to Protect” in May 2024, enabling members from the city’s sheriff’s office, police department, and Department of Consumer and Worker Protection to immediately padlock businesses found engaging in illicit cannabis sales.
In the first week of “Operation Padlock to Protect,” New York City reported successfully sealing 75 illegal smoke and cannabis shops, issued nearly $6 million in penalties, and recorded 3,878 counts of violations. In the 12 months since its launch, more than 1,400 unlicensed sellers have been shut down across New York State, with over $95 million illegal products seized from illicit stores.
Legal cannabis sales in the city reportedly increased by 72% following these enforcement actions. The success of this initiative is attributed to its swift implementation and the avoidance of bureaucratic red tape, allowing for immediate and effective enforcement.
California’s Current Enforcement Landscape
California’s DCC oversees the regulation and licensing of cannabis businesses. Enforcement actions typically begin with site inspections, followed by notices to comply. If violations persist, the DCC can issue citations, hold administrative hearings, and impose penalties, including license suspensions or revocations.
Yet the penalties for selling illegal cannabis have been relatively light, with few criminal consequences. Regulators have found themselves raiding the same storefronts over and over again.
To bolster enforcement, California established the Unified Cannabis Enforcement Taskforce (UCETF) in 2022. This multi-agency task force collaborates with local, state, and federal partners to target illegal cannabis operations. In 2024, UCETF seized over $534 million worth of unlicensed cannabis products, yet the illicit cannabis industry continues to boom. This reality is recognized by the regulators, with Bill Jones, head of enforcement for DCC, telling NPR, “[the] black market is very pervasive and it is definitely larger than the legal market.”[1]
Potential Implications of Adopting the ‘Padlock’ Approach in California
Granting the DCC the authority to seal unlicensed premises could expedite the shutdown of illegal operations, potentially leveling the playing field for licensed businesses. However, New York’s experience offers cautionary insights. The aggressive enforcement led to legal challenges, with some businesses suing the city for improper closures and procedural violations under the applicable local regulations.
One NYC smoke shop successfully challenged the city’s actions in court, obtaining a ruling from a Queens County judge who found that the city’s summons and sealing order were improperly served on the business. Based on this fact, it was deemed arbitrary and capricious for the administrative hearing officer to determine that the premises should remain closed for a year.
The court specifically noted that “[s]ince the ultimate penalty, or shuttering Petitioner’s business, is so severe, it is imperative that the City strictly abide by all service requirements in order to preserve Petitioner’s due process rights.” [2] As a result, the court vacated the Immediate Order of Closure and ordered the New York City sheriff to remove the seal and reopen the premises.
As California considers this heightened enforcement strategy, it will be crucial to balance swift action against illicit operators with the protection of due process rights. Ensuring transparent procedures, clear criteria for enforcement, and avenues for appeal will be essential to uphold justice and maintain public trust.
[1] Kaste, Martin. “Black Market Cannabis Thrives in California Despite Legalization.” NPR, April 5, 2024. https://www.npr.org/2024/04/05/1242165136/black-market-cannabis-california-legalization-marijuana-recreational-illegal.
[2] Sutphine Convenience Corp., Index No. 717237/2024, Docket No. 22 (Sup. Ct. Queens Cnty. Sept. 11, 2024) (Decision and Order).
