Unlicensed Cannabis Dispensaries thrive in Fullerton

Though illegal within the city, several cannabis dispensaries operate openly in Fullerton. Most of these businesses are easily searchable online, and some are located only a few miles from City Hall.

Fullerton Exotics, an unlicensed dispensary that operated at 922 Williamson Avenue since at least November of 2021, was declared a public nuisance by the city, had its power cut, and was declared unsafe for occupancy. Despite this, it was soon operating just a few miles away, at 110 Ash Avenue. This is a common evasive tactic used by unlicensed dispensaries.

“This happens over and over again. it seems like we're just playing whack-a-mole, and to some degree we are,” said Mayor Fred Jung of Fullerton. 

Cannabis shops are a significant source of tax revenue for nearly 190 California cities, according to state regulators, but Fullerton is reluctant to legalize and regulate them. Last year, Santa Ana earned $20 million from cannabis-related taxes. Meanwhile, Fullerton is expecting a deficit of $5 million in the 2022-2023 fiscal year and is considering handing over its city fire department, founded in 1908, to the county to cut costs. 

Fullerton prohibited dispensaries within the city following the passage of Proposition 64 in 2016, which made recreational cannabis legal statewide. In November 2020, the city adopted an ordinance that would allow several dispensaries to open, but rescinded it in February 2021 due to resident complaints.

“I am just concerned we are trying to go along with what other people, other cities are doing, and Fullerton’s a very unique city, I’d like to keep it that way,” said Maureen Flynn-Becerra, who said she taught the anti-drug DARE program for the Fullerton Police Department. “What would we lose as a city, as families, as a community, by supporting an ordinance like this?” 

“People, Fullerton residents, care about getting our financial house in order, they care about fixing our roads and streets, and this is not going to do that,” said City Council member Nick Dunlap. “The fact that there’s no residential buffer to some of the most, I think, at-risk neighborhoods in the city, is a complete disrespect to the residents of our city, and this is not something that I could support.”

In April 2021, the city launched a $72,000 pilot program to combat unlicensed cannabis shops, fining cannabis businesses and the property owners who lease storefronts to them.

Although possessing cannabis is legal statewide, cities must create ordinances to set specific rules for related businesses. Regulations typically include rules about where and when these shops can operate. A black market like Fullerton however, has no such regulations, meaning businesses can open near public schools or parks, which would not be allowed in a legal market. 

The city follows a strict citation process in their efforts to shut down unlicensed cannabis businesses, said Lisa Weaver, a spokesperson for the Fullerton Police Department. If the business chooses to ignore the citations, the city can pursue a court order to shut off the electricity. 

Cannabis businesses typically register as an LLC, or limited liability company, because they are much more flexible than other types of corporations, and the owners can avoid certain business taxes. 

“Sometimes these cannabis businesses will sell the property under another LLC and the city will have to start over with the due process. So there really are a lot of variables involved,” said Guillermina Torrico, a code enforcement manager for the city.

Torrico said that once a warrant is received, the process to shut down an illegal dispensary takes about a month. However, the city can run into challenges issuing citations because the businesses are usually set up under false names and not properly registered with the city. Fullerton can also issue citations directly to the property owner in the hope that they will evict the illegal business. 

The first citation for running an illegal cannabis business in Fullerton is $100, the second is $200, and a third citation could amount to $500, according to an April 2021 city staff report.

If an unlicensed cannabis business has made building alterations without permits, the city can add “building and safety fines” onto the initial citations. These fines start at $130 for the first violation, $700 for the second and $1,300 for more violations.  Jung said these fines are not high enough to deter these unlicensed dispensaries, which can rake in as much as $10,000 to $20,000 per day.

Because Fullerton operates under California’s general laws and not a city charter, it faces challenges enforcing local cannabis regulations, according to Jung. Cities with charters, such as Anaheim and Santa Ana, have greater local power because city ordinances can supersede certain state laws. 

“One of the things that we cannot do, and have difficulty doing, is arbitrarily increasing fines and levying fines,” Jung said.

Bob Solomon, a clinical professor of law at UC Irvine and co-chair of the UCI Center for the Study of Cannabis, said he does not buy the mayor’s explanation. 

“Of course they can, because it's an illegal activity. They have chosen not to do so,” said Solomon.

“The best enforcement, frankly, for illegal dispensaries, is legal dispensaries because legal dispensaries don't want people to get an unfair advantage and they help police the market,” Solomon said.

Solomon said legal cannabis businesses could reduce safety risks that the illegal businesses pose for consumers, while also being a better option for the environment.

“If it's a legal, licensed dispensary, you're going to have tracking from seed to sale, which means it's environmentally sound,” Solomon said.

With Fullerton unable to muster up enforcement tools beyond citations to shut down illegal cannabis shops, Solomon believes the current strategy will harm the city more than it will help it. 

“If the city chooses not to do police enforcement, you basically have the wild west,” Solomon said. ”In any event, it's the government that's responsible for enforcement; if the city chooses not to do so, then so be it, but we know who to blame.”