Canna_Business
3 weeks ago
$MRMD: Earnings 8/7/2024
MRMD: MariMed Inc. (Balance Sheet Summary)
Current Assets: Increased from $51,432,000 in 2023 to $53,054,000 in 2024, indicating a stronger short-term financial position.
Cash and Cash Equivalents: $10,192,000 (2024) compared to $14,645,000 (2023), a decrease but still maintaining significant liquidity.
Accounts Receivable, Net: Improved slightly from $7,199,000 to $7,744,000 suggesting better collection from customers.
Inventory: Increased from $25,306,000 to $31,139,000 indicating growth in production and product availability.
Non-Current Assets: Grew from $144,691,000 in 2023 to $155,480,000 in 2024, reflecting investment in long-term growth.
Property and Equipment, Net: Increased to $93,977,000 from $89,103,000 showing investment in physical assets.
Intangible Assets, Net: Increased from $17,012,000 to $20,404,000 reflecting growth in intangible value.
Goodwill: Increased from $11,993,000 to $15,812,000 indicating potential acquisitions or value addition.
Finance Lease Right-of-Use Assets: Increased from $3,295,000 to $4,151,000 suggesting expanded leasing activities.
Total Assets: Increased to $208,534,000 in 2024 from $196,123,000 in 2023, indicating overall growth.
Accounts Payable: Increased from $9,001,000 to $11,854,000 showing more operational activity.
Non-Current Liabilities: Increased slightly from $76,347,000 to $80,272,000 indicating more long-term obligations but manageable.
Positives:
1. Total Assets Growth: Significant increase in total assets from $196,123,000 to $208,534,000 reflecting overall growth.
2. Inventory Growth: Increase in inventory to $31,139,000 indicating higher production capacity.
3. Investment in Property and Equipment: Increase to $93,977,000 showing commitment to expanding physical infrastructure.
4. Intangible Assets and Goodwill: Growth in intangible assets and goodwill, suggesting value creation and potential acquisitions.
5. Increased Paid-In Capital: Increase in additional paid-in capital, reflecting investor confidence and additional equity financing.
These points indicate a positive trajectory with investments in assets and infrastructure that suggest growth and expansion potential.
Six months ended June 30:
• 2024:
o Revenue: $78,371,000
o Cost of Revenue: $44,990,000
o Gross Profit: $33,381,000
o Gross Margin: 42.6%
o Operating Expenses: $30,404,000
o Income from Operations: $2,977,000
Positives:
Revenue Growth:
Three months ended June 30: Revenue increased from $36,519,000 in 2023 to $40,438,000 in 2024.
Six months ended June 30: Revenue increased from $70,899,000 in 2023 to $78,371,000 in 2024.
Gross Profit Increase:
Three months ended June 30: Gross profit increased from $16,376,000 in 2023 to $16,909,000 in 2024.
Six months ended June 30: Gross profit increased from $31,764,000 in 2023 to $33,381,000 in 2024.
Improvement in Operating Income:
Three months ended June 30: Despite an increase in operating expenses, the company maintained positive income from operations ($956,000 in 2024).
Six months ended June 30: Income from operations was $2,977,000 in 2024, indicating effective cost management despite higher operating expenses.
Reduction in Interest Expense:
Three months ended June 30: Interest expense decreased from $2,640,000 in 2023 to $1,724,000 in 2024.
Six months ended June 30: Interest expense decreased from $5,145,000 in 2023 to $3,353,000 in 2024.
Cash Flows from Investing Activities:
• 2024:
o Purchases of property and equipment: $8,336,000
o Business acquisitions, net of cash acquired: $4,250,000
o Purchases of cannabis licenses: $623,000
o Proceeds from notes receivable: $13,000
o Net cash used in investing activities: $13,809,000
Cash Flows from Financing Activities:
• 2024:
o Proceeds from Construction to Permanent Commercial Real Estate Mortgage Loan: $2,948,000
o Proceeds from mortgages: $1,163,000
o Principal payments of finance leases: $676,000
o Distributions: $83,000
o Net cash provided by financing activities: $2,961,000
Positives:
1. Positive Cash Flow from Operating Activities:
o 2024: $6,395,000 indicating the company is generating cash from its core operations.
2. Strong Depreciation and Amortization Contributions:
o Significant amounts for depreciation and amortization ($3,946,000 and $1,183,000 in 2024) demonstrate substantial investment in assets and intangible resources.
3. Increased Cash Flow from Financing Activities:
o 2024: Positive net cash provided by financing activities ($2,961,000), showing successful financing strategies, including new mortgage loans and managing finance leases.
4. Investment in Growth:
o Continued investment in property, equipment, and business acquisitions, reflecting the company's commitment to growth and expansion.
5. Reduction in Cash Outflows from Investing Activities:
o Despite significant outflows, the company is strategically investing in key areas such as property, equipment, and licenses.
These points indicate that MariMed Inc. is focusing on operational efficiency, strategic investments, and effective financing to support its growth trajectory.
Positives:
1. Positive Adjusted EBITDA:
o Three months ended June 30, 2024: Adjusted EBITDA is $4,371, ,000 showing positive earnings before interest, taxes, depreciation, and amortization adjustments.
o Six months ended June 30, 2024: Adjusted EBITDA is $9,032, ,000 indicating strong operational performance.
2. Improvement in Non-GAAP Gross Margin:
o Three months ended June 30, 2024: Non-GAAP Gross Margin improved to 42.9% from GAAP Gross Margin of 41.8%.
o Six months ended June 30, 2024: Non-GAAP Gross Margin increased to 43.3% from GAAP Gross Margin of 42.6%.
3. Reduced Non-GAAP Net Loss:
o Three months ended June 30, 2024: Non-GAAP Net Loss is significantly lower at $(232,000) compared to GAAP Net Loss of $(1,639,000).
o Six months ended June 30, 2024: Non-GAAP Net Loss is $(822,000), substantially less than GAAP Net Loss of $(2,931,000).
4. Consistent Adjustments for Amortization and Stock-Based Compensation:
o Adjustments for amortization of acquired intangible assets and stock-based compensation provide a clearer picture of the company's operational performance by excluding non-cash expenses.
5. Maintained Positive EBITDA Margins:
o Despite the lower GAAP income, MariMed has maintained positive Adjusted EBITDA margins (10.8% for the three months and 11.5% for the six months ended June 30, 2024), indicating operational efficiency.
These points highlight MariMed Inc.'s operational strengths, including strong Adjusted EBITDA, improved non-GAAP gross margins, and a significantly reduced non-GAAP net loss.
Six months ended June 30: 2024
o Product revenue - retail: $45,969,000
o Product revenue - wholesale: $30,373,000
o Total product revenue: $76,342,000
o Other revenue: $2,029,000
o Total revenue: $78,371,000
Positives:
1. Strong Growth in Wholesale Revenue:
o Six months ended June 30, 2024: Wholesale revenue grew substantially by 41.9% to $30,373,000 from $21,407,000 in 2023.
2. Overall Revenue Growth:
o Six months ended June 30, 2024: Total revenue increased by 10.5% to $78,371,000 from $70,899,000 in 2023.
3. Stable Retail Revenue:
o Despite a slight decrease, retail revenue remains a significant portion of the total revenue, contributing to a balanced revenue stream.
o Six months ended June 30, 2024: Retail revenue was $45,969,000 compared to $47,519,000 in 2023, showing resilience.
4. Increase in Other Revenue:
o Six months ended June 30, 2024: Other revenue increased slightly to $2,029,000 from $1,973,000 in 2023, demonstrating growth in additional revenue streams.
These points highlight MariMed Inc.'s robust performance in increasing wholesale revenue and overall revenue growth, which are positive indicators of the company's expanding market presence and operational efficiency.
Balance Sheet Summary:
• Total Assets increased from $196.1M to $208.5M, showing overall growth.
•Current Assets grew to $53.1M from $51.4M, with significant liquidity in cash ($10.2M).
•Non-Current Assets rose to $155.5M from $144.7M, driven by investments in property, equipment, and intangibles.
•Total Liabilities increased to $120.9M from $107.2M, reflecting higher short-term and long-term obligations but manageable within the asset growth.
Stockholders’ Equity remains strong at $68.6M despite a slight decrease from $69.9M.
Positives:
1. Asset Growth: Significant increase to $208.5M.
2. Inventory Increase: Reflects higher production capacity.
3. Investment in Infrastructure: Increased property and equipment investment to $94M.
4. Intangible Assets Growth: Indicates value creation and potential acquisitions.
5. Stable Financing: Consistent mezzanine financing at $19M.
Revenue Growth:
o Q2: Up from $36.5M (2023) to $40.4M (2024).
o 6 Months: Up from $70.9M (2023) to $78.4M (2024).
Gross Profit Increase:
o Q2: Up from $16.4M to $16.9M
o 6 Months: Up from $31.8M to $33.4M
Operating Income:
o Q2: Positive at $956K despite higher operating expenses.
o 6 Months: Positive at $3M
Interest Expense Reduction:
o Q2: Down from $2.6M to $1.7M
o 6 Months: Down from $5.1M to $3.4M
Positives:
1. Revenue and Gross Profit Growth: Consistent increase in revenue and gross profit.
2. Positive Operating Income: Indicates effective cost management.
3. Reduced Interest Expenses: Lower financial costs improve net loss figures.
Statements of Cash Flows Summary:
• Positive Cash Flow from Operations: $6.4M in 2024, showing strong core operations.
• Investing in Growth: Continued investment in property, equipment, and business acquisitions.
• Effective Financing: Positive net cash from financing activities at $3M.
Positives:
1. Operational Cash Generation: Strong positive cash flow from operations.
2. Strategic Investments: Significant investments in assets and growth initiatives.
3. Effective Financing Strategy: Positive financing activities support growth.
MariMed Inc. demonstrates robust growth in assets, revenue, and operational efficiency, with strategic investments and effective financing supporting its positive trajectory.
Giovanni
2 months ago
Mold scandal in Massachusetts leads to $200,000 fine for marijuana MSO
author profile pictureBy Chris Roberts, Reporter
June 12, 2024 - Updated June 12, 2024
SHARE
Just Released! Get realistic market forecasts
te-by-state insights and benchmarks with the new 2024 MJBiz Factbook member program, now with quarterly updates. Make informed decisions.
Image of a petri dish swab at a cannabis lab
(Photo by Matthew Staver for MJBizDaily/Emerald)
(This story was updated at 12:45 p.m. ET Wednesday to include comments from Holistic Industries.)
Massachusetts regulators last month fined marijuana multistate operator Holistic Industries $200,000 after a mold outbreak in which the company allegedly “knowingly” sold contaminated cannabis.
According to an April 15 stipulated settlement between the company and the Massachusetts Cannabis Control Commission (CCC) approved May 9, the agency alleged Holistic knew about a mold outbreak at its cultivation facility in the town of Monson since at least November 2020.
According to CCC documents, rather than immediately fix the problem, the company sought out permissive lab testing that allowed the tainted marijuana to pass inspection and be sold, leading to “numerous patient and consumer complaints” that Holistic cannabis “smelled and tasted like mold.”
CCC spokesperson Tara Smith confirmed the company paid the fine, but she offered no further comment.
“We had issues with mold in our Monson facility in 2020/2021 and determined the safety of our plants was not compromised,” Jamie Ware, interim head counsel at Holistic Industries, told MJBizDaily in a statement emailed Wednesday.
“To be clear, no product was ever sold or in the hands of consumers that did not pass testing from a state-approved facility.”
In public comments at the CCC meeting on May 9, before the settlement was approved, Commissioner Kimberly Roy praised the employee whistleblowers for alerting officials to the problem and pushed for the creation of a dedicated “whistleblower hotline.”
“We want to thank these employees for being brave enough to speak up,” Roy said.
“We want to make sure consumers and patients are safe, but also our workers.”
Big fine, increased scrutiny
According to the settlement, the CCC determined that Holistic violated four state regulations, including jeopardizing “the welfare of the public.”
Despite increased scrutiny in recent years about the relationship between marijuana operators and independent testing labs, the situation came to light only after employees contacted regulators in fall 2021, according to the CCC.
Employees claimed company leadership knew about the problem, but moldy product was “pushed through anyway,” according to the settlement agreement.
Speaking for Holistic, Ware said via email that “even though all products passed all testing requirements during that time, we decided to completely renovate the facility at significant expense to ensure we could provide the best quality, safest products with no future issues.”
“During that time, we also consulted with top environmental science experts and OSHA (Occupational Safety and Health Administration) and were assured that any issues within the facility did not pose a human health hazard.”
Gaming the system?
Critics say the situation highlights several ongoing problems, including lax oversight that allows unscrupulous operators to use labs that provide desirable results, including inflated THC potency.
Seeking lab results that allow contaminated product to enter the market creates potential for health and safety crises that affect both workers and consumers.
“I think it’s fairly serious. The ease with which the system was gamed is really concerning here,” said Jeff Rawson, the Cambridge, Massachusetts-based founder of the Institute of Cannabis Science, a consumer-advocacy and watchdog group that’s been sounding the alarm over lax testing and safety standards.
“It’s fraud, and it’s also an unlawful occupation hazard.
“You are not allowed to employ people in a workplace that’s full of mold.”
Such problems aren’t limited to Holistic, according to Rawson, who has performed random testing of off-the-shelf cannabis products in Massachusetts and found about 10% of those selected failed his own testing for mold.
ADVERTISEMENT
‘Knowingly’ sought PCR testing
As part of its settlement with the state, Holistic “neither admits nor denies” any allegations, including:
Mold “was present” throughout Holistic’s 56,000-square-foot cultivation facility, including grow rooms, processing tables, “office spaces, drains, HVAC systems and structural elements.”
Holistic “knowingly” requested polymerase chain reaction (PCR) testing rather than plate assay testing “to ensure the maximum volume of product would reach the market.”
Holistic did not begin remediating the mold outbreak until April 2021, despite knowing about the problem the previous winter.
The company did not cease production during the mold outbreak, nor the remediation efforts.
As part of the settlement, Holistic must, for six months, submit product for testing to a third-party lab agreed to by both the state and the company.
Employee whistleblowers
Holistic’s alleged mold problem became public knowledge in 2021, thanks to employee whistleblowers who leaked word of the situation to local media as well as state regulators.
That year, an independent investigation found “significant” mold contamination “throughout the facility” in Monson, according to a report anonymously leaked to the Daily Hampshire Gazette and other media outlets.
At the time, Jamie Ware, a senior vice president at Holistic, blamed a December 2020 power outage for a “high-humidity event” and said the company found mold in June 2021 after a “pervasive smell” appeared.
Large, privately held MSO
Headquartered in Washington, D.C., Holistic Industries also operates cultivation facilities in Maryland, Massachusetts, Michigan, Oregon, Pennsylvania and West Virginia.
The company operates 15 adult-use stores and medical marijuana dispensaries under its Liberty brand in California, Maryland, Massachusetts, Michigan and Pennsylvania.
In news releases, Holistic describes itself as “among the largest” privately held MSOs in the country.
The company also scored a marketing coup when it secured the rights to sell cannabis using the name and likeness of Grateful Dead front man Jerry Garcia.
2024 MJBiz Factbook – now available!
Exclusive industry data and analysis to help you make informed business decisions and avoid costly missteps. All the facts, none of the hype.
Featured inside:
Financial forecasts + capital investment trends
200+ pages and 49 charts highlighting key data figures and sales trends
State-by-state guide to regulations, taxes & market opportunities
Monthly and quarterly updates, with new data & insights
And more!
Get the Facts
Massachusetts and safety
The alleged mold outbreak in Monson is one of several incidents to involve employee and consumer safety in the Massachusetts cannabis industry.
In January 2022, a 27-year-old cultivation worker employed by Florida-based MSO Trulieve Cannabis Corp. died after collapsing at the company’s former grow operation in Holyoke.
As part of its settlement in that matter, Trulieve paid a $14,502 fine and agreed to fund a study about the hazards of ground cannabis dust.
Chris Roberts can be reached at chris.roberts@mjbizdaily.com.
Giovanni
5 months ago
Is it unexpected that a patient needing a lung transplant dies waiting?
How long can you wait for a lung transplant?
The average person waits around two years for a single lung transplant, and as long as three years for two lungs. People who are unable to wait that long may be considered for lung transplant from a living donor.
What organ transplant has the lowest success rate?
Lung transplant patients have the lowest 5- and 10-year survival rates, according to UNOS. “The lungs are a very difficult organ to transplant because they're exposed to the environment constantly as we breathe,” explained Dr. Steves Ring, Professor of Cardiovascular and Thoracic Surgery. Dr.Apr 26, 2017
pubmed logo
Search:
Search
Advanced
User Guide
SaveEmailSend to
Display options
full text links
full text provider logo
actions
Cite
Collections
share
page navigation
Title & authors
Abstract
Comment in
Similar articles
Cited by
Publication types
MeSH terms
LinkOut - more resources
Pediatr Transplant
. 2015 May;19(3):294-300. doi: 10.1111/petr.12390. Epub 2014 Nov 19.
Lung transplant waitlist mortality: height as a predictor of poor outcomes
Britton C Keeshan 1, Joseph W Rossano, Nicole Beck, Rachel Hammond, James Kreindler, Thomas L Spray, Stephanie Fuller, Samuel Goldfarb
Affiliations expand
PMID: 25406495 DOI: 10.1111/petr.12390
Abstract
The LAS was designed to minimize pretransplant mortality while maximizing post-transplant outcome. Recipients <12 are not allocated lungs based on LAS. Waitlist mortality has decreased for those >12, but not <12, suggesting this population may be disadvantaged. To identify predictors of waitlist mortality, a retrospective analysis of the UNOS database was performed since implementation of the LAS. There were 16,973 patients listed for lung transplant in the United States; 12,070 (71.1%) were transplanted, and 2498 (14.7%) patients died or were removed from the wait list. Significantly more pediatric patients died or were removed compared with adults (22.0% vs. 14.4%, p < 0.01). In multivariate analysis, in addition to higher LAS at time of listing (adj. HR1.058, 1.055-1.060), shorter height (1.008, 1.006-1.010), male gender (1.210, 1.110-1.319), and requiring ECMO (1.613, 1.202-2.163) were associated with pretransplant mortality. Post-transplant survival was not affected by height. The current age cutoff may impose limitations within the current lung allocation system in the United States. Height is an independent predictor of waitlist mortality and may be a valuable factor for the development of a comprehensive lung allocation system.
Keywords: lung transplant; mortality; organ allocation; outcomes; pediatrics; waitlist.
© 2014 John Wiley & Sons A/S. Published by John Wiley & Sons Ltd.
PubMed Disclaimer
Comment in
Pursuing distributive justice in pediatric lung transplantation.
Mallory GB.
Pediatr Transplant. 2015 May;19(3):249-51. doi: 10.1111/petr.12434.
PMID: 25808911 No abstract available.
Similar articles
Improved waitlist and transplant outcomes for pediatric lung transplantation after implementation of the lung allocation score.
Lancaster TS, Miller JR, Epstein DJ, DuPont NC, Sweet SC, Eghtesady P.
J Heart Lung Transplant. 2017 May;36(5):520-528. doi: 10.1016/j.healun.2016.10.007. Epub 2016 Oct 17.
PMID: 27866928 Free PMC article.
Effect of the lung allocation score on lung transplantation in the United States.
Egan TM, Edwards LB.
J Heart Lung Transplant. 2016 Apr;35(4):433-9. doi: 10.1016/j.healun.2016.01.010. Epub 2016 Jan 15.
PMID: 26922274
Current status of thoracic organ transplantation and allocation in the United States.
Coke M, Edwards LB.
Clin Transpl. 2004:17-26.
PMID: 16704135
The new lung allocation system and its impact on waitlist characteristics and post-transplant outcomes.
Hachem RR, Trulock EP.
Semin Thorac Cardiovasc Surg. 2008 Summer;20(2):139-42. doi: 10.1053/j.semtcvs.2008.04.004.
PMID: 18707648 Review.
How Should Lungs Be Allocated for Transplant?
Egan TM.
Semin Respir Crit Care Med. 2018 Apr;39(2):126-137. doi: 10.1055/s-0037-1620265. Epub 2018 Mar 26.
PMID: 29579766 Review.
See all similar articles
Cited by
Sarcoidosis lung transplantation waitlist mortality, a national registry database study.
Fleitas Sosa DC, Gayen S, Zheng M, Gangemi AJ, Zhao H, Kim V, Sehgal S, Criner GJ, Gupta R, Mamary AJ.
ERJ Open Res. 2023 Jul 17;9(4):00738-2022. doi: 10.1183/23120541.00738-2022. eCollection 2023 Jul.
PMID: 37465560 Free PMC article.
Poor functional status at the time of waitlist for pediatric lung transplant is associated with worse pretransplant outcomes.
Himebauch AS, Yehya N, Schaubel DE, Josephson MB, Berg RA, Kawut SM, Christie JD.
J Heart Lung Transplant. 2023 Dec;42(12):1735-1742. doi: 10.1016/j.healun.2023.07.003. Epub 2023 Jul 10.
PMID: 37437825
Utilizing computed tomography volumetry for size matching prior to lung transplantation: a case series.
Shepherd HM, Farahnak K, Harrison MS, Frye CC, Marklin GF, Bierhals AJ, Hachem RR, Witt CA, Guillamet RV, Byers DE, Kozower BD, Meyers BF, Nava RG, Patterson GA, Kreisel D, Puri V.
J Thorac Dis. 2023 Apr 28;15(4):2233-2239. doi: 10.21037/jtd-22-1203. Epub 2023 Mar 6.
PMID: 37197524 Free PMC article.
Use of Berlin EXCOR cannulas in both venovenous and venoarterial central extracorporeal membrane oxygenation configurations overcomes the problem of cannula instability while bridging infants and young children to lung transplant.
Stephens NA, Chartan CA, Gazzaneo MC, Thomas JA, Das S, Mallory GB Jr, Melicoff E, Vogel AM, Parker A, Hermes E, Heinle JS, McKenzie ED, Coleman RD.
JTCVS Tech. 2023 Feb 10;18:111-120. doi: 10.1016/j.xjtc.2023.02.004. eCollection 2023 Apr.
PMID: 37096088 Free PMC article.
Outcomes of Patients on the Lung Transplantation Waitlist in Korea: A Korean Network for Organ Sharing Data Analysis.
Yeo HJ, Oh DK, Yu WS, Choi SM, Jeon K, Ha M, Lee JG, Cho WH, Kim YT.
J Korean Med Sci. 2022 Oct 24;37(41):e294. doi: 10.3346/jkms.2022.37.e294.
PMID: 36281485 Free PMC article.
See all "Cited by" articles
Publication types
Research Support, U.S. Gov't, P.H.S.
MeSH terms
Adolescent
Body Height*
Body Weight
Child
Child, Preschool
Databases, Factual
Female
Humans
Infant
Infant, Newborn
Kaplan-Meier Estimate
Lung Diseases / mortality*
Lung Diseases / surgery*
Lung Transplantation*
Male
Multivariate Analysis
Retrospective Studies
Risk
Tissue and Organ Procurement
Treatment Outcome
United States
Waiting Lists*
LinkOut - more resources
Full Text Sources
Wiley
Other Literature Sources
scite Smart Citations
Medical
MedlinePlus Heal
Giovanni
7 months ago
Yo Bull
Do you need english lessons? Read this again!
Hard to compete with The Cartels!
A massacre that killed 6 reveals the dangerous world of illegal pot in SoCal deserts
A San Bernardino County sheriff's deputy, left, detains a cannabis worker in the Lucerne Valley, CA.
A Sept. 2022 shows a San Bernardino County sheriff’s deputy detaining a cannabis worker on an illicit cannabis farm in the Lucerne Valley. (Brian van der Brug/Los Angeles Times)
BY SUMMER LIN, SALVADOR HERNANDEZ, KAREN GARCIA
JAN. 30, 2024 10:30 PM PT
In a desolate stretch of California desert off U.S. Highway 395, Franklin Noel Bonilla made one last desperate plea to save his life.
“I’ve been shot,” he told 911 dispatchers in Spanish, according to authorities. “I don’t know where I am.”
Officials tracked the coordinates of the phone call to a dirt road in the remote desert community of El Mirage, about 50 miles northeast of Los Angeles.
There they made a horrific discovery: six men with gunshot wounds, four of them with severe burns, and two abandoned vehicles, one of which was pocked with bullet holes.
Authorities think the massacre was the result of a dispute over illegal marijuana, and it marks the latest act of shocking violence in isolated areas of California where a black market for pot has flourished.
The death toll, which has included shootings and dismemberments, has alarmed law enforcement officials and comes as illegal grow operations have spread in inland desert communities across Southern California.
Cannabis plants on an illegal grow blow in the wind
CALIFORNIA
Legal Weed, Broken Promises: A Times series on the fallout of legal pot in California
May 5, 2023
Hundreds of pot farms have cropped up across the desert region, bringing crime and fear with them, according to residents and law enforcement officials.
A San Bernardino County Sheriff's deputy at an illegal marijuana grow in the unincorporated area of Phelan.
A June 2022 photo shows a San Bernardino County Sheriff’s deputy counting out one-pound bags of processed cannabis on an illegal marijuana grow in the unincorporated area of Phelan. (Brian van der Brug/Los Angeles Times)
In the last year alone, the San Bernardino County Sheriff’s Department said its marijuana enforcement teams served 411 search warrants for illegal marijuana grows. They found 14 “honey oil” labs, 655,000 plants and 74,000 pounds of processed marijuana. Eleven search warrants were executed in the immediate area where the slayings took place.
“The plague is the black market of marijuana and certainly cartel activity, and a number of victims are out there,” Sheriff Shannon Dicus said.
A Times investigation last year uncovered the proliferation of illegal cannabis in California after the passage of Proposition 64, which legalized the recreational use of marijuana in the state. Although the 2016 legislation promised voters that the legal market would hobble illegal trade and its associated violence, there has been a surge in the black market.
Growers at illegal sites can avoid the expensive licensing fees and regulatory costs associated with legal farms. Violence is a looming threat at these operations, authorities said, because illicit harvests yield huge quantities of cash to operators who can’t use banks or law enforcement for protection.
An illustration depicts a scene inside a growth operation where a mysterious envelope is exchanged by two people.
CALIFORNIA
‘$250,000 cash in a brown paper bag.’ How legal weed unleashed corruption in California
Sept. 15, 2022
In 2020, six people were found shot to death at a property in Aguanga, a small community in rural Riverside County east of Temecula. A seventh victim later died at a nearby hospital.
The victims were immigrants from Laos and were found at a large-scale illegal marijuana cultivation and processing site — a “major organized-crime type of an operation,” Riverside County Sheriff Chad Bianco said at the time.
It is hard to determine the number of homicides tied to illegal pot farms. But a Times review in 2021 found at least five Mojave Desert killings in 2020 and 2021 that investigators said were connected to pot farming.
Black markets can thrive despite the legalization of the product, according to Peter Hanink, a professor of sociology and criminology at Cal Poly Pomona.
“It doesn’t matter what the product is,” he said. “If there’s sufficient demand and the thing is valuable enough, you’ll get a black market.”
Adelanto, CA - January 24: San Bernardino sheriff's department officials investigate scene where five were found dead in a remote area of SanBernardino county north of Adelato January 24, 2024. (Brian van der Brug / Los Angeles Times)
CALIFORNIA
Marijuana dispute led to desert massacre in San Bernardino that killed 6
Jan. 30, 2024
Cartels in Mexico have traditionally carved up and delegated certain areas to different groups so they don’t have to kill each other to make money, Hanink said. At the beginning of a black market, when there’s more instability, there could be violence that results from regional groups competing over the same area. Hanink said the El Mirage slayings could’ve been between competing groups, based on the grisly nature of the crime.
“The sheer violence and the extent of the violence — burning the bodies and how extreme it was, it’s the sort of thing that suggests someone is trying to send a message,” he said.
Hanink stressed, however, that he doesn’t believe Mexican cartels were involved in the San Bernardino County killings, because the FBI, Homeland Security and the Drug Enforcement Administration haven’t gotten involved. The fact that the investigation involves only the Sheriff’s Department and the California Highway Patrol indicates it’s a local California matter, he said.
“Mexican cartels tend to stay local to Mexico, and they very rarely try to do things within the U.S. because they don’t want to involve U.S. law enforcement,” he said. “If you have executions being ordered by parties in other countries, that becomes a case of U.S. security interest.”
Bill Bodner, former special agent in charge of the DEA’s Los Angeles Field Division, agreed that while Mexican cartels have previously been involved in the illegal marijuana business, most have shifted to synthetic drugs, such as methamphetamine and fentanyl.
Illegal marijuana trade has also become unprofitable for the cartels, he said, because of the risk of getting shipments seized at the U.S.-Mexico border.
Bodner said disputes at illegal grows usually involve the theft of product or cash and, in some cases, workers seeking to get paid.
“Don’t forget, it’s a criminal business run by criminals, so they’re going to pay as little as they can,” Bodner said.
The marijuana black market has thrived in California in recent years, as growers try to circumvent taxes, feeding an unlicensed, unregulated industry and, at times, making its way into legitimate dispensaries as well,Bodner said.
In 2019, an audit by the United Cannabis Business Assn. found nearly 3,000 unlicensed dispensaries and delivery services were operating in the state — at least three times more than legal, regulated businesses.
Four years later, Bodner believes the black market has only gotten larger in California.
“The number of unlicensed grows, conservatively, has doubled,” he said.
LUCERNE VALLEY, CA - September 30, 2022: Two cannabis workers comfort each other after San Bernardino sheriff's deputies served a search warrant on an illicit farm and destroyed plants Friday, Sept. 30, 2022 in Lucerne Valley, CA. (Brian van der Brug / Los Angeles Times)
CALIFORNIA
FOR SUBSCRIBERS
Dying for your high: The untold exploitation and misery in America’s weed industry
Dec. 22, 2022
At first, deputies saw cardboard, rubber tires, broken bottles and bullet casings littering the ground when they drove out to the remote El Mirage location on Jan. 23. There were two abandoned vehicles nearby, one of them riddled with bullet holes. Then they found the bodies.
Four of the six victims have been identified: Franklin Noel Bonilla, 22; Baldemar Mondragon-Albarran, 34; and Kevin Dariel Bonilla, 25. The fourth is a 45-year-old man, whose identity is being withheld pending notification of next of kin. They were all Latino, possibly Honduran nationals, and lived in Adelanto and Hesperia, authorities said.
The San Bernardino County Sheriff's Dept. arrested five men in a multiple slaying in San Bernardino County.
The San Bernardino County Sheriff’s Dept. arrested five men in a gruesome multiple slaying in a remote part of the Mojave Desert in San Bernardino County. (San Bernardino County Sheriff’s Dept.)
After the brutal slayings, the San Bernardino County Sheriff’s Department served search warrants in Apple Valley, Adelanto and the Los Angeles County area of Piñon Hills. They arrested five men in connection with the killings — Toniel Baez-Duarte, 34; Mateo Baez-Duarte, 24; Jose Nicolas Hernandez-Sarabia, 33; Jose Gregorio Hernandez-Sarabia, 34, and Jose Manuel Burgos Parra, 26.
Authorities say they believe everyone involved in the killings has been arrested and there are no outstanding suspects.
When serving warrants, detectives recovered eight firearms. They will undergo forensic examinations to determine whether any were used in the slayings, said Michael Warrick, a sergeant in the specialized investigation division of the Sheriff’s Department.
Warrick wouldn’t comment on whether the slayings were cartel-related but said there were “certain things at the scene that show a level of violence that obviously raises some interesting questions for us.”
CALIFORNIACANNABIS
Summer Lin
Summer Lin is a reporter on the Fast Break Desk, the Los Angeles Times’ breaking news team. Before coming to The Times, she covered breaking news for the Mercury News and national politics and California courts for McClatchy’s publications, including the Sacramento Bee. An East Coast native, Lin moved to California after graduating from Boston College and Columbia University’s Graduate School of Journalism. In her free time, she enjoys hikes, skiing and a good Brooklyn bagel.
Salvador Hernandez
Salvador Hernandez is a reporter on the Fast Break Desk, the Los Angeles Times’ breaking news team. Before joining the newsroom in 2022, he was a senior reporter for BuzzFeed News, where he covered criminal justice issues, the growing militia movement and breaking news. He also covered crime as a reporter at the Orange County Register. He is a Los Angeles native.
Karen Garcia is a reporter on the Fast Break Desk, the team that has a pulse on breaking news at the Los Angeles Times. She was previously a reporter on the Utility Journalism Team, which focused on service journalism. Her previous stints include reporting for the San Luis Obispo New Times and KCBX Central Coast Public Radio.
‘Narcas’ author Deborah Bonello on the dangerous fascination of Latin American drug cartels
Nov. 14, 2023
Licensed cannabis farmer Mary Gaterud nurtures such strains as pina colada cake and watermelon starburst.
CALIFORNIA
In Riverside, she was a nobody. In Ireland, her affair with a bishop rocked the Catholic Church
The year that killed L.A. restaurants: Here are more than 65 notable closures from 2023
CLIMATE & ENVIRONMENT
A fire burning deep inside an L.A. County landfill is raising new alarms over toxic air
Level up your trading with our powerful tools and real-time insights all in one place.
Hot Features
Premium
