Catalyst Co. Sues State Over Burner Distributors
Bellflower-based Catalyst Cannabis Co. has filed a lawsuit against California’s Department of Cannabis Control (DCC) over the state’s failure to address so-called “burner distributors.” The criminal actors use front men to obtain legal distribution permits, which they use to buy legal cannabis at wholesale prices. Then they sell that weed on the black market, both in California and out of state.
The proliferation of burner distributors undercuts the legal industry and results in the loss of “hundreds of millions of dollars” in tax revenue. Still, according to the suit, the DCC has opted to “look the other way.”
Catalyst also blames the state for helping to create the problem in the first place. Cannabis taxes are so high in California that many cultivators have no choice but to sell their product to rogue actors to make a living.
“The burner distributions are a symptom of the state’s complete incompetence as well as their unwillingness to admit what they know, they have screwed up the entire legal cannabis market,” said Catalyst CEO Elliot Lewis. “They know that burner distributions exist but will not admit it publicly because they want to pretend like this problem they helped create doesn’t exist.”
The DCC would not comment on pending litigation but says it is working hard to ensure legal compliance within the industry.