Governor Newsom Announces Major Illicit-Market Enforcement Milestone: A Priority CaCOA Has Consistently Championed

By Amy O’Gorman Jenkins is the Executive Director of the California Cannabis Operators Association

Today, Governor Gavin Newsom announced that the California Department of Tax and Fee Administration (CDTFA) has seized more than $168 million in illicit cannabis and tobacco products since 2019, including nearly $22 million during the first half of 2026 alone.

This is welcome news for California’s licensed cannabis operators, and it represents meaningful progress on an enforcement priority the California Cannabis Operators Association (CaCOA) has worked diligently to elevate: confronting illicit products where they are sold directly to consumers.

For too long, California’s cannabis enforcement strategy has focused heavily on illegal cultivation while giving comparatively less attention to the illicit retail marketplace. Illegal cultivation is unquestionably part of the problem. But Californians, including young people, are also purchasing intoxicating, mislabeled, and potentially contaminated products from smoke shops and other unlicensed retailers operating in communities across the state.

These businesses compete directly with licensed cannabis operators without paying the same taxes, complying with the same testing and packaging requirements, or meeting the extensive regulatory obligations imposed on California’s legal market. That is not simply unfair competition. It is a consumer-protection and public-health problem.

CaCOA has been working to change that enforcement equation.

In May, we raised the need for greater resources and a more sustained focus on illicit retail during a meeting with Department of Cannabis Control (DCC) Director Clint Kellum.

CaCOA has also testified at numerous legislative budget hearings and consistently pressed both the Administration and Legislature to prioritize enforcement against smoke shops and other retailers selling unlawful intoxicating products.

Our advocacy has been grounded in a straightforward principle: limited enforcement resources should be directed first toward conduct presenting the greatest threat to consumers, public health, and the integrity of the regulated marketplace.

As I have said repeatedly, “Enforcement cannot stop at cultivation. California must confront illicit products where they are sold: at smoke shops and other unlicensed retailers operating in our communities.”

CaCOA also proudly sponsored AB 8 (Aguiar-Curry, Chapter 248, Statutes of 2025), the landmark intoxicating-hemp legislation enacted last year. The measure strengthened California’s laws governing intoxicating hemp-derived products, improved coordination among regulatory agencies, and gave CDTFA additional tools to seize unlawful products and take administrative action against tobacco retailers operating outside the law.

Their announcement demonstrates why those tools (and the agencies empowered to use them) matter.

CDTFA occupies a uniquely important position in this effort because it licenses tobacco retailers and has the authority to inspect businesses, examine financial records, investigate tax evasion, and remove illicit products from store shelves. That makes the department an essential partner in confronting smoke shops and other storefronts that have become increasingly visible points of sale for illegal cannabis and intoxicating hemp products.

The announcement also reinforces the importance of the CaCOA-sponsored bill AB 2537 by Assemblymember Phil Chen (D-Yorba Linda), which would bring greater focus, transparency, and accountability to the Department of Cannabis Control’s enforcement strategy. The bill would require DCC to prioritize unlicensed commercial activity and violations that pose the greatest threats to public health and safety, while providing annual reports on how enforcement resources are deployed.

AB 2537 would translate CaCOA’s longstanding advocacy into policy by directing limited enforcement resources toward the illegal operators causing the greatest harm to consumers and the regulated marketplace. The results highlighted today show what targeted retail enforcement can accomplish and why this approach should become a sustained, accountable part of California’s broader cannabis enforcement strategy.

The need for continued action remains urgent. California’s own economic analysis estimates that the licensed market supplies only about 40 percent of the cannabis consumed in the state. Licensed operators continue to close while illicit sellers avoid taxes, regulatory obligations, and basic consumer safeguards. The consequences extend beyond lost cannabis sales: illegal operators siphon away revenue intended to support schools, environmental restoration, youth programs, local governments, and other essential public services.

CaCOA applauds Governor Newsom, CDTFA Director Trista Gonzalez, and the state employees responsible for these enforcement efforts. We also appreciate the Administration’s recognition that protecting California’s legal cannabis market requires more than shutting down illegal cultivation. It requires removing illicit products from retail shelves, enforcing California’s tax laws, and holding businesses accountable for selling intoxicating products outside the regulated system.

CaCOA is proud to have sponsored AB 8 and is equally proud to sponsor AB 2537.

Together, these measures reflect our commitment to ensuring that California’s enforcement agencies have both the tools and the direction necessary to protect consumers and support licensed operators that play by the rules.

Today’s announcement is an important step forward. Now California must build upon that progress by making targeted, sustained, and accountable retail enforcement a permanent part of its strategy for protecting consumers and preserving the legal cannabis marketplace.

Governor Newsom illicit market enforcement