What Is an Illegal Dispensary?

California cannabis dispensaries are required to meet state and local licensing requirements to operate legally.  Not all cannabis dispensaries meet these requirements and are thereby operating illegally.  Illegal dispensaries typically do not have access to banks or electronic payment systems (such as credit or debit cards).  As such, they deal almost exclusively in cash.

Why Are Illegal Dispensaries Dangerous?

Illegal dispensaries accumulate large amounts of cash and unlicensed cannabis, which makes them prime targets for robbery, theft, and other violent crime.  Illegal dispensaries often compound this problem by failing to take adequate security measures such as installing proper lighting and video surveillance, hiring competent security guards, and obtaining proper licensing and zoning permits.  The result is that unlicensed dispensaries have seen a rash of violent activity including deadly shootings and armed robberies.

Premises Liability at Illegal Dispensaries

Property owners have a duty to maintain their property in a safe condition.  This means they must curtail dangerous, illegal activity if they know or should know about it. Failing to stop such activities enhances the risk of injury to people on the property and in surrounding areas.  Thus, property owners who fail to curtail dangerous, illegal activity on their property may be liable for injuries caused by such activities.

Property owners have a duty to secure the premises against foreseeable criminal acts by third parties.  Illegal dispensaries maintain large quantities of accumulated cash and unlicensed drugs.  Thus, they are foreseeable targets for robbery, theft, and other violent activity.  As such, property owners who rent to dispensaries must take reasonable steps to prevent violent activity on the premises, such as:

  1. Ensuring that dispensary tenants are properly licensed;
  2. Carefully researching and hiring competent security guards;
  3. Installing adequate security cameras and video surveillance;
  4. Installing alarms and functioning security hardware (such as gates, locks, and doors);
  5. Installing adequate lighting on the premises.

Failure to take adequate security measures can result in liability for the property owner if someone is injured at the property during a foreseeable violent act, such as a robbery or theft.  Previous acts of violence on the premises (actual or threatened) demonstrate foreseeability.  Prior similar incidents put the property owner on notice that such incidents may occur again.

Responsibility to provide adequate security cannot be delegated to a third party.  This means that landowners cannot delegate the responsibility to secure the premises to tenants or independent contractors.  It is ultimately the property owner who is responsible for the security of the property (Brown v. George Pepperdine Foundation (1943) 23 Cal. 2d 256, 260) which established that it’s the landowner’s responsibility to maintain their property in a reasonably safe condition and that it can’t be delegated.

Compensation for Victims

People injured because of a property owner’s negligence may recover for past and future medical expenses, physical pain and suffering, emotional pain and suffering, lost wages, lost earning capacity, loss of enjoyment of life and other damages.

If a person has died as a result of a property owner’s negligence, their loved ones may be eligible to file a wrongful death lawsuit. Such claims may include loss of financial support, medical expenses related to the accident, lost companionship, funeral and burial costs, pain and suffering, and other intangible losses like guidance and care.

Premises Liability Insurance

Property owners can defray the risk of premises liability by purchasing premises liability insurance.

Why Do Illegal Dispensaries Exist?

The main reason illegal dispensaries exist is because there aren’t enough legal ones.  The shortage of legal supply creates the opportunity for black market operations to pop up.  The black-market operations then become targets for crime in the neighborhood.  The most efficient way to eliminate black market dispensaries is to increase the legal supply to meet the true local demand.  This means the public needs more safely zoned and properly regulated dispensaries.

For years, opponents of cannabis legalization have told the public that cannabis dispensaries cause an increase in neighborhood crime.  Law enforcement has fueled this belief to the greatest extent possible, and has been one of the biggest lobbying groups opposed to cannabis legalization.

The statistics, however, suggest that the opposite is true.   A study published in the U.S. National Library of Medicine reports that legal dispensaries have a similar effect as restaurants on neighborhood crime – that is they cause a slight decrease in ”dark alley” crimes and property crimes such as burglary, larceny, theft, motor vehicle theft, arson and vandalism.  This decrease in crime is believed to be due to an increase in walkability of the area, with more ”eyes on the street” serving as a natural deterrent to crimes of opportunity.  Other contributing factors to the decrease in crime may include improved lighting, the presence of trained security guards and the installation of video surveillance.

In other words, legal dispensaries (like other types of legitimate business) are generally good for the neighborhood and are accompanied by a decrease in crime.  The same, however, cannot be said for illegal dispensaries.  Illegal dispensaries have proven to be targets of violent crime such as shootings and armed robberies. 

Why Aren’t There More Legal Dispensaries?

Cannabis is still federally banned even though medical cannabis is now legal in more than 30 states, and recreational cannabis is now legal in at least 15 states. Under federal law, cannabis is still a Schedule 1 controlled substance, which means that it is treated as being more dangerous than meth and prescription opiates (Schedule II controlled substances). This is true even though there were roughly 500,000 opiate overdose deaths from 1999-2019, compared to roughly zero cannabis overdose deaths during the same time.

Today, the federal ban still has not been lifted.  This means that even legal dispensaries still don’t have regular access to banks, checking services or electronic payments.  This creates a tremendous, unnecessary security risk: large stockpiles of cash that must be stored and transported. The main reason the federal ban has still not been lifted is due to big-money lobbying from the alcohol, pharmaceutical and law enforcement industries: each one stands to lose billions of dollars if cannabis is legalized.  Unless and until federal law changes to allow marijuana dispensaries access to modern banking, illegal dispensaries will continue to attract violent crime.

Expect insurance companies to do everything in their power to limit or deny coverage to minimize their financial responsibility.  If you or someone you love was injured due to negligent security at an illegal dispensary, we suggest contacting an experienced premises liability lawyer as soon as possible to best protect your legal rights. 


Judicial Council Of California Civil Jury Instructions, Series 1000 – Premises Liability, Civil Jury Instruction 1001. Basic Duty of Care

Judicial Council of California Civil Jury Instructions, Series 1000 – Premises Liability, Civil Jury Instruction 1005. Business Proprietor’s or Property Owner’s Liability for the Criminal Conduct of Others

James S. Iagmin Practice Areas – Wrongful Death