Black Market Hash-Oil Labs Growing, Exploding In California: DEA

SAN DIEGO — They say you never really know your neighbors — but on May 5, folks on Sunny Meadow Street got an explosive introduction to the quiet folks renting a four-bedroom house down the block. It seemed like a typical Sunday afternoon until, that is, the garage door blew off its hinges.

Two more explosions followed. Dozens of butane gas tanks rained down from the sky, landing with thuds on the neatly kept lawns in the sleepy Mira Mesa neighborhood. In no time, the house was fully engulfed in flames, and was soon surrounded by fire trucks and ambulances. Three men in their 20s, their clothes in flames, ran from the garage. A neighbor extinguished one of them with a garden hose.

“They always said hello. They were friendly,” Reina Pe said of her next-door neighbors. “But I never saw their garage door open. My brother thought that was suspicious.”

The blast charred part of the stucco exterior of Pe’s house. Months later, the inhabitable rental house next door remains boarded up. An empty husk of a Toyota 4-Runner, all four tires flattened, still sits in the driveway.

In California, the shocking events that rocked Sunny Meadow Street could happen anywhere, local Drug Enforcement Agency agents say. Pe’s neighbors had outfitted the rental house to manufacture butane hash oil, the current trend in cannabis consumption. California is home to nearly 70 percent of the country's hash-oil labs, according to the National Drug Threat Assessment.

What began at the start of the decade as an illicit backyard hobby — fill a turkey baster with marijuana, shoot butane through it, capture the THC-rich oil that trickles out, then carefully burn off the butane — has become big business. Hash-oil labs getting bigger, filled with ever-increasing numbers of 55-gallon drums of flammable liquids and sophisticated laboratory equipment more often seen in a chemical factory. This year, the local DEA office is on track to bust the most illegal hash-oil labs in four years.

Through July, agents raided 20 hash-oil labs in San Diego County alone. In 2018, the DEA seized 28 illegal hash-oil operations. The house on Sunny Meadow wasn’t even a large-scale operation, yet it had enough material — lots of marijuana and dozens of butane cartridges — to make $72,000 of hash oil, burn up the house and scar at least one person with third-degree burns over 90 percent of his body, a DEA agent said.

On Sunny Meadow, Pe says the house that exploded next door always seemed to smell like weed. She figured the renters were growing it. As things turned out, the popularity of hash oil — which is almost pure THC — has fueled demand for black-market manufacturing. The sticky stuff, also called honey oil, comes out looking a bit like hard candy. It’s so robust that smoking it renders a distinctly psychedelic experience that can be exponentially more intense than smoking a joint.

Recreational marijuana legalization has multiplied all the myriad ways you can get high off of it: liquid cartridges for vape pens; gummy bears, lollipops, chocolate-covered pretzels, mints, tinctures or botanical spices. All of which are made with hash oil. Some of the products in which oil is an ingredient end up being sold in legal, licensed dispensaries due to loopholes in the system, a weed-industry expert said.

“Demand [for marijuana] has increased substantially, to the point where what people want now is concentrates,” the DEA agent said. “Demand has created more of a market for people who want to sell it, and they’re having to pump it out in larger quantities faster.”

Makeshift hash-oil factories have popped up almost everywhere — warehouses, garages, apartments, rural trailers, office buildings. You only need four walls, a roof, the right equipment, a whole lot of marijuana and fuel like butane, hexane or ethanol that extracts the THC yet can easily blow the place up.

In nearby El Cajon, the New 2 U Autos used-car dealership warehouse roof erupted in a ball of fire about two weeks after the explosion on Sunny Meadow Street. Nearby, unsuspecting shoppers at the Wal-Mart that evening reported that a man on fire ran into the store desperate for help. Three days later, authorities uncovered a small lab in an apartment complex in Point Loma. And the day before that, the DEA uncovered a lab 15 times larger than the Sunny Meadow garage operation in three mobile homes stocked with hash oil valued at more than $400,000.

What drives a person to make an illegal, highly incendiary product in their own home?

It’s the economy. The booming cannabis economy, that is, of which California by far out-produces every other state thanks to it’s relaxed cannabis laws. In March, the Sacramento Bee reported that licensed growers alone can produce 9 million pounds of marijuana each year. But the market for legal marijuana consumption amounts to around 2 million pounds a year. Which is to say a lot of people continue to buy marijuana products on the black market in California, and the state produces a vast oversupply to fuel illegal weed trafficking to states where weed isn’t legal for recreational use.

“The drive is always to make more, make more, so oftentimes they’ll neglect little things — and little things can turn into huge problems,” said Daniel de Sailles, a hash-oil expert, and founder of one of Denver’s first legal labs.

“Closed-loop systems, where the butane is recycled, are more efficient,” de Sailles explained. “The problem is, the people getting into this don’t usually have a strong scientific background. They don’t have a practical understanding of equipment maintenance or dealing with highly pressurized gaskets. People go to school for that! So if a gasket goes out or springs a leak in a closed-in space, suddenly the room is full of pressurized butane, and any spark at all sets it off.”

So who’s behind the spike in illegal hash-oil labs? According to de Sailles, the trend started with entrepreneurial marijuana aficionados or hustlers trying to make a living. “But of course where there’s money, organized crime’s going to go after it for their share of it, every time,” he said.

The DEA source said organized crime has become heavily involved in illegal hash-oil operations, but the players aren’t the usual suspects.

“It’s not your Mexican cartels or your Italian mafia,” he said. “What we see frequently is Asian organized crime — whether that’s Laotian, Chinese or Vietnamese. And then we also see Chaldean organized crime involved in the marijuana trade extensively.” And biker gangs transport hash-oil products across state lines, he said.

The underground hash-oil production industry intersects with other black markets, particularly near the U.S. border with Mexico, where Hispanic and Asian undocumented immigrants have been caught working in many bootleg hash-oil operations, the DEA source said.

“Most of the ones we’ve talked to, they don’t even know where they are when we talk to them,” the DEA special agent said. “Some of them don’t even know if they’re in California or not.”

Illegal hash-oil manufacturing looks like it’s here to stay in California for a while, according to marijuana policy expert Alex Kreit, a visiting professor at the Ohio State University Moritz College of Law.

“When you have legalization in a state, it becomes a little easier for an illegal manufacturer or grower to operate kind of in plain sight,” he said. “The risk of being caught and prosecuted at the state level goes down a lot. ... If you want to grow marijuana or open up a hash-oil lab to supply a prohibition state, there’s a pretty good incentive to do that in a place like California or Colorado. As long as you have states that have marijuana prohibition, California’s probably going to be a pretty appealing place for people who want to supply those states. I think it’s why you haven’t seen the black market disappear as quickly as you might anticipate, for example, after the end of alcohol prohibition.”

Down on Sunny Meadow Street, neighbors still don’t know what came of the sloppy hash-oil chefs who blew up the garage down the block. No one has been criminally charged and the investigation remains ongoing, a DEA spokesperson said.

Months later, the whole thing has left some folks on edge, and it’s hard to blame ‘em if they’re still suspicious of neighbors that they don’t really know.

They’ve been burned before.

Adam Elder is a writer in San Diego who's written for Esquire, The New York Times, The Wall Street Journal, NewYorker.com, VICE, The Guardian, WIRED.com and elsewhere.

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