While there are many added benefits to legalizing marijuana, one of the biggest perks is to eliminate the black market — or, at least that was the plan. A new survey that was taken in Canada and the U.S. found that some cannabis users continue to buy the drug from illegal sources, even years after it is possible to purchase from regulated, legal shops. This is due mainly in part to the fact that illegal sources can be cheaper and easier to access.
According to New Scientist, the survey of nearly 12,000 cannabis users in Canada and the U.S. found that price was the most common reason for buying illegal weed, cited by about 35 percent of users in Canada and 27 percent in the U.S. Convenience was the second most common factor, cited by 17-to-20 percent of respondents across both countries. The findings suggest that policy-makers who want to wipe out the cannabis black market need to make sure that new legal sources are competitively priced and widely available.
The Black Market is Alive and Well
“Even in California,where recreational marijuana has been legal for quite some time, about 60 percent of cannabis is still being sold through the black market,” William Bogot, partner and co-chair of Fox Rothschild’s Cannabis Practice Group, said. “If you just look at California for this issue, it is pretty huge, and there have been many articles recently about cannabis licensees going bankrupt or having financial problems. It is surprising because if anyone can make money, it should be cannabis companies.”
Bogot is based in Illinois, where both medical and recreational marijuana is legal, and he has noticed two major things in the state in regards to the cannabis industry: the black market is still alive and well and consumers are going to other states to get it cheaper. Especially if they live close to the Indiana border, they can simply slip over to Michigan to get cheaper prices.
Purchasing Legal Weed is Becoming Increasingly Difficult
Taxes and access are other big issues, according to Bogot. In California, they have very high tax rates compared to other states, so it can be a fraction of the cost to purchase marijuana off the black market. In states like Illinois who have limited dispensaries, so the nearest one to a consumer may be 10-30 miles away, the local weed dealer right around the corner is not only much closer, but they are also ready to sell without all of the added taxes.
“Another big issue I have seen, in addition to access and taxes, is the cultural norm shift. I have heard some talk of users intentionally buying from their local dealers so they do not support the government. In my state of Illinois, there has been some criticism that the majority of cannabis operators are large companies and not minority owned, and consumers would rather continue buying weed from local black or brown business owners, so there is a cultural identity politics reason for it as well,” Bogot said.
Even if cannabis becomes federally legalized, the pricing issue will only get significantly worse. On top of the already existing taxes on marijuana in each state, there will be another federal tax layered on top. Especially with the black market already thriving in states like California with high taxes, Bogot does not see illegal purchases going away anytime soon.
The Dangers of Buying Off the Black Market
Even though there are some downsides to purchasing marijuana from legal dispensaries, there are also downsides to illegally purchasing it from the black market. At the end of the day, the great thing about legalizing cannabis is that consumers can feel safe buying products that have been tested. Oftentimes the packaging offers information on when the batch was tested and in what facility, so customers know what they are paying for.
“Just like the vape crisis we saw a few years ago — all of those vape pens were hurting a lot of kids and were all traced to generally non-licensed entities, so if you are buying a vape pen from a non-licensed neighborhood marijuana dealer, you cannot be sure of the ingredients in it and what you are putting into your lungs,” Bogot said.
Marijuana users also have to think about the fact that they themselves are committing a crime when purchasing cannabis from an illegal source. Even though the laws differ from state-to-state, for those who have legalized marijuana to be sold through licensed sanction operators, Bogot says both the seller and purchaser would be committing a crime. Cannabis is not that different from other drugs, but while it may be illegal to buy from a non-licensed source, most states have decriminalized it.
Where to Start in Wiping Out the Black Market
While the black market for marijuana is still a huge issue, and will likely not go away anytime soon, if at all, it requires a relatively simple formula. Cannabis is similar to casinos in regards to certain regulations and taxes in order to run a business, and while Atlantic City and Las Vegas are two of the most well-known gambling cities, Las Vegas always comes out on top because they have less strict regulations and lower taxes.
“It is the same in regards to cannabis: if we can have reasonable regulations on cannabis licenses and reasonable taxes, then they will generally thrive under normal constraints of supply and demand. If they treated buying marijuana more like purchasing alcohol, with less taxes and more business-friendly regulatory structures, then these enterprises in the cannabis industry will thrive. Frankly, I think that will be good for everyone in all of the states,” Bogot said.