What’s Happening in the Underground Cannabis Market?

Because of the criminalization of weed throughout the United States and around the world, the underground cannabis market has prospered in the shadows for decades. Fueled by high demand and limited legal access, those selling black-market weed have operated in secrecy, risking incarceration for state or federal infractions.

With risks for both sellers and buyers, the underground cannabis market is both intriguing and illuminating. Let’s explore what’s happening in the current cannabis black market and what that means for the regulated market and cannabis legalization.

What is the Cannabis Black Market?

The cannabis black market refers to the illegal trade and distribution of unregulated marijuana. In violation of local and state laws, many say that the underground cannabis market is threatening to undercut the progress states have made in legalizing medicinal and recreational cannabis. While lawmakers and their constituents originally thought that legalizing cannabis would impede the black market, it continues to thrive in the era of regulated cannabis.

What’s Happening with the Cannabis Black Market?

Roughly 75 percent of the $100 billion cannabis market in the U.S. remains illegal, and roughly two-thirds of that illicit weed is grown domestically, as noted by data from Whitney Economics, which analyzes the cannabis industry. In regulated states like California, illegal grow operations outnumber licensed grows by 10 to one, according to a 2022 LA Times article.

In New York, which legalized weed for medicinal purposes in 2016 and recreational purposes in 2021, the underground cannabis market continues to thrive. According to officials, there are roughly 1,400 illegal cannabis dispensaries across the city’s five boroughs. Then you have states like Oklahoma, which are home to massive distribution hubs that transport black market weed to states across the country. Just this year, officials in Oklahoma seized 14,000 pounds of black-market weed worth over $50 million.

What Does a Thriving Black Market Mean for Regulated Weed?

A robust underground cannabis market means trouble for legal weed. One of the main motivations for legalizing weed in the first place was to generate tax revenue for states. As the black market continues to thrive, it will continue to negatively impact funding for public services and initiatives. Another way the black market is impacting regulated weed is that it hinders the growth and success of regulated cannabis businesses that have put their livelihood on the line to enter this emerging market.

A further, yet equally important issue that comes with the black market is safety. Unregulated products are not tested for safety and don’t adhere to quality control standards. Further, the underground cannabis market brings with it heightened criminal activity like robberies, turf wars and even some deaths reportedly due to worker exploitation. These issues mean more trouble for the future of the regulated cannabis market.

How Can Local and State Governments Combat the Illicit Market?

Local and State governments are simply overwhelmed by the staggering number of illegal cannabis operations, so how can they successfully combat the illicit market?

One way governments can outgrow the black market is through reasonable taxation. Unfortunately, the high taxes associated with regulated cannabis products are driving consumers back to the black market. When governments enact reasonable tax laws, regulated cannabis stands a chance of outgrowing the black market.

Another way to combat the illicit market is through public awareness campaigns. Educating the public on the dangers of black market weed can help drive consumer traffic to compliant, tested cannabis products available at legal cannabis dispensaries.

The most influential way to combat the illicit market, though, is through heightened law enforcement whereby local and state governments allocate resources to dismantle illegal operations.

The Marijuana Black Market is Deeply Ingrained in the U.S.A.

The persistence of the underground cannabis market serves as a stark reminder of the complexities surrounding cannabis legalization. Despite the strides made by regulated markets, the allure of black market cannabis remains strong, fueled by factors such as affordability, limited enforcement and the absence of quality standards. As we navigate this evolving landscape, it is imperative for local and state governments to take proactive measures against the marijuana black market.

Reasonable taxation, public awareness campaigns and strengthened law enforcement are essential tools in our fight against the marijuana black market. By addressing these challenges head-on, we can pave the way for a safer, more sustainable future for both consumers and the regulated cannabis industry, ensuring that the vision of a thriving legitimate market for cannabis becomes a reality. It’s a challenging journey, but one that holds the promise of a brighter, better-regulated future for all.

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