A recent PBS story attempts to paint the picture that cannabis legalization actually adds fuel to the fire that is the illegal cannabis market by allowing illegal grows to flourish, camouflaged by the legality that surrounds them.
To be sure, the black market for marijuana is alive and well in the United States. Highly taxed, heavily restricted and regulated legal marijuana is not going to make much of a dent in that. But there are a couple of problems with the theory that legalization is actually allowing the black market to grow.
The first, most obvious problem, is that there are no accurate statistics or data sets that track black market activity. Law enforcement in Colorado will point to more and bigger marijuana seizures in recent years, but that could be due to many factors, including *gasp* better police work. It could also be a side effect of police spending less time busting small-time dealers and consumers and being able to focus more on larger illegal cannabis operations, thanks to legalization.
In any case, as long as there is a market for illegal marijuana, it will certainly be grown and sold. And as long as an area lacks low-price, high-quality legal marijuana, the black market will thrive there.
In the beginning of the story linked above, there is an admission that Colorado marijuana is being found illegally in places like Florida, Tennessee, Indiana and South Carolina – all states without adult-use legalization and with the exception of Florida, states with little or no medical marijuana protections.
Why does this matter? In an economic sense, states where prohibition still reigns are becoming magnets for marijuana grown in states with less prohibition. Commodities will naturally find their way to where they can fetch the highest prices in sales, whether they are sold legally or not.
This brings us to the “solution” for the black market “problem”. It’s something I’ve written about before and will continue to write about. The only way to undercut the black market is for the legal market to compete better. Illegal marijuana growers will only take the extra risk if the profits are worth it. Falling prices that result from actual competition from the legal market will shrink those profit margins.
As profit margins shrink, illegal dealers will drop out of the market, either joining the legal market or moving on to something else. But as long as the quality, variety and prices of illegal marijuana products outperform those measures in the legal arena, many consumers will continue to frequent the black market.