Cannabis advocates promised an end to illegal marijuana trade with the advent of legalization. We were told that cartels and gangs would be cut off from the market and that it would mean the end of pot-related violent crime. But according to a new study, cannabis users in the U.S. and Canada continue to purchase black market marijuana even when legal options are available. Researchers say this decision is driven by the high cost of legal weed and lack of access.
Price Drives Choice
The study was published last week in the Journal of Studies on Alcohol and Drugs. Researchers at the University of Waterloo in Ontario analyzed data from the 2019 and 2020 International Cannabis Policy Study. Participants were asked how much of the cannabis they’d consumed had been purchased at a legal dispensary in the previous 12 months. Respondents who answered less than 100 percent were asked to choose from a list of reasons for purchasing cannabis illegally.
In both the U.S. and Canada for both years, the number one reason respondents claimed that they purchased illegal weed was “legal sources had higher prices.” The second greatest factor in choosing to purchase illegal cannabis appeared to relate to general convenience. Both “legal sources were less convenient” and “legal stores were too far away/there are none where I live” were popular choices as well.
Less popular reasons included level of quality, the desire to stay anonymous, delivery speed and loyalty to a dealer.
Study co-author David Hammond, professor and university research chair at the University of Waterloo’s School of Public Health Sciences, said this research is invaluable as it can help policymakers determine how to shift users to a legal market.
“Transitioning consumers from illegal to legal retail sources is a primary goal of legalization,” said Hammond. “Indeed, many of the potential benefits of legalization—including product standards, revenue for legitimate businesses, reducing burden on the criminal justice system—depend upon shifting consumers to legal cannabis sources. Given the importance of this issue, there is surprisingly little empirical evidence on the factors that determine where consumers source their products in a legal market.”
The team noted that these trends change as legal markets mature and expand. Competition drives prices lower and increasing the number of pot dispensaries makes legal purchases more convenient. “Regulators will need to balance public health and criminal justice priorities in order to establish a competitive market for legal cannabis that encourages legal purchasing,” wrote the study’s authors.
Conflicting State Policies
But while pot consumers in states where the drug is legal can be persuaded to shift away from the black market over time with increased market maturity, the strain among various states’ cannabis policies has made it even more lucrative for criminals to start illegal grow operations in legal states with the intent of selling weed in nearby prohibition areas.
Evidence for this can be found in the nation’s biggest cannabis markets. Illicit marijuana operations have exploded in states like California, Oregon and Colorado, where local policies make it tougher to tell the difference between a legal and an illegal grow.
In May 2021 federal agents concluded what is said to be the largest cannabis bust in Colorado’s history when authorities raided 250 homes and businesses in the Denver metro area, seizing more than 80,000 cannabis plants along with nearly $2.2 million, jewelry, gold bars and sports cars. Dozens of arrests were made of members of the Chinese drug gang that masterminded the operation. The gang was allegedly purchasing suburban homes and converting their basements into production factories. It’s believed that they were operating more than 500 illegal grows in nondescript suburban homes.
According to ABC News, a number of legal cannabis producers in California have turned to the black market to subsidize their legal businesses because they lose business, in part because of high sales taxes and cannabis bans in some jurisdictions that encourage illicit sales.
In October 2021 California law enforcement officials said over one million illegal plants had been identified and destroyed statewide, acknowledging that these illicit grows are becoming larger in scale as the state’s legal market matures. Humboldt County Sheriff William Honsal admitted to reporters, “We may never eliminate the illegal cultivation.”
Cannabis has been legal in Oregon since 2014. Thanks to the state’s climate and vast forested areas, it has become home to a large number of illegal outdoor cultivation operations. The Oregon Liquor and Cannabis Commission—the agency in charge of the state’s cannabis market—estimates around 2,000 illicit cannabis farms are currently operating in the state. According to Politico, Oregon has some of the nation’s cheapest cannabis and an estimated 80 to 85 percent of the state’s cannabis purchases are made legally. However, authorities continue to bust large-scale grows run by foreign criminal organizations with the intent of selling the product in states where the drug is still banned. Organized criminal cannabis operations in Oregon have even led some residents and local officials to call upon the governor to deploy the state’s National Guard.
In all of these cases, authorities had some trouble identifying illegal operations because they looked so similar to legal operations. This highlights the necessity of federal cannabis reform, as these illicit operations are only profitable as long as there are areas in the country where black markets are allowed to prosper. New Frontier Data claims that Americans purchased an estimated $97 billion in legal and illicit cannabis last year, beating out alcohol sales by around $11 billion. That amount will likely continue to climb as more states legalize cannabis and cultural attitudes around the drug continue to become more permissive. Prohibition only serves to leave that money in the pockets of drug dealers.