Why the Black Market Still Exists Even with Medical Marijuana Reform

Written by: Margot Carmichael

The laws surrounding marijuana, both medical and recreational, seem to be in a constant state of change. Over the past ten years, the United States has become somewhat of a patchwork quilt when it comes to cannabis laws.

This is because, although the Federal government still deems marijuana an illegal Schedule 1 substance, individual states have the ability to create and enforce marijuana laws as they see fit. And 29 states have done just that by legalizing marijuana in one way or another.

Allowing more lenient laws regarding the sale and use of marijuana has created higher expectations regarding how marijuana will benefit our economy, criminal justice system, and the black market.

Expectations that are, sadly, not being met.

With seven states and Washington D.C. legally allowing the recreational use of marijuana, it was no secret that the passing of these laws was largely aimed at eliminating black market marijuana sales.

State lawmakers had high hopes for eradicating street corner drug deals and turning them into taxable, store bought transactions.

And in theory, their plan made sense.

After all, who would want to buy marijuana from a random drug dealer in a potentially unsafe environment when they could avoid any legal repercussions by purchasing their pot from a safe, licensed dispensary that offered a variety of options?

Surprisingly, based on the currently thriving state of the black market, a lot people.

Though marijuana reform has certainly increased tax revenue and decreased marijuana-related arrests, it has yet to make a real impact on the black market.

Here’s why.

Convenience

One of the main reasons that black market marijuana is still a thriving industry within the United States is simple – for most people, it’s the only way to score pot.

Unless you live in one of the seven states or Washington D.C. where purchasing recreational marijuana is legal, the only option to buy marijuana for personal, non-medical use is to buy it on the black market.

Sure, many states allow the legal sale of medical marijuana, something that is often taken advantage of by those trying to cheat the system, but obtaining a medical marijuana card, for a genuine medical condition or not, takes work.

Not to mention, legally, you have to have a medical condition that justifies a doctor writing you a prescription for medical marijuana. Something that many marijuana users simply don’t have.

Which means that until recreational marijuana is legalized on a more national level, marijuana users in non-legal marijuana states will continue to keep black market marijuana sales in business.

Economics

Street weed is cheaper than legal weed, plain and simple.

Which is one of the biggest reasons that the black market still exists.

Even if you live in a state that allows the legal purchase of marijuana for recreational use, chances are, you’re going to pay significantly more than you would from your local drug dealer on the street thanks to the hefty tax that comes with the purchase of legal marijuana.

Take Colorado for example, a pioneer in legalizing both medicinal and recreational marijuana, but also a state that’s still dealing with a significant black market.

Denver community leader, Francisco Gallardo, puts the issue into simple terms by saying, “If it’s ridiculously expensive and they can get it from their homie cheaper, that’s what they’re going to do.” (James, 2016)

Black market drug dealers are able to significantly undercut legal dispensaries by selling their product without hiking up the price since they don’t have to tax their product.

Medford, Oregon offers a perfect example for the problem with legal marijuana tax markup. In Medford, an ounce of legal marijuana can cost as much as $352. But if you’re willing to buy from the local drug dealer, you can purchase the same amount for as low as $191.

Sure, it’s not as safe and probably not as high-quality as marijuana purchased legally from the dispensary, but if you’re on a budget, you can’t beat that price.

It’s just simple economics, and it’s what the black market counts on to stay alive.

Personal Growers

Laws surrounding the ability to grow marijuana plants in your home differ from state to state, though most states that have legalized recreational marijuana, allow residents to grow anywhere from three to sixteen plants for personal use, with that number rising significantly if the plants are for medicinal use.

The problem with legal home-grown pot is that it creates an attractive business opportunity for black market dealers.

Take Colorado for instance, a state that allows residents to grow up to 99 plants in their home assuming they’re used for medical purposes, which often they are not. This can be extremely difficult to monitor and creates a huge opportunity for illegal marijuana growth and sales. Commenting on the grow laws in Colorado, Tom Gorman, director of the Rocky Mountain High Intensity Drug Trafficking Area program, says, “Instead of eliminating the black market, Colorado has become the black market.” (McKinley, 2017)

This issue really stems from the fact that it’s hard to keep tabs on whether these home growers are actually using the marijuana for medical purposes or in fact packaging and selling it for a hefty profit.

Sherriff Shane Heap of Elbert County, Colorado says, “I have 45 deputies, but I could use 10-12 more just to work the marijuana cases.”

Thanks to lax grow laws in states like Colorado, black market marijuana sellers are able to operate under the radar, legally growing marijuana in their homes and selling it for a massive profit, both in and out of state.

Furthermore, thanks to laws legalizing the sale of marijuana in seven states and D.C., many black-market dealers have taken to websites like Craigslist to unload their home-grown products, posing as legitimate and licensed dealers.

With the influx of this type of market for marijuana sales, local police departments simply don’t have the manpower to track down each and every illegitimate online dealer. Which only furthers the reach of black market marijuana growth and sales.

Big Pharma

There is no denying the incredible benefits that marijuana offers for a variety of medical issues, from treating nausea to curbing anxiety to reducing seizures.

However, even in states that allow the legal sale of medical marijuana, patients are unable to purchase it through big pharmaceutical companies or with the help of insurance coverage thanks to regulations in place by the federal government.

The federal government’s deeming of marijuana as a Schedule 1 controlled substance means that they not only consider it to have a high-potential for abuse but they view it as having no medicinal purpose. Something that over 1.2 million medical marijuana patients would beg to differ with.

The federal government’s regulations on medical marijuana has many patients who rely on the drug in order to function on a daily basis finding other, less legal outlets for purchasing their medication.

And unfortunately, there’s little hope that the role that pharmaceutical companies play in making medical marijuana products more accessible will change anytime soon.

John Hudak, of the Brookings Institute, says, “Pharmaceutical companies’ ability to conduct research on marijuana is oftentimes stymied by federal scheduling. That creates a burden that just adds to their costs. Even if they started to do research that could be used to create cannabis-based medicines, the Schedule I status makes it extraordinarily difficult for them to bring those drugs to market.”

Meaning that we shouldn’t expect to see medical marijuana in the big pharmaceutical market anytime soon, and therefore, we shouldn’t expect to see it disappear from the black market either.

Unclear Laws

I’ll be honest, I had to look up the marijuana laws for my state before writing this article.

I live in Georgia, so I knew that marijuana wasn’t legal for recreational use, as there aren’t dispensaries on every street corner, but I wasn’t 100% clear on the specifics of the medicinal laws in my state.

And I’m not alone in my uncertainty.

There is a ton of confusion surrounding marijuana legalization and decriminalization in the United States. Especially because it varies significantly from state to state.

This fact alone contributes to the existence of the black market.

If you’re unclear on how to obtain a medical marijuana card, or the process is simply too difficult, where are you going to turn for your marijuana needs?

Probably, your local drug dealer. Though illegal, buying weed on the black market is pretty straightforward, making it a better choice for some people.

Not to mention that even though the legal sale and distribution of marijuana, medical or not, is legal in multiple states, cannabis companies are still being treated like criminals by financial lenders.

Due to the federal status of marijuana as a Schedule 1 substance, many financial institutions are reluctant to invest in legitimate marijuana distributors. Which makes it tough for the business of legal weed to grow while keeping those black-market sellers in business.

The Future of Black Market Marijuana

As of now, marijuana is a booming business in the United States – both legally and on the black market.

While the legal marijuana industry generated approximately $6.7 billion dollars in 2016, black market marijuana sales crushed that number by generating an estimated $46.4 billion dollars.

And while that may seem disheartening at first glance, not all hope is lost. That black market revenue is down 3% from the previous year, which small, but not insignificant. It shows that the legalization of marijuana in seven states has done some damage to the black market. The hope being that with more states legalizing marijuana, black market revenues will continue to decrease.

Eliminating the black market and all the negative backlash that comes with it is in fact possible by legalizing marijuana on a national level. And although we still have a long way to go to reach this level of legalization, we can find hope in looking at how far we have come over the past decade.

I remember the days when the idea of being able to walk into a store and legally purchase marijuana was laughable. And now there are more states than I can count on one hand where you can do just that. Progress takes times.

Hopefully, one day my children will look back and say, “Remember when you couldn’t buy marijuana at the local pharmacy in every single state?”

EMMJ Newsletter

Get connected with Everything Medical Marijuana by signing up for our free newsletter