Nearly A Third Of Smokers Will Opt For Black Market Marijuana After California Legalization

Nearly A Third Of Smokers Will Opt For Black Market Marijuana After California Legalization


By Steve Birr

Recreational marijuana legalization promises to rake in more than $5 billion for California in 2018, but nearly one-third of smokers will continue buying black market weed.

A new study from the University of California Agricultural Issues Center shows taxes and red tape surrounding the state’s burgeoning recreational market will dissuade some smokers from initially joining in. They estimate 29 percent of current California smokers will opt for illicit cannabis to avoid the new regulations and 15 percent retail tax coming in January, reports Los Angeles Times.

Officials are still crafting the legal framework that will govern marijuana sales, including who will be granted licenses for growing, testing, transporting and selling the plant.

“It’s going to take some time,” Lori Ajax, director of the state Bureau of Marijuana Control, told Los Angeles Times. “While it’s unlikely that everyone will come into the regulated market on Day One, we plan to continue working with stakeholders as we move forward to increase participation over time.”

Researchers conducting the study estimate California’s legalized market will be worth more than $5 billion. Medical marijuana made up $2 billion of cannabis sales in 2016, while illegal sales accounted for $5.7 billion. Officials expect medical sales to plummet to $600 million once users have access that does not require a medical card.

“Revenues for medical cannabis in Washington state, for instance, fell by one-third in the first year after the legal adult-use cannabis system took effect, and by more subsequently,” researchers said in the study, according to Los Angeles Times. “We projected that when legally allowed, slightly more than half of the demand currently in the illegal adult-use segment will quickly move to the legal adult-use segment to avoid the inconvenience, stigma and legal risks of buying from an unlicensed seller.”

Despite the likelihood some smokers will stay in the black market to get their marijuana, legal recreational sales are expected to account for 61.5 percent of overall sales in California in 2018.

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  • Fr33dom
    June 13, 2017, 9:11 am

    Black markets will persist until we end the prohibitions that cause them, namely:

    1) The federal prohibition increases the risk of CA supply inflating the price of a dried herb to $250 per ounce retail (while ground coffee and loose tea costs pennies per ounce.) The black market will persists in CA because unregulated criminals can undercut this artificially inflated federal prohibition price.

    2) The prohibition of surrounding states also creates a black market in CA. By ending their statewide prohibition, CA will further decrease the risk and hence cost of their supply, while surrounding prohibition states have higher risk and thus higher prices. Prohibition states create the illegal export of marijuana from CA: buy low, sell high.

    3) Overly burdensome taxes that prohibit fair market prices create black markets that profit by illegally undercutting the artificially inflated taxed price.

    End the prohibitions of overburdensome taxes, the fed and states, and black markets vanish.