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Why The Black Market Continues To Thrive — And What Is Being Done About It

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Cannabis grown indoors is considered better quality and sells for 40% more than greenhouse cannabis, according to an agricultural economist.

While the black market is thriving in nearly every market where cannabis is sold — it was 60% of second quarter sales in Canada in 2019 — it appears to be particularly troublesome in California, where a lack of enforcement, a lack of oversight, and regulatory burdens on legal businesses has allowed it to grow.

A report by cannabis research firm BDS Analytics found that California’s illicit market is predicted to comprise 53% of all sales in 2024; the black market in other states with more supportive regulatory regimes are expected to shrink to 30% or less of total sales in that time frame, according to the report.

Black market enterprises are not always the guy in a parking lot or dorm room selling weed in a state where it has been legalized. An audit from the United Cannabis Business Association, a California retail cannabis advocacy association, found that, of the 3,757 dispensaries or delivery services listed on the popular cannabis service platform Weedmaps, only 922 were licensed to legally sell weed.

California now has a bill that would fine each of these illegal businesses $30,000 a day — AB 97 effective as of July 1, 2019 — but enforcement is still lagging.

The vaping crisis has played an important role in the fight to identify and stop the black market in California, as many dangerous vaping products were sold there and in other states. California stepped up enforcement and busted 24 unlicensed locations last December.

Then in February, the state’s Bureau of Cannabis Control proposed emergency regulations that included adding a “quick response code” to the packaging of all legal cannabis products to help consumers identify licensed cannabis retail stores, thus supporting the legal cannabis market. A consumer could scan the code into his or her smart phone to confirm that it’s legitimate.

While new regulations are helpful, it’s been the regulatory structure in part (along with high taxes on retail products) that has caused the black market to thrive in California.

To Read The Rest Of This Article By David Hodes on The Fresh Toast

Published: March 27, 2020

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