Marijuana Black Market: Marijuana legalization arrived in California a the beginning of 2018 and from its infancy, there was concern that this new legalized market would be undercut by a well-established black market that had, after many years, already carved out its niches.
The concern is real; the marijuana black market is thriving despite the legality of the substance, and ironically, the biggest sufferer is also the state's biggest legal local marijuana market—LA.
The Marijuana Black Market Doesn't Play By The Rules
Currently, in California, it is legal to sell marijuana for recreational purposes to anyone over 21. But because sellers must be licensed retailers, this means taxes are applicable as are licensing fees and this drives product price upward. As a result, marijuana is more expensive to buy from a legal dispensary than an illegal or unlicensed retailer.
Another hard reality is that LA's 150-strong licensed storefront marijuana retailers are greatly outnumbered by the masses of illegal dispensaries.
For those trying to do good honest business and play by the rules, its a very unfair market model.
The Police
LA County Sheriff's department is doing what it can but has not got the manpower to crack-down on all the outlaw dispensaries. This is despite it boasting the largest police department in America. On average an assigned task force raids an average of one dispensary a week—it is still not enough.
The law considers possession of over 28.5 grams of marijuana as a misdemeanor, a nonindictable offense. This means that when an illegal dispensary is raided and its assets seized, nobody is actually facing jail time for running an illegal business. Often the business reopens and the problem starts all over again;
“It’s a money-lucrative business so there are people willing to take the risk,” said Capt. Holly Francisco, who commands the sheriff’s department’s narcotics unit.
There is another problem with illegal dispensaries too; quality control. Illegal marijuana is often tainted with illegal pesticides or other harmful chemicals and its origin and make-up can be ambiguous. It simply does not carry the same seal of approval as that which is found in licensed retailers and can lead its users to suffer ill side-effects not worth the cheaper price-tag.
Facade
More often than not, illegal pot shops look legitimate and customers may not even realize they are illegal. Signs above security windows saying customers must be 21 and have a valid photo ID, along with whiteboards cleary advertising marijuana strains and deals. Also, the plain-sighted nature of the storefront and its listing on go-to websites such as WeedMaps can easily convince a person that this shop is just another legal dispensary.
Lt. Frank Montez oversees the marijuana task force, in his words: “People out here on the street are thinking it is a legitimate operation and are smoking this cannabis with all these dangerous pesticides, and they are really killing themselves,”
Usually, the only tale-tale sign is the lower prices and the waived tax charges. But shoppers are savvy and want the best deal; many of them know that these places are illegal but they still go simply because it’s cheaper.
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Conclusion
Legal marijuana storefront owners are running legitimate shops. They are paying the necessary government fees and providing— most importantly— legitimate well-sourced product to their customers. It's ironic and unfair at best, that they are losing massive business in a market that has only recently been made legal and should be their playground.
I imagine at street level that these 150 legal dispensaries are branded "boutique" dispensaries, who cater to a bourgeoisie clientele which is indicative of their higher prices.
But this is not a case of target markets but rather law-abiding decisions.
Featured Image: Vox
