The black market thrives, despite legalization
There’s no denying that the legal marijuana market has become a booming industry since states first legalized recreational cannabis over a decade ago. Despite the many successes of legal marijuana sales, the black market continues to be the state’s largest competitor.
According to an analysis from the Los Angeles Times, California’s black market is “indisputably many times larger” than the legal market. Licensed growers and sellers are struggling to stay afloat while illegitimate tax-free operations continue to reap the benefits of a community that uses marijuana recreationally.
One of the arguments proponents used for legalizing recreational marijuana was the possibility of eradicating, or mostly eliminating, the black market. Illegal drug sales attract competition that cannot be settled in court, often leading to deadly violence. Legalizing weed, in turn, should have resulted in reduced violence and a diminishing of illegal sales.
Violent crime is at an all-time high and the black market continues to thrive. Republicans argue that the legalization push in itself is to blame for the black market’s success. According to Conservatives, marijuana acceptance leads to a consumer demand higher than what can be fulfilled by legitimate markets. Black markets exist to fill the void.
Truthfully, legal marijuana operations are expensive. Licensing requires costly fees, and the sales tax on cannabis is higher than on any product produced in the United States. The overregulation and laws designed to create a safe legitimate market have forced rational business leaders on the wrong side of the law.
The push the legalize has been coupled with a push to decriminalize. The cost of operating in the illegal marijuana market, which used to be years of prison time, no longer outweighs its many benefits. Sellers can serve to make a lot more by avoiding taxes and reaching a community of people who don’t wish to be seen publicly purchasing cannabis.
The black market isn’t going anywhere unless lawmakers reconsider their approach to the legal market. High taxes and over-regulating make investing in the industry a difficult decision to make, while illegitimate markets are producing millions of dollars. States are missing out on billions of taxable dollars with their greedy sales tax rates.