California is arguably the weed capital of the United States both in production and consumption. For every pound of pot that is consumed in California, three pounds of cannabis are being produced and sold to the black market outside of the Golden State. States as far as New York, a region where some of the leading marijuana brands are unable to legally produce products for, are stocking those brands for consumers despite their illegal status. Although cannabis has been legalized in the state of California for about six years, the illegal sale and distribution of unlicensed marijuana products are still a dominating force in cannabis commerce across the state as well as the country.
The State of Black Market Cannabis
As it stands, it is currently illegal for marijuana and marijuana products to cross state boundaries even if both states are legal. All marijuana companies must produce and manufacture their products in each state they have legal status in. Until federal legalization of cannabis occurs, marijuana companies will not be able to distribute their products across state lines. However, that doesn’t stop the fact that leading brands such as Kiva, Stiiizy, and AbsoluteXtracts, all brands based in California, from having their products shelved in New York dispensary Empire Cannabis Club. In an interview, store owner Jonathan Elfand claims that their products magically appear into their inventory despite the brands being barred from New York.
Of the $72 billion totaling the cannabis industry, $47 billion of it is from the circulation of illegal transactions. Many participants of the cannabis industry critique the current cannabis laws in each state as an unfair playing field when up against companies with deep pockets. Due to the tax rates of marijuana products throughout the country, combined with crippling regulations, it is no wonder many conduct black market trades in order to make a profit. The greed of lawmakers in establishing an income from cannabis taxes will perpetuate an economic incentive for both the consumer and supplier of marijuana to conduct illicit sales. It is no wonder the necessity to sell illegal cannabis especially between states is a result of having to maintain business in an incredibly restrictive environment.
Berner, founder of a leading cannabis brand known as Cookies, is one such businessman who understands how to leverage the black market to push his brand beyond survival. Like many leading licensed marijuana businesses in California, they know that once their products are in someone else’s hands, whether or not their products end up in another state is beyond their control. Nonetheless, Berner recognized that your brand must be known in every corner of the industry in order to survive in the legal market. If your cannabis is able to leave your stores and somehow make it across the country, that hype will skyrocket your brand once it arrives legally.
Current Solutions for Facilitating Illegal Cannabis
The California Department of Cannabis Control has taken countless efforts to curve the sales of marijuana across state lines. Over the past year, the department has seized over 1.2 million unlicensed plants and over half a million pounds of illegal cannabis, and arrested about 200 individuals. Despite these efforts, marijuana is still flooding the country wide market from California. If we were to learn anything from the prohibition of alcohol, it is that laws will never stop or regulate the market demand and supply of illicit goods unless it is controlled not by brute force, but by market forces.
The Future of Black Market Weed
Overbearing taxes on cannabis coupled with the nonexistent commerce between states has established a market that requires alternative solutions to survive regardless of legal consequences. In October 2021, Gavin Newsom appealed the idea of regulating cannabis like alcohol and tobacco while also allowing for interstate sales. By opening up the federal legalization of cannabis and regulating the market in a way that is economically viable, cannabis business and consumers will both be more compelled to purchase legal weed, and allow the legal market to take out the imbalance of the $72 billion dollar industry.
The market is always changing and adapting, but it is safe to say that the only way to prevent the smuggling of marijuana across state lines and decrease the demand for illegal weed is by legalizing cannabis at a national level and decrease the tax rates on cannabis.
We hope you enjoyed and learned more about the state of cannabis and where it stands with the law. If you would like to learn more about marijuana and hemp, please be sure to check out our blog!
