Marijuana legalization is spreading as more states are regulating and taxing the drug, but there’s still a large black market where marijuana is sold illegally. The relationship between the black marijuana market and the regulated marijuana market is interesting because they both seem to help and hinder each other.
In order to kill the black market, Canada suggests keeping prices competitive against street value by lowering marijuana taxes. Now, the goal of Canada’s marijuana tax is to stop the illegal market, “The key issue is to make sure we eliminate the black market. It’s straightforward. The first issue has to be our focus on that. Which means we are thinking about taxation in the context of how we get at that first objective...Revenue maximization is absolutely not our goal." Legal states are damaging the black market regardless of the tax, because more users are now turning to dispensaries to buy weed rather than their dealers. Though legalization is also helping the black market in some legal states, because the process is extremely timely, “...delays in the state’s permitting process for new entries into the recreational marijuana market, which acts as an artificial control on supply, which… in turn pushes customers to explore cheaper options.” Hopefully this will change when the whole country legalizes marijuana, in the same way bootleggers disappeared after prohibition fell.