Legalization Hasn't Stopped Illegal Weed From Being Big Business in California

Cannabis is legal in California, but business is still booming in the black market.

Legalizing cannabis is supposed to help run illicit dealers out of business, but that doesn't appear to be happening in California. Since licensed retailers began selling cannabis a little over a year ago, the black market has continued to flourish. So much so that Governor Gavin Newsom (D) recently ramped up the state's crackdown on the black market by pulling Nation Guard troops from the Mexican border and sending them after illegal marijuana farms instead.

Meanwhile in states like Colorado, Oregon and Washington, legal sales continue to grow and the black market is notably shrinking. So why isn't that happening in California?

One reason is that local governments have unintentionally left openings for illicit sellers to keep operating. A stunning 80 percent of municipalities in California have moved to ban legal cannabis retailers from setting up shop in their jurisdictions. So consumers in those communities have few options for sourcing cannabis from anywhere but through illicit channels. On top of that, the black market is outcompeting licensed retailers because the price of cannabis is much higher at legal shops.

However, it appears that the biggest factor keeping the black market in business is the high demand for California weed among out-of-state consumers. By some estimates, only 20 percent of the 14 million pounds of cannabis grown in California every year stays in the state. The rest gets shipped across the country. And that's not entirely surprising given California's reputation for producing some of the best cannabis in the world. But out-of-state consumers can't try any of it at home legally because California law forbids licensed cultivators from shipping cannabis beyond state lines. And you can't blame local regulators for taking that extreme position: since state borders fall under federal jurisdiction, anyone attempting to transport cannabis from one state to another would face hefty penalties for defying federal prohibition.

So the black market for cannabis exports in California probably will continue to thrive until the federal government legalizes cannabis across the country and allows growers in the Golden State to ship their buds to dispensaries in other regions.

h/t: The New York Times

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Ontario's limping legal cannabis market seems to be finally catching a break. Legal cannabis sales have nearly doubled since licensed cannabis retailers began opening in the province last April. Ever since cannabis legalization took effect in October of 2018, legal sales have lagged behind in Canada's most populous province compared to other jurisdictions, which have significantly smaller markets.

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