The Marijuana Black Market in California is Still Active & Growing
California’s latest move to open up the cannabis market to recreational users has produced unintended consequences. A sizable chunk of the industry is choosing to operate in the dark.
No thanks to the stringent measures and regulations in place, a large portion of pot growers, manufacturers, and retailers, have unfortunately ran the risk of losing their license. The marijuana companies that are surviving, have been hit heavily by various taxes, rules, and regulations.
Many in the marijuana industry have been operating in the shadows for far too long. With the recent opportunities to step out into the light, many have taken the option. However, not without some dismay. The drafted policies have caused some to back away from the legal open market, in order to avoid penalties for the stricter regulations.
It’s a fact that across the state, the illegal market outnumbers the legal businesses by almost 5 to 1. What’s even more discouraging is that the majority of the legal stores are charging nearly 3 times the price of the illicit stores.
Incompliance of the new rules have caused the number of licensed retailers to drop to 410. This is according to state reports. That’s a decline of around 1,100 under the previous rules, says BDS Analytics, a research firm. In addition, the delivery services in California have plunged to 116, compared to a previous estimate of 2,000.
This has affected growers as well. More than half of the 60,000 cannabis farmers have opted out because of the new rules. Many of them see the black market as a better alternative.
Some marijuana dispensaries are choosing to run their businesses without licenses, thus, unfairly undercutting the legal operators who pay taxes and play by the rules. The state is cracking down on operators and retailers that violate the licensing laws. Until then, violators will get away with it.
The Cannabis Control seems to be making trouble all around, as over 1,800 cease-to-desist letters have been to sent to unlicensed retailers. Legal cannabis industry players are quickly taking a back seat. This is hurting the marijuana-testing laboratories, because the licensed labs can only conduct business with other licensed retailers, distributors, and growers.
The black market has gotten so out of hand that Governor Jerry Brown suggested setting aside $14 million of California’s budget to going after cannabis sellers in the black market. The millions of dollars would pay for five teams that’s part of California’s Attorney General’s office. The main targets of their mission would be tax evaders. However, Governor Browns’ proposal was not successful due to unavailable funds in California’s’ already tight budget.
Recent requirements mandate that producers have their cannabis tested for dangerous pesticides and mold. They have been given time to comply, but this has caused a backlog for lab testing centers from the beginning of the year.
In Santa Ana only 50% of cannabis products are able to pass current pesticide tests. Pesticide infested cannabis is a public health issue. These products could be distributed to uninformed consumers in the black market. The Journal of Toxicology performed a study in 2013 that determined that cannabis with high amounts of pesticide causes medical problems for marijuana smokers.
Myclobutanil is a pesticide that farmers are using on cannabis plants. Myclobutanil is especially harmful when smoked due to high heat that turns the chemical into hydrogen cyanide. Hydrogen Cyanide was released in gas chambers by the Nazis to kill millions of people. When not heated up, the level of toxicity is lower, despite this, farmers working with this pesticide have suffered from the following symptoms.
- Throwing Up
- Irritation of the Eyes
- Stomach Pain
- Skin Irritation
These strict regulations may cause a lot of legal businesses to cease operations, causing spiking cannabis prices, and shortages if the problem is not resolved. The high taxes that legitimate cannabis businesses pay, is resulting in a competitive upper hand that leans towards the black market.
New research carried out by Eaze, a pot delivery company, indicated that about 20% of California residents have purchased unregulated marijuana in the past 3 months. Although pot is legal in the state, the underground market has a very strong presence in California.
Eaze’s research further revealed that 84% of Californians were initially satisfied with the newly launched legal cannabis market in January. It appears that Californians are happy to say they are fine with the legal market, but some customers are letting their wallets do the talking and choosing to purchase cannabis through the black market instead.
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