California's Unregulated Weed Market Remains Nearly 3x Larger than the Legal Side: $8.7B vs. $3.1B

Some people prefer to take the bad news before the good, while others want the good news right up front. But in the world of taxed and regulated cannabis, the line between the two has gotten so hazy, whether the news is good or bad really depends on who you ask.

This week, ArcView/BDS Analytics released a report titled “California: Lessons From the World’s Largest Cannabis Market” which claims that the state is on pace for a 23% jump in the growth of the legal, licensed marijuana market in 2019 over the prior year. This equates to over $3.1 BILLION in legal cannabis sales this year, and if the numbers hold, would make California the undisputed largest legal cannabis market on the planet. Colorado is expected to post a $1.6 Billion pull from legal weed in 2019, and Canada… well, Canadian cannabis companies are LOSING a billion dollars per quarter. After stumbling out of the gates of “legalization” in 2017-18 and witnessing embarrassingly low revenues trickle in, these new numbers are good news for California, right?

Well, the flip side of the coin is that California already was the undisputed largest cannabis market on the planet. For decades, in fact, but it was always fueled by trunk hustlers and trap houses and the more things change with legal weed, the more they stay the same on that flip side. $3.1 Billion in 2019? Cool. But the state’s black market is reportedly due to record a haul nearly 3x as large with a projected untaxed, unregulated street pull of over $8.7 Billion…. and honestly, that’s probably a conservative estimate.

Although Cali’s regulated market is clearly finding its stride, cannabis consumers statewide have shown a willingness to buck the new laws and revert back to their old sources. On average, one gram of legal weed costs 77% more than one gram of street weed. Lower prices and no outrageous taxes is a main draw, but in many cases, the “black” market has superior products as it is not just consumers avoiding the legal market, but some of the state’s best cultivators, extractors, and edibles manufacturers have opted out as well.

Some industry watchdog groups are predicting that California’s legal cannabis market will more than double in size by the year 2024, with revenues topping $7 Billion, but they also predict that the state’s black market will still be running neck and neck with comparable earnings and a fraction of the overhead. That would be a full six years into the implementation of the adult use marijuana law in California and the optimistic best guess is that the black market will still be banking billions and that should come as a surprise to nobody.

Colorado had a 2-year head start on California when it comes to legal cannabis, and its own black market - though certainly established - could not hold a hempwick to that of California’s. Yet more than seven years later, the state (and the Feds) still dedicates vast amounts of resources to combat the unregulated market that continues to thrive. “I’ve only been doing this for 25 years and I have never seen the black market as robust and as complicated and as expertly cultivated as this one right now,” says attorney George Brauchler in Colorado’s 18th Judicial District.

So, how can states like California or Colorado totally eliminate their black markets for cannabis?

Should they employ PTSD-inducing raids with military personnel and cops who just dress and act like they are military personnel like we are seeing happen up and down the state of California right now?

Should states open the doors for the DEA to come in and impose antiquated federal laws and continue to put people in jail over a plant?

Many would advocate for nationwide cannabis legalization, positing that the blanket legislation would make it unprofitable or even unnecessary for interstate diversion of weed from legal states to non-legal states. Sure, that’ll help with that, but if you think that packs being shipped from NorCal to Georgia are what is killing Cali’s legal marijuana market then you aren’t paying attention or haven’t been around weed for very long.

It's the guy who has been smoking weed since the 90's, buying a zip and a half a month like clockwork but refusing – REFUSING – to pay $500 for it, regardless of the quality, which is usually midsy compared to a local farmer’s harvest that weighs in at less than half that price. Until these states find a way to convince the real ‘heads to walk into these shiny Apple Store dispensaries they will bleed revenue to the streets.

But we’ll leave you with one question: Does that matter?

Goddamn, California, it sounds like you are going to have $3,100,000,000 that you didn’t have last year – thanks to weed. We know, we know, this is capitalism so you want it all, but that’s not how this plant gives. It never has been. Take what it gives you and be grateful – leave those other branches alone.

Hell, imagine how many homeless people could be housed, fed, and educated for the $200 Mill that Governor Newson has vowed to spend on uprooting unpermitted pot farms in 2019? For what? So you can run even with them, maybe, in 2024? Then what? Seven more years of Blackhawk helicopters in the Emerald Triangle? Once again, the late comedian Bill Hicks summed it up best when he said, “…the war against drugs. You know what that implies? There's a war being fought, and the people on drugs are winning it.”

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