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Even With Legal Cannabis, California’s Black Market Will Remain Huge

Legal Cannabis

legal cannabis

Legalizing marijuana, California voters were told last year, would create a “safe, legal and comprehensive system” allowing adults to consume the drug while keeping it out of the hands of children. Legal cannabis would be sold in highly regulated stores, the Proposition 64 campaign promised, and California would gain new tax revenue by bringing the marijuana marketplace “out into the open.”

Voters overwhelmingly bought the message, with 57 percent approving Proposition 64. But as state regulators prepare to begin offering licenses to marijuana businesses on Jan. 1, it turns out that a huge portion of the state’s weed is likely to remain on the black market.

That’s because California grows a lot more pot than its residents consume, and Proposition 64 makes marijuana legal only within the state’s borders. It also didn’t give an automatic seal of approval to every cannabis grower. Those who want to sell legally must be licensed by the state and comply with detailed rules that require testing plants, labeling packages and tracking marijuana as it moves from farm to bong.

Exactly how much cannabis circulates in California is unknown because most marijuana grows — and purchases — have been illegal for so long. But economists hired by the state government estimate that California farms produce about 13.5 million pounds of cannabis each year, while state residents annually consume about 2.5 million pounds. That leaves 11 million pounds of pot that likely flow out of California illegally, according to the economic report commissioned by the California Department of Food and Agriculture, which regulates cannabis farmers. Other analyses have similarly found that roughly 80 percent of California-grown marijuana leaves the state.

Even the 2.5 million pounds of legal cannabis consumed within California won’t all be purchased through state-sanctioned shops when they open; the economists predict about half of it will probably be sold illegally.

“Those sales opportunities will still be there,” said Hezekiah Allen, executive director of the California Growers Association, which represents more than 1,000 marijuana businesses in the state.

Allen surveyed his members recently and found that 85 percent hope to get a license to sell marijuana legally under Proposition 64. But many fear they won’t be able to because some local governments will limit or ban pot businesses, or because prices could drop too low in the regulated market. And if they can’t sell legal cannabis, 40 percent of the respondents to Allen’s survey said they would continue operating the way they always have: on the black market.

Some longtime cannabis growers will likely go out of business, Allen said. But, “at the end of the day, a lot of businesses in general may stay outside of the regulated market.”

That means that despite the passage of Proposition 64, California cops will still have plenty of work going after illicit cannabis operations.

“You’re going to see robust enforcement efforts to prevent California from becoming the staging area for drug trafficking nationwide,” said John Lovell, a lobbyist for the California Narcotics Officers’ Association, which opposed the ballot measure.

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