The illicit market of cannabis has existed for a while. Back in 2016, it was proposed that the legalization of marijuana would help drive down the illicit market since people would be able to buy without fear of criminalization. Thus, Prop 64 was passed with high hopes. With this, it was extremely surprising to see opposite results. Legalization may have led to the rise of black market marijuana. Since legalization, the black market has continued to grow.
As illegal markets continue to thrive, it’s costing many legal businesses, ranging from cultivation to dispensaries. Many legal cannabis businesses are frustrated at the lack of action from the state government. They blame faulty legalization and high taxes. But these businesses claim they won’t wait around with arms crossed.
The Rise of Black Market Marijuana
The rise of black market marijuana has been going on for years. Although the illegal market existed before legalization, it grew after weed was legalized. Lt. Marc Bracco, from San Bernardino County Sheriff’s Department, blames the law’s lack of repercussion for illegal activity.
In an interview for Vice News, Bracco explains how his team will go after illegal marijuana cultivation sites, and the people they find tending the plants will walk away with citations. Due to laws and COVID regulations, most of these individuals do not go to jail. Once they shut one site down, in about 3 – 5 months, a new one will be set up.
Although Prop 64 legalized possessing and consuming marijuana, it did not legalize the cultivation and commercial distribution of it. This is where local laws come into play. More than half of California counties have laws that ban retail marijuana sales. These locations become hotspots for illegal marijuana sites. For example, San Bernardino County does not allow the cultivation or sales of marijuana. Its large and bare landscape makes it a perfect place for cultivators to set up and grow weed illegally.
Authorities, like Lt. Marc Bracco and his team work to shut down illegal weed sites. He suggests that lawmakers increase fines and punishments for those running these black market sites. The illegal market is worth $8 billion annually. That’s more than twice made from licensed and tax sales.
Prop 64 Taxes Affecting Legal Businesses
Along with addressing the illegal cannabis market, Prop 64 was designed to help the state by earning tax revenue. In part, the law was successful. Marijuana sales tax earns billions of dollars in revenue for the state. The state and local government can then use this money for social programs, infrastructure, and other aspects to help the community.
Entering 2022, taxes were raised once again for legal cannabis businesses. Needless to say, these businesses are not happy about taxes being raised. Legal weed businesses are struggling to compete against the illicit market. They blame taxes and the lack of laws around the illegal cannabis market.
Many cannabis business owners state they have had enough. A group of them wrote a letter to Gov. Gavin Newson, requesting something be done about the matter. On the other hand, there are business owners that wish to take a more abrasive approach. They plan to withhold their earnings from taxes.
Currently, cannabis businesses must collect a variety of taxes. First, there’s an excise tax, which is about 15%. Then, there’s a weight tax that cultivators must pay. Additionally, there’s a regular state tax, which may be from 8 to 10%. And finally, separate cities and counties may add additional local taxes.
How Is Black Market Marijuana Harmful?
The black market does not exist without harm to others and the environment. Illegal marijuana cultivation sites often cause a lot of harm to the environment. For example, illegal marijuana cultivators will often use dangerous pesticides that cause extreme harm to wildlife.
In San Bernardino County, most of the black market marijuana sites are set up outdoors, meaning these chemicals will easily spread. Authorities have found piles of trash and dangerous chemicals at these sites, including a dead bear.
Moreover, underground cultivators have been linked to serious criminal activity. For example, water is an essential role to cultivating weed, whether it is done indoors or outdoors. In some towns, illegal cultivators will steal water in order to support their own weed sites. This is done by drilling into wells and aqueducts, and sometimes even from fire hydrants. This has left several towns full of angry, frustrated, and scared residents.
How is black market marijuana harmful:
- Underground cultivators use illegal and dangerous pesticides
- Large illegal cannabis farms leave behind tons of trash and waste
- Underground cultivators may steal water from nearby towns
- Distributes unregulated weed to consumers
