Marijuana News Today: Black Market Continues to Plague Pot StocksPosted by On


Marijuana News Today
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Marijuana News Today

The marijuana news today offers a clearer picture of a problem that the industry has been contending with for years: the continued success of the black market.

An audit by the United Cannabis Business Association found that there are about 2,835 unlicensed weed dispensaries and delivery services operating in California, the largest marijuana market on earth. (Source: “Nearly 3,000 illegal marijuana businesses found in California audit, dwarfing legal trade,” Los Angeles Times, September 11, 2019.)

By contrast, the legal market in the state is made up of only 873 cannabis sellers operating with state licenses.

Another industry-backed audit found that about $8.7 billion will be spent on unregulated cannabis in California this year. Again the legal market limps behind; in the same period, there will be about $3.1 billion spent on cannabis sold by legal businesses in the state.

This issue has been something we’ve tracked for months. While we knew that transitioning from a massive illegal network to a legal one wouldn’t happen overnight, it is disheartening to see that a massive disparity between legal and illegal profits still exists.

To put this in investor terms, every dollar that is spent on illegal pot is one less dollar that could have filled a legal company’s coffers, bolstering revenue and stock value.

There are a number of reasons for the illegal trade gulf. One is that fewer than 20% of cities in California permit retail shops to sell cannabis for recreational use. But even in cities where marijuana sales are permitted (including major hubs like Los Angeles, San Diego and San Francisco) there still exists a booming black market cannabis trade.

Many blame the web site “Weedmaps,” which allows many illegal marijuana businesses to advertise using the online tool. The company has vowed to cull unlicensed advertisers from its site, but it took a fair bit of cajoling to get to this point.

Even then, this will likely hardly put a dent in the black market for a simple reason: the black market is thriving because people trust it and it’s cheaper.

On one hand, you have long-time pot users choosing to continue to make use of the black market that was their only supplier for years. They’ve grown accustomed to trusting non-licensed marijuana dealers.

While the government will say that there are inherent dangers in illegal marijuana due to its unregulated nature, that warning rings hollow to…

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