Who Are We Talking About When We Talk About Black-Market Marijuana?
This story is third in a four-part series about cannabis equity in America. The USC Annenberg Center for Health Journalism’s 2021 National Fellowship supported reporting for this project.
Other stories in this series are:
Part 1: Legal Cannabis Opens a Pandora’s Box of Equity Issues
Part 2: Is Cannabis Equity in Florida a Pipe Dream?
Part 4: The Rocky Road for Black Cannabis Entrepreneurs, Past and Present
Illustration by Define Urban
This story is the third in a four-part series about cannabis equity in America.
Cooper, not his real name, a Black, dreadlocked man, kicked back upon the trunk of a sedan. He waves cigarette smoke around the August evening air as he details the last weed deal he’ll ever do.
At 36, Cooper has a passion for cutting hair in the downtown Vancouver, Washington space that he rents to afford that two-bedroom apartment across the parking lot. Slinging cannabis on the side paid the cable and the gym memberships.
Never a huge smoker, Cooper looked at weed like income that was simply there if you wanted to have it.
Then, the legal cannabis market across the river in Oregon — already famous as America’s most flower flooded — took on even more bud this summer. Prices tanked.
(This reporter can attest: A suburban Portland dispensary turned back time in my mind, sending me out the door with four pre-rolled, mid-only-in-Oregon joints, and they cost just $20. It felt like Carter was president again.)
Prospective Pacific Northwest customers had to ask: Why meet up with Cooper — not his real name — to buy his untested, unremarkable bud when Oregon flower that costs marginally more with tax can be delivered to your door?
It was when he tried to move a pound over Facebook earlier this year and found no one from either Vancouver or Portland interested that Cooper realized his own marketplace irrelevance.
“The day of the weed man is over,” he lamented.
That bag still sits in a closet, unsold and unsmoked.
In the 15 states with adult use cannabis, overly ambitious state and local taxes are the wind beneath the unlicensed market’s wings.
In this traditionally cultivated, or “black” market heyday, unlicensed cannabis brokers from Illinois to Florida can be heard laughing aloud at Cooper’s assertion. They’re richer than ever off this gift from the land.
We’re a nation awash in weed. Along with whatever random cannabis y’all be smoking back East, fresh from the West Coast, Colorado and now Oklahoma comes brilliant and untested bud.
Tax free for your local cash economy.
Not all dealers in the traditional market are chuckling at Cooper. And not because a healthy lot of them are cartel members, and chuckling isn’t in anyone’s repertoire with that gig’s job description, but because the future ought to hold only less action for the traditional market.
Cooper’s not wrong. He’s just heard the footsteps early.
The Perils and Pitfalls of Legal Weed
With high public approval numbers — aided by a countrywide quarantine THC indulgence that undercut 80 years’ worth of federal propaganda — the cannabis industry is drilling itself into the concrete of American society.
Yet, as mentioned in Part Two, 32 states offer no recreational (aka adult use) option. The unlicensed thrive in those states.
Traditional-market growers, brokers and dealers also thrive in leading-edge prohibition slayers such as California. Here, new aficionados who would never cop pot in a baggie have combined with the old cannabis people to give the state of 39 million an unprecedented consumer base.
Yet, California provides only two dispensaries for every 100,000 residents, just because of Prohibition Hangover. Unlicensed Golden State cannabis — edibles, concentrates, vapes, tinctures and all — is about twice its nation-leading $4 billion legal industry.
Golden State-sanctioned cannabis costs twice what’s easily available via the traditional market. But it is strenuously tested; consumers know what they’re getting. Pretty packaging aside, that’s the only reason the average weed fan has for tracking down and patronizing dispensaries.
How much more tax revenue would California weed generate if a fraction of the unlicensed could be absorbed into the legal industry?
In the 15 states with adult use cannabis, overly ambitious state and local taxes are the wind beneath the unlicensed market’s wings. (As of Jan. 1, cannabis is taxed in California at a flat rate of about $161 a pound, on top of a 15% excise tax, as well as local cultivation, manufacturing, processing, distribution and retail taxes.) Which would be fine if the state hadn’t ported Prohibition Hangover into the 21st century, with local control, a policy that sounds exactly like what it is and might have succeeded in a market the size of Delaware. In the Mecca of cannabis, local control as Golden State policy is a regrettable embarrassment.
The enterprises of many weed pioneers have been made into roadkill.
Nevertheless, California has been able to fund new parks, forest clean-ups and child care programs with its $1 billion in cannabis sales tax revenue from 2018-21. Weed revenue has helped minimize the pandemic’s fiscal impact and keep Cali in the black.
But how much more tax revenue would California weed generate if a fraction of the unlicensed could be absorbed into the legal industry?
The ceiling on what this revenue might bring any state is reinvesting cannabis taxes in communities devastated by the “War on Drugs,” as Illinois has done.
Illinois is illustrative of social equity implementation without cohesive strategy. While it innovates by giving the prospect of recompense to those traumatized by the “War on Drugs” but who are uninterested in selling pot, state policy makers haven’t dealt with the facet that would minimize the legality delta tensions: access.
“There are a lot of local entrepreneurs that could really make money if they could get their product into dispensaries,” says Deborah Dillon, a businesswoman and cannabis researcher at Chicago State University.
No Illinois program exists to put War on Drugs victims’ lives back in order post-arrest. Those dudes you copped from outside the Chicago Theater and other Black street dealers are likely to have been popped — and as a result, their credit was stymied, same as their ability to obtain student loans and get jobs.
“Historically, as soon as a state legalizes, the arrest rate of people of color goes up.”
~ Deborah Dillon, cannabis researcher, Chicago State University
A cannabis conviction on one’s record, Dillon explained, can be hell on cohabiting relationships.
She explained that in Illinois decriminalization and legalization have helped clear 500,000 people convicted for possession of under 30 grams of the drug. Yet the expungement movement must be seen only as a powerful opening salvo, the start of sanctioned weed salving criminalization’s wounds.
“There is no path from legacy to legality. There is no direct path,” Dillon said. “In fact, historically, as soon as a state legalizes, the arrest rate of people of color goes up.”
Instead of a direct path that trains ex-offenders to be part of the cannabis and hemp industries, there’s a journey that, at best, takes them into the lowest strata of the unlicensed market.
At worst? Our eternal thirst for greenery reinforces established patterns.
“They hustle up even the smallest of dough. Buy a quarter of an ounce. They start selling dime bags,” Dillon said. “Those who can’t hustle up enough money to get a quarter pound, they’re out there mugging and whatever else they’re doing to try to survive.”
Who Is Traditional-Market Cannabis, That Most Known Unknown?
When seven Laotians are murdered on a farm, both the killers and the dead might be part of the so-called black market. But so’s that job site lunch lady who for a decade keeps her colleagues in affordable, dependable medicine.
As is:
- The cannabis chef who gives your friend’s wedding party that certain something special.
- The dispensary customer in front of you who’s buying more vape cartridges than one human could suck dry.
- That person who distills the concentrates you buy from that delivery service you’re pretty sure isn’t registered.
- A cast of literal millions.
“I would say a few million people are doing some kind of weed transactions without a license,” said industry insider Andrew DeAngelo. “Most are small time. They sell a quarter pound a month to keep them in stash.
“Or grow a little and trade it for another good or service.”
The unlicensed market’s relationship to social equity is critical. Underground dominance not only means talented weed people simply exist outside of a stable-ish industry that’s largely free of organized crime.
It also means depletion of tax revenue shortchanges government equity programs.
With support from the University of Southern California’s Center for Health Journalism, I put together, distributed and collected responses to a Legacy Market Questionnaire. Drawing insights directly from those who happen to sell Americans their cannabis — by a 5-to-1 margin — is something that sounds basic, but just doesn’t happen enough.
Responses from unlicensed cannabis operators are here.
My questions were developed with input from about a dozen American advocates, regulators and licensed and unlicensed operators.
Some Growers Wish to Remain Anonymous and Others Must
Because the questionnaire wasn’t distributed in Spanish or Hmong, the thing is hopelessly skewed, according to a state scientist I spoke with prior to distribution. Among other shortcomings, the questions fail to show the international flavor of America’s cannabis underground.
I literally have to ask, “Are we talking Chinese from China, or American Chinese from the Valley?” In California, the Hmong are disproportionately represented in mountainside growing, but especially among the production strata that trims bud.
If the questionnaire is definitively skewed, it is warped toward tiny, unlicensed operators who will put a version of their names to an online query that promises anonymity.
Four hundred twenty people saw the online questionnaire last time I checked. Starting the document were 152 people. Only 23 completed it, even though I allowed the questionnaire respondents to attach pseudonyms to their words as a means of protecting their identities.
Weed may be almost legal, but almost ain’t legal.
I tossed a half-dozen responses for lack of seriousness. A few respondents gave me their answers by phone. A handful of answers came from those who aren’t technically illegal — it appears — but if those responses offered insight, I included them.
“We need folks to cut checks, “ said “Danielle,” a 35-year-old New England resident. As with the other respondents, anonymity was promised to shield them from prosecution and social consequences. She has been a dealer and broker in California, Virginia, Maryland and D.C., and has strong views on social equity.
A hamstrung California legal market has driven scientists, cultivators and brokers to outposts like Oklahoma, where regulations are loose.
I asked how legal weed could attract top talent from the underground’s most talented.
“A lot of people who would make excellent candidates don’t even have the fuckin’ access, “ Danielle said.
The questionnaire respondents offered cross-country perspectives on the prospect of equity in cannabis, on guns, the environmental impact of their cultivation operations and operating in a cash-only industry, among 21 questions.
Consumers find little need to see the tectonic shifts happening in the unlicensed market. We only notice when prices rise or fall or when a delivery service is out of our favorite medicine.
The Emerald Triangle mountains and those of the Pacific Northwest are and shall be Mary Jane’s spiritual home. A hamstrung legal market has driven scientists, cultivators and brokers to outposts like Oklahoma, where regulations are loose, Canadian stock market-watchers consider it a darling, and an operator’s license has you out the door for a cool $2,500.
In Cali, where the application fee alone is $1,000, retail licensing costs can run as high as $96,000. (It’s actually a lot more complicated than that.)
Oklahoma is now an unprecedented weed hub. In 2020 the state issued 2,392 licenses. By comparison, larger, more senior California issued 2,304 licenses in 2020.
Boomer Sooner, for real.
As this story goes to publication, the price of cannabis everywhere has dropped. A new lawsuit against the California’s Department of Cannabis Control alleges that the state allows its product to leak into the unlicensed market, exacerbating a trend that tilts away from independent licensees and toward multistate operators.
Not everyone views the suit as breaking news.
“Even licensed stores have to back-door about 30% to the black market,” said questionnaire respondent “Sandcrabber,” a 49-year-old California grower.
In urban areas, the influx of cartel operators is often measured in spiking neighborhood power costs.
Criminal organizations that grow on public lands in California have in the past two years begun moving their grows from the deep forests — in part because of California Department of Fish and Wildlife eradication program crackdowns — and transferring them to private property. Sometimes the landowner is in on the deal, but not always.
“These setups usually include water diversions, use of banned pesticides and lots of poaching around the grow site,” said California Department of Fish and Wildlife spokesperson Janice Mackey. “They may squat on someone’s property (such as a rancher with 500 acres next to a national forest), they may purchase private land in very remote areas and grow their illegal crop or they may pay a landowner for the space if it has the right resources (water availability and in a remote area) to set up an illegal cannabis grow.”
In urban areas, too, the influx of cartel operators is often measured in spiking neighborhood power costs. Stolen power is measured more effectively today, but the practice has gone on for decades, a Colorado respondent said in a phone interview.
This Is My Theory
Social equity strikes CEOs like Trulieve’s Kim Rivers as optional acts of charity — and not a shared industry necessity — because the most clever operators are still out there, unlicensed and doing amazing things to distinguish a drug that famously sells itself.
Some geniuses, of course, are hardcore criminals who cannot be reconciled. But most only differ from the catbird seat owners in Florida in their skill at playing the investment and compliance game.
And they’re more comfortable with weapons.
A big takeaway that has no business being a surprise is the prevalence of guns. They’re a fact of life for most working in this cash industry.
“I just saw a gun 30 minutes ago,” said Pressa, a Missouri grower and musician with 10 years’ experience delivering and growing. (“I grow organic. I’m not all about yields,” Pressa said.) He says he is trying to build his medical marijuana operation and trying to find a bank that will work with a cannabis company.
A few regulators and activists that I spoke to no longer care for the words “social equity” or “cannabis equity.” This is because, within the government-sanctioned industry, the term has taken on deprecating connotations, as did affirmative action and welfare before it.
For underground market participants who even bother to think about the deal beyond a sale, the time-release success of today’s unlicensed world feels worth it. Beats working behind the counter at the Wal-Weed outpost heading to a neighborhood near you.
Or will it be Uber Smokes?
“There will never be ‘equity,’” said Chicago State’s Deborah Dillon. “So, let’s have some ownership. Because that’s what we need.”
The USC Annenberg Center for Health Journalism’s 2021 National Fellowship supported reporting for this project.
[This article was originally published by Capital & Main.]