If you live in a state with cannabis access laws, you’ve likely bought your weed from a dispensary or delivery service. Did you ever stop to wonder if your dispensary was licensed? Most cannabis consumers are unaware about the proliferation of illegal dispensaries in their area. How could they know? Sites like Weedmaps openly advertise unlicensed shops making it hard for licensed shops to compete.
Before legalization, unlicensed growers operated under the radar. Weed legalization was touted as the solution to black market operations, but regulatory frameworks have strengthened some cannabis black markets in some areas. Opening up a pot shop comes with high permitting fees, tons of red tape, restrictive licensing guidelines, and outright dispensary and delivery service bans. The alternative to obtaining a license to sell is to run an illegal pot shop.
Illegal dispensaries can take out a big cut of the cannabis market, thereby, bringing down profits for licensed retailers. Licensed dispensaries are required to pay sales and state excise taxes, which can add to the businesses’ high overhead costs. Unlicensed shops can offer rock-bottom prices on weed and weed-infused products because they don’t pay taxes. Some consumers prefer to buy their cannabis at illegal retailers just for the low prices.
Cities attempt to crack down on unlicensed shops with fines and jail time, but black market growers continue to take the risk of operating in spite of criminal charges. Illegal operations can range from unlicensed grow sites to extraction facilities. Even if a pot shop is raided, owners have been known to set them back up, sometimes within hours of the raid. Illegal shop owners can hide behind LLCs and cash payments to remain undetected.
Licensed retailers rely on customers who want to do the right thing and purchase cannabis legally. License holders often claim that their product has been lab tested, which can be helpful for medical cannabis patients and health-conscious cannabis consumers. Legal weed, however, can be tainted with pesticides, solvents, heavy metals, and more. A lack of oversight on lab testing has made consumers think twice before trusting lab results.
A poor regulatory framework for legal weed along with caps and bans on legal shops and delivery services has opened up the market for unlicensed dispensaries. In many cases, there aren’t enough pot shops to meet customer demand. As a result, customers end up purchasing their eighths from unlicensed retailers, most of the time without knowing. Police have a difficult time enforcing dispensary bans. Plus, they’re expensive and cost a lot of taxpayer dollars.
It can be hard to distinguish between licensed and unlicensed dispensaries. Oftentimes, both feature the standard green cross to advertise to foot traffic. Consumers can look into state databases to find license holders, but not everyone will due to a lack of knowledge. Ultimately, dispensary shops are cheaper than legal dispensaries and that’s all that some consumers care about. Others avoid getting a medical cannabis card for privacy issues driving them to the black market.
If you do end up making a trip down to your local unlicensed pot shop and happen to be there during a raid, you’re unlikely to face an arrest, but the experience can be offputting. For now, the cannabis market in most states continues to unintentionally support an underbelly of black market dispensaries that won’t go away anytime soon.