The illegal marijuana market in California continues to grow, despite the legalization of recreational use of the drug in 2016. The legal industry has faced difficulties competing with low black market prices, regulations, and high taxes that have stifled legal stores. Although there are more than 1,100 legal stores in the state, less than 40% of cities allow sales in their territory, leaving many customers at the mercy of the illegal market.
Regional, local, and industry-specific taxes increase the final price of the product by 35%, and legal retailers claim that they lose 30% of their customers to the illegal trade that does not pay these fees. In addition, regulations vary between jurisdictions, and municipal authorities have the final say.
Meanwhile, the illegal marijuana market mobilizes around $8 billion in sales per year, according to the specialized firm Global Go Analytics. Illegal sellers, although they suffer police raids and confiscations of their products, are willing to continue operating despite these risks. To deal with the high cost of legal marijuana, some customers turn to illegal stores, which are often hard to find and can present quality problems in the weed they sell.
While legalization should have allowed control of the market and ensured product quality, it has been shown that much remains to be done to regulate and control the marijuana industry in California.