One Year Into Legalized Pot, Black Market Continues to Grow

One Year into Legalized Pot and the Black Market Continues to Grow

Taking stock after one year, the recreational cannabis industry is fighting a battle—but it’s not the battle we thought it would be facing.

The expected federal interference never really came, and President Obama has pretty much let it be known that he does not intend to put federal funds toward fighting the legalization movement, leaving states to their own devices and letting them each figure out how to regulate and tax cannabis. Out of all the fully recreational states, Washington and probably moreso Colorado find themselves in a particular quandary. Although the states pulled in $15 million and $60 million respectively in tax revenue from recreational sales, these figures are far short of what cash-hungry state officials were hoping for.

Recreational marijuana sales seem mostly to be a hit with tourists. Just ask Nebraska and Oklahoma, which are in the midst of suing Colorado, claiming their states are being overrun by the plant. Locals in each state are still going to the black market in droves, or to the growing-not-dwindling medical marijuana system.

The problem is how the marijuana is taxed. On the black market (a.k.a. your local dealer), obviously you pay no taxes. Medical marijuana is taxed at the normal statewide level. Meanwhile, if you make a purchase at a recreational shop, be prepared to pay ten times that. Do the math and in Colorado that’s nearly 30% added sales tax.

So what are they going to do about the problem? Well, one option is to completely rein in the medical marijuana system, possibly getting rid of medical dispensaries altogether. They could take the route that newly recreational Oregon went, placing a $35-per-ounce flat tax. Or they could do the most logical thing and greatly close the tax gap between recreational and medicinal. No matter how you look at it, something has to change.