Is COVID Really Killing the Marijuana Black Market?

covid and marijuana black market numbers

According to Politico – the legal cannabis market has seen a surge during the pandemic. They believe that this could be evidence that the illegal market – commonly known as the black market – may be suffering.

While it’s virtually impossible to say that the illegal market is suffering under COVID – one should entertain the idea especially since the pandemic has radically affected our behavioral patterns on an individual level.

I don’t have to go through the list of adaptations you had to implement since the start of the pandemic. I’m sure each and everyone of you have enough evidence to confirm that this pandemic has reshaped our day-to-day interactions.

It is then only logical to think that consumers would continue this behavior even within the black market. However – unlike Politico’s Paul Demko and Alexander Nieves – who in all likeliness have not purchased drugs on the black market recently – I do venture beyond the realm of legal markets to get a pulse of what’s happening behind the veil of legality.

It’ highly logical to look at the data objectively and infer that consumer trends are moving away from black market activity and engaging with the legal market at a much higher rate. We know for a fact that since the start of the pandemic – Americans started smoking weed at higher rate.

We see this by new medical cannabis inscriptions in places like Florida – who added more than 50,000 new patients in March. According to New Frontier Data – cannabis revenue this year is poised to hit $17 Billion, which would be 25% increase from 2019. It seems that while many industries are taking a hit – the cannabis industry is still growing.

This is seen as “evidence that the black market is shrinking”, however – in places like California, the illicit market still takes up the bulk of all cannabis sales in the market. In fact – some estimate that the illicit market still takes up 80% of all cannabis sales within the state.

What are some reasons why consumers might switch to legal cannabis?

One of the major reasons why consumers continued to purchase on the illicit market is due to price. This is especially evident in places such as California – where exuberant taxes inflated the price of cannabis to such a degree that consumers were forced to continue to buy on the illegal market due to cost.

Even here – we have seen an increase in legal sales. However, this may be attributed to the current legal market simply buying at a higher rate due to increased levels of anxiety.

However – other reasons may include;

Regulated Sources have quality control – within a COVID dominated society, having the assurance that the cannabis has been checked for pesticides and what not is a plus.

Less risk in buying – unlike the illegal market where you still have to venture out to the dealer – legal solutions include things like curb-side pick-ups and home-deliveries. This is more appealing for those worried about COVID.

These are just a few reasons analysts believe why the illicit market may be taking a hit.

However – speaking to the consumers [something these analysts hardly do], I have not seen a decrease in illicit buying. There have been some supply chain issues for consumers who buy on the black market – but this could be due to an increase in border seizures due to a decrease in traffic.

Yet even with all of this – the illegal market is still expected to rake in $68 billion this year.

The thing is – people are willing to risk their health for the sake of shaving off cost from their cannabis. In places like California – the black market will continue to coexist until something can be done about the average price per cannabis.

This can only be achieved when policy-makers stop trying to squeeze out every penny from a budding cannabis industry. Until then – the black market will continue to thrive.

How the pandemic will increase legalization efforts?

One thing we can almost say with certainty is that COVID will initiate a flood of legalization efforts as counties and states are seeing a need for new revenue streams. In fact – alcohol prohibition was repealed as a result for new revenue streams after the great depression.

We can expect that COVID will have a similar effect on Cannabis prohibition. This, and with CONGRESS voting to protect legal cannabis – it is highly likely that after COVID – legalization will increase if it hasn’t been legalized at a Federal Level.

As with alcohol prohibition – we can expect the federal government to repeal cannabis prohibition, but NOT force states to accept it. This means that every state will still have to legalize – but that all federal penalties would be removed.

Either way – COVID in large part has been a positive for the cannabis industry. At least that is some good news coming out of all of this madness. 








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