Chart of the Week: Black Market Marijuana Taking Big Hit in States With Operating Dispensaries, Rec Shops

By Becky Olson

Nearly 70% of marijuana users in states where dispensaries and/or recreational stores are open for business obtain cannabis exclusively through legal means, while just 17% rely solely on the black market, according to exclusive data in a new research report by Marijuana Business Daily.

The figures provide one of the clearest indications yet that marijuana legalization and cannabis businesses are highly effective in steering patients and general MJ users away from the black market.

Most marijuana users in states with operational dispensaries and/or recreational shops say they only buy through licensed businesses or caregivers, or they grow their own at home. An additional 16% of users in those states buy both legally and from the black market, meaning that just one in six users – or 17% – in those markets exclusively patronize the black market.

The contrast when compared to the rest of the country is stark.

Just over 80% of users in states without operating dispensaries/rec stores exclusively buy from the black market. Another 7% indicate they have means of legal access such as caregivers or home growing, but that they still occasionally buy from unlicensed dealers.

In total, nearly 90% of medical and recreational users typically obtain cannabis through illegal means in states where they don’t have access to dispensaries/rec stores (including states where cannabis can be obtained via home growing or caregivers).

The numbers stem from an online survey conducted in June of more than 1,600 medical and recreational users across the country. The results of that survey are included in a report titled What Cannabis Patients & Consumers Want, which was released today.

The difference in consumer behavior based on the presence or absence of legal storefronts is staggering and certainly will help bolster legalization efforts going forward.

It’s important to note that far more recreational users currently buy marijuana via illegal means than medical patients, primarily due to lack of access. Medical cannabis is currently available via dispensaries in eight times as many states as recreational marijuana is via legal storefronts.

Certainly the cannabis black market can never really be entirely eradicated, even under the ideal scenario of full federal legalization. However, the size and influence of illicit markets can be reduced sufficiently so as to be rendered inconsequential, the figures show.

To that point, a key insight for legal marijuana entrepreneurs is the portion of users who actually move from the black market to legal sales (vs. those who never previously purchased from the black market but begin to patronize retail outlets once they open). Of the 67% of users who exclusively obtain cannabis legally in states where dispensaries/rec stores are open, just over half are actual black market conversions.

This initial rate of conversion is very promising for marijuana entrepreneurs, as is the overall level of interest generated by the wave of legalization across the U.S.

As dispensaries and rec stores become operational in additional states, more and more users will fully convert to legal sales. Also, at some point in the near future, a “critical mass” of all cannabis users across the country will have access to legal sales, which will drive the overall conversion rate even higher.

 Becky Olson can be reached at [email protected]

12 comments on “Chart of the Week: Black Market Marijuana Taking Big Hit in States With Operating Dispensaries, Rec Shops
  1. Jamie Lowell on

    I would agree that having safe, central locations for consumers to get cannabis- is a very desirable and functional way of facilitating activity that will take place with or without reasonable and productive regulations. However, it absolutely matters if the retail outlets are the creature of the free market or of a system designed to accommodate a small group of investors by using a tiered system similar to alcohol.

    A fair and level playing field via the free market and not the cartel or oligarchy schemes being proposed by investment groups without any practical knowledge of cannabis or recognition of existing working systems that are fair and open to competition- will result in higher quality and lower costs for the consumer. Everyone wins – not just the greedy ignorant investors who would, otherwise, control the market.

    • bongstar420 on

      The oligarch is powered by wealth…

      As long as your cut and your equipment gives you an edge, the money wins..erhem..the oligarch

  2. Rick Fague on

    I would have guessed that the percentage of people going legal would be lower, since the price disparity between black market and legal is still pretty wide in some places, but the survey says what the survey says.

    For better or worse, I suspect the black market will be with us for a very long time. Who knows, maybe eventually it’ll morph into the MJ equivalent of the craft beer industry.

    • Mike S on

      I just moved to Washington state. While the prices are higher (by quite a bit, imo) at the rec shops, I find that I still like the transparency that is a hallmark of the shops. Basically, buyers know what they are getting at rec shops and they don’t need to deal with flakey dealers and such that make the black market buying experience such a pain in the ass.

  3. Torch on

    “The numbers stem from an online survey conducted in June of more than 1,600 medical and recreational users across the country.” The online survey is bogus because it does not represent all users. It’s doesn’t make economic sense to pay a tax to the State to smoke weed available for half the price.

    • bongstar420 on

      You mean to say it doesn’t make economic sense to support schools and law enforcement with your discretionary recreational budget.

  4. WakeUpSheeple on

    I doubt these are accurate polling numbers. I bet if you had captured the age of the pollers you’d find they are all over 40+ years old and have an actual medical condition……which is probably about 20% of the total user base….its really recreational users aged 15-39 that very likely still get it on the black market…you just didnt poll them…

    It’s like saying a presidential nominee has captured 65% of the voting public in their campaign…the sad part is that only 30% of the total population in the US actually vote… 65% is really a biased answer there too..

  5. Lawrence Goodwin on

    What you call “the ideal scenario of full federal legalization” should be put in place tomorrow. In much the same way that alcohol Prohibition simply became too expensive to enforce (see the story of Al Capone’s domination of Chicago in the 1920s and the arrival in town of federal agent Eliot Ness), our very costly modern cannabis prohibition was imposed upon the nation by the U.S. Treasury Department via the 1937 Marihuana Tax Act. All four main sectors of the cannabis economy–Manufacturing, Medicine, Nutrition and Recreation–continue to be smothered by placement of the idiotic word “marihuana” in the Controlled Substances Act (CSA). This is an outrage! Call President Barack Obama and your federal lawmakers, inundate their phone lines and emails, demanding complete removal of the word “marihuana” in the CSA. Demand further the establishment, back in the Treasury Dept., of a renamed Bureau of Alcohol, Cannabis, Tobacco, Firearms and Explosives. That’s how the feds ended alcohol Prohibition, and that’s how they must end cannabis prohibition. By tomorrow. Let U.S. Treasury Department officials swallow the lies about “marihuana” along with their pride, so they can start collecting federal taxes on cannabis transactions nationwide (in all 4 sectors!) and institute proper regulation of this industry through the ACTFE. Eliot Ness figured out how to do it right with extremely dangerous alcohol products. So can the best minds among us today.

  6. Mariah on

    Well this isn’t really that surprising. Think about it – how many people still get their alcohol from the black market? None, or almost none at least. There’s no real reason to use the black market when you can just go to the store and get what you want.

    • WA Resident on

      Not true here in Spokane, WA. You get better weed for better prices in the stores. I can’t go to some shady ass person’s house and buy their basement weed anymore because I’ve been spoiled by quality. Also, when I can regularly get an eighth in a store for $20, why would I possibly get worse weed for more money?

      The 17% are either living in a place with inflated price due to novelty/tourism or they’re just bad with choosing how to spend their money.

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