In 2023, the illicit cannabis market is alive and well. Even in states with medical and recreational use programs for adults and harsh penalties for offenders, the illegal cannabis market continues to thrive.  According to the CDC, marijuana is the most commonly used federally illegal drug in the United States. Approximately 18% of Americans used cannabis at least once in 2019. There are several reasons for this–let’s dig in.

What is the illicit cannabis market?

The illicit cannabis market is the illegal trade and sale of cannabis products, including CBD and hemp. This market exists both in states where cannabis remains illegal and in states with a recreational use market.  For example, recreational cannabis use has been legal in New York since 2021, with the first licenses issued to those “most impacted by the enforcement of the prohibition of cannabis or non-profit organizations whose services include support of the formerly incarcerated.” While this is a more equitable way to introduce a legal market, it creates long waits for licenses and red tape that some choose to ignore. Even now that licenses are being issued and legal dispensaries are opening across the state, officials believe there are more than 1,400 unlicensed dispensaries in New York City alone. 

Why does the illicit cannabis market exist?

In places where marijuana is legal, the prices at licensed dispensaries plus the state taxes levied on the products make it more economically feasible for consumers to shop illegally.  Accessibility is another factor. Let’s take the New York example–the closest licensed dispensary could be across town–maybe a subway ride, bus ride, and walk away–while an illegal shop is just down the block. Which one makes more sense for consumers to visit?  In states where cannabis remains illegal, the illicit market will continue to exist. For many people, especially older adults, medical marijuana has improved their quality of life, and the fact that the products aren’t easily or legally accessible means they will turn to the illicit market.

What are the risks of purchasing cannabis from the illicit market?

Buying cannabis from the illicit market carries several risks. A study commissioned in 2022 by the New York Medical Cannabis Industry Association tested 40 products from the illicit market in New York City for things like accurate THC levels and the presence of pesticides, e. Coli, salmonella, and heavy metals. The study found that nearly half of the products would fail at least one of the tests given to legal cannabis products.  Consumers who purchase from the illicit market cannot know if the products are accurately labeled, dosed, or safe for consumption. Consumers could also unknowingly support violent organized crime rings or find themselves in legal trouble if caught with illicit products. 

How prevalent is the illicit cannabis market?

It is challenging to accurately determine the exact size of the illicit market in the United States. However, it remains significant in states where cannabis is illegal or legal access is limited or burdensome. Using California as an example, the state saw $8.7 billion in illicit cannabis sales in 2019, compared to $3.1 billion in legal cannabis sales. However, it is projected that by next year, the legal cannabis market will overtake illicit sales, with $7.2 billion in legal cannabis versus $6.4 billion illegally.

Is the illicit cannabis market associated with organized crime?

The illicit cannabis market is often linked to organized crime—the potential for large profits and the risk of legal action means complex operations are necessary for success. However, the extent of organized crime involvement can vary depending on the specific region and context. Mexican cartels have a long history with the drug trade in the United States, and, more recently, Chinese investors, owners, and workers have emerged as a force behind the illegal trade. 

How does the illicit market impact legal cannabis businesses?

The illicit market can negatively impact legal cannabis businesses by undercutting prices and creating unfair competition. The unlicensed dispensaries are not subject to stringent testing, licensing, and other business fees, so the cost of doing business increases significantly for legal enterprises. These costs are passed on to the consumer. However, experts believe it is up to regulators to provide a pathway for illicit businesses to become legal. Shaleen Title, a former commissioner of the Massachusetts Cannabis Control Commission and founder of the drug policy think tank Parabola Center, has seen the process of legal dispensaries take hold in Massachusetts: “The first year it was estimated that 90% of consumers were still in the underground market. Five years in, prices have dropped significantly. My guess is that probably 50% or more of sales are taking place in the regulated market. So if we see that consistent change, then I think we’re meeting the goals of legalization.” Further, the illicit market reduces the tax revenues that could support local public services and further regulatory efforts.

What are the efforts to combat the illicit cannabis market?

Many successful efforts in combating illegal cannabis revolve around legalization. Increasing legal access, implementing robust regulations, lowering taxes and barriers to entry for legal businesses, investing in public education, and promoting consumer awareness about the risks of the illicit market all play a significant part in changing attitudes toward cannabis and the importance of a transparent, safe market.

Can the illicit market be eliminated entirely?

Eliminating the illicit cannabis market in the US is a complex challenge. However, effective regulation, fair taxation, public education, and expanded legal access can significantly reduce its impact.

Is purchasing cannabis from the illicit market safe?

Purchasing cannabis from the illicit market carries inherent risks, including the lack of quality control, potential contamination, and the absence of consumer protections. It is generally safer to obtain cannabis from legal and regulated sources.  However, we know that even legal cannabis carries consumer risks–Qredible is working to change this.  

How can individuals contribute to combating the illicit cannabis market?

Individuals can combat the illicit market by supporting legal and regulated cannabis businesses.  If your home state doesn’t yet have a legal industry, advocating for cannabis reform, social equity, and education can make a significant difference. And, of course, engaging in responsible consumption practices within the bounds of the law protects yourself and your community.

In the Cannabis Market? Get in Qredible.

The illicit cannabis market carries risks for everyone–from consumers to legal cannabis business owners. If you’re part of the cannabis market, it’s time to get in Qredible, the first platform designed to connect the entire CBD, hemp, and legalized cannabis supply chain.