I’ve read there is still a huge black market for cannabis in Oregon. What gives?
Yes, there is a large black market, has always been, and will be for a while here in Oregon. There is also a dark gray market, an off-white market, and many shades between. As a general concept, the further cannabis gets from the grower, the darker the market.
Right now, Oregon probably grows about four or five times the amount of marijuana that is consumed in state. (It’s not like we aren’t trying; there’s just too much pot.) A recent study estimates that just 30 percent of all pot transactions are state-approved. Much of the surplus weed goes from sea to shining sea, but especially to hubs like Illinois, Minnesota, New York, and Florida. Because Oregon weed is an excellent brand, demand is high nationwide.
Much of Oregon’s exported weed is grown in two southern counties: Jackson and Josephine. And much of that weed is straight-to-black market—e.g., a pound of local weed may sell for $1,000 here, and re-sell somewhere like Texas for $7,000. Other transactions may be grayer and comparatively benign—e.g., a pound of weed grown under the medical program may be sold to the cardholder’s friend, at friendly prices.
As with any commodity, the blacker the market gets, the higher the price for weed. This is because we compensate dealers for increased risk of arrest, the cost of turf, and so on. One day, when weed becomes legal nationwide, the black market will probably look similar to those for other controlled substances, like tobacco and booze. Today, a few people still buy loosies and moonshine, but most of us go to the store.
It will be a while before Idaho, Texas, and other miserable states change their laws, so Oregon attempts to moderate the black market in three primary ways: law enforcement, supply, and taxation. Oregon needs to improve its enforcement, and turkeys like Jeff Sessions point to this as evidence that the program must end altogether. This argument ignores the demand side, though, where federal prohibition has created an irrepressible national market for Oregon weed.
On supply, we’re doing better. The goal here is to have enough legal weed so that no Oregonian needs to go off-system. We’re close on that one, but issues with state-mandated testing and license approval have caused temporary shortages. Right now, weed is sold before it’s been grown—at least in the OLCC system. This should even out by 2018.
As for taxation, the goal is to generate revenue but keep prices low. When prices drop and stay below the black market, the black market disappears. The last people to leave will be the heaviest cannabis users, who are generally most price-sensitive and accustomed to informality. When all of those folks are finally going to the store, the black market will be gone—at least for Oregon sales. And when the national laws change, the black market will dissipate altogether.