Colorado's Marijuana Black Market Is Complicated
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Colorado's Marijuana Black Market Is Complicated
Posted by CN Staff on August 13, 2014 at 05:16:35 PT
By Matt Ferner
Source: Huffington Post
Colorado -- Depending on whom you ask, Colorado's marijuana black market has either vanished or expanded since weed was legalized in the state. Mexican pot farmers have anecdotally said they're taking a beating, but one illegal Colorado drug dealer told The Washington Post that his business was growing. So which is it?Turns out that's a tough question to answer. A comprehensive market analysis, released by the Colorado Department of Revenue's Marijuana Enforcement Division in July, looked at supply and demand in the state's marijuana market, but the report did not offer granular detail about the supply side.
So The Huffington Post spoke exclusively with Adam Orens, one of the lead researchers on the analysis, who broke down the supply side numbers -- including the current best guess on the size of the black market.The report released last month is likely the world's first post-legalization study of a marijuana marketplace. It was prepared by the Marijuana Policy Group, a collaborative effort of BBC Research & Consulting -- Orens' employer -- and the University of Colorado, Boulder, Business Research Division.Researchers found a lot of demand: an estimated 130 metric tons a year, "much larger than previously estimated," the report notes. Of that 130 metric tons, the study indicates that 77 came through two regulated supply channels -- 55 metric tons, or 42 percent of the total, from medical marijuana shops and 22 metric tons, or 17 percent of the total, from recreational marijuana shops.But the report describes the remaining 53 metric tons as supplied from outside the main regulated framework, without any additional information about those segments of the market.Orens noted that all "these numbers are moving, these numbers are changing,Ē and that there is a preliminary nature to the data in the report, which tracked Colorado's marijuana marketplace for the first three months of 2014. Researchers used exact numbers when possible but also relied on some educated guesswork when clearer data were not available.That 53 metric tons, Orens said, could be separated into three distinct suppliers: medical caregivers, home growers and the black market.Medical caregivers who facilitate the use of marijuana and home cultivators of recreational pot constitute what the report calls the "gray market," because these supply channels, while legal, are less regulated. According to Orens, 34 metric tons, or 26 percent of the total demand met, was attributable to caregivers, and 12 metric tons, or 9 percent of the total, came from home growers."The caregiver and home grow market data is based on some assumptions," Orens said. Researchers made rough estimates of how many patients each caregiver facilitated, how many home growers there are in-state and how much yield home growers -- with their wildly varying cultivation skills -- can squeeze out of their plants, among other things.Neither caregivers nor home growers are directly monitored by the Marijuana Enforcement Division. Caregivers fall under the regulatory purview of the Colorado Department of Public Health and Environment. Researchers weren't able to obtain exact data from the health department in time for the study, so they made their estimates based on public information. Home growers merely have to notify the Marijuana Enforcement Division that they are present and growing, but aren't otherwise regulated by the division, explained Natriece Bryant, communications specialist at the Department of Revenue. That means the level of detail available about the fully regulated market -- in large part due to the state's seed-to-sale Marijuana Enforcement Tracking, Reporting and Compliance (METRC) system for retailers and commercial growers -- just isn't there for the gray market.To estimate the black market, the researchers then subtracted the total metric tons supplied legally -- through medical marijuana shops, retail stores, medical caregivers and home growers -- from the total amount supplied. According to Orens, the black market came to 7.5 metric tons, or 5.7 percent of Colorado's marijuana supply."We did not use our survey to ask individuals how they obtained marijuana," Orens said, adding, "We did not conduct a separate supply-side study nor did we target surveys to black market demand. If there was more time and resources, that type of surveying would be useful, but very difficult to obtain."While this is just preliminary information on the first three months of legalization, far too little time to measure any emerging trends, the study suggests a small black market survives amid a huge regulated market.The report concludes that it remains "unclear how large the black market is in Colorado and how the introduction of retail marijuana will affect its size." The authors speculate that if the price of unregulated pot remains as high as it was in early 2014, "the black-market production could continue" -- albeit only if that higher price remains competitive with the regulated market. But they argue that the regulated market is "likely to reduce market share held by the black market. If prices are similar, consumers would likely shift to the regulated market because the selection, quality, and product safety is generally much higher at a licensed retail provider."There is some anecdotal evidence that supports the numbers supplied by Orens about the size of the black market in Colorado. Earlier this year, The Washington Post spoke to Mexican marijuana farmers who said that the wholesale price of marijuana is falling, due in part to rapidly changing laws in the U.S., and driving them out of the cannabis trade. News site Vice also recently spoke with retired federal agent Terry Nelson, who said that legalization is "hurting the cartels," which aren't "able to move as much cannabis inside the U.S. now."A 2012 report by the Mexican Competitive Institute, a Mexican think tank, forecast that recreational marijuana legalization in Colorado, Washington state and Oregon might cut into drug cartels' profits by as much as 30 percent.However, there have also been stories of Colorado marijuana being found in drug busts large and small in more than two dozen other states and of a thriving black market still in existence in Colorado. In other words, it's entirely possible that the black market is larger than the data from the Marijuana Enforcement Division report suggest.Marijuana that is purchased legally and then diverted into the black market adds a complicating factor. And there is anecdotal evidence that out-of-staters are buying pot in Colorado and then heading home, where their personal-use stash is illegal.Yet legal weed sold into the black market may also be undercutting illicit drug cultivators or the cartels from selling their product in Colorado. That may not reduce the size of the black market, but it certainly changes its composition.Due to the difficulty of sizing up illicit drug sales, there's not even a clear picture of just how large Colorado's marijuana black market was before legalization -- making it all the harder to evaluate how legal sales have affected it."This is our best effort, but itís not rocket science," Orens said of the data. "Itís some educated guesses, it is incomplete data, and some of the data is unknowable and untraceable."A more detailed assessment will become possible in time, but Orens warned not to expect perfect knowledge."Once METRC has a full year under its belt, and even after a year itíll probably take a second year for the data to get really good, then we'll have a clearer picture," said Orens. "Weíll know the medical and recreational markets with certainty. But the other channels, the gray and black markets, will still be a little bit murky."Source: Huffington Post (NY)Author: Matt FernerPublished: August 13, 2014Copyright: 2014, LLC Contact: scoop huffingtonpost.comWebsite:  -- Cannabis  Archives
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Comment #2 posted by Sam Adams on August 13, 2014 at 08:45:58 PT
lying continues
5 percent? From what I've heard the black market is more like 85% in Colorado. is this legislator trying to improve that by lowering taxes, fees, and nuisance regs? Or is he trying to kill the medMJ program and force even more people back into the black market?
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Comment #1 posted by The GCW on August 13, 2014 at 07:41:17 PT
Long live the GREEN market.
I get the feeling all this effort will not be used to increase freedom to use cannabis but rather to control the plant and citizens who use it and profit from the plant instead.All systems indicate cannabis is here for the duration and exorbitant control of the plant is and has always been easily avoided.If policy is created to change the historic discredited environment it benefits society to be reasonable reducing constraints and simultaneously acknowledging cannabis poses significantly less harms than prohibitionists have claimed.Taxing the relatively safe plant as though it is more harmful than cigs or booze isn't going to gain respect or trust but rather extend contempt.Thus the black market in Colorado isn't black but rather GREEN.The GREEN MARKET IS THE NEW BLACK MARKET.The more regulators / prohibitionists screw with the people, the stronger the GREEN market will remain.And long live the GREEN market because no matter how much regulation is reduced, there will always be a GREEN market.
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