MJBizMag August 2020 - 41

California's Illicit Cannabis Market
Profits
$3.1B
Licensed
2019
$8.7B
Unlicensed
873
Licensed
2,835
Unlicensed
$7.2B
2024
Projected
Source: BDS Analytics, Bureau of Cannabis Control, CannaSafe,
Los Angeles Times and the United Cannabis Business Association.
Colorado-based cannabis research firm BDS Analytics expects California's regulated market will eclipse the illicit market by 2024.
Licensed
$6.4B
Unlicensed
Dispensaries
the licenses more accessible. There's the
fundamental question that's driving this
whole thing, " Goldsberry added.
A dearth of local licenses in California,
Massachusetts and other states have
contributed to marijuana " deserts " that
allow the illicit market to thrive.
Some operators also point to cultural
issues-notably decades-old cannabis
growing traditions in states such as
California and Oregon-and consumer
disdain for what's perceived as the
corporatization of cannabis.
" Cannabis consumers at large are
ethical, socially responsible people,
and big cannabis makes us feel sick, "
Goldsberry said. " Turning the permits
over to corporate cannabis is a giant
turnoff for the cannabis culture. It's very
much part of what's keeping the illicit
market alive. "
That social conscience also
complicates enforcement measures
against the illicit market.
ILLICIT GONE LEGAL
Of course, legal operators want to see
bad operators punished-particularly
those who use dangerous pesticides
or sell to minors-regardless of
whether they are permitted. But not all
underground operators are nefarious.
Many are small growers with a passion
for cannabis and cultivate it cleanly.
Others are illicit dealers trying to keep
friends supplied.
In fact, many licensed business owners
are former illicit market operators
themselves who empathize with those
walking a mile in the shoes they used
to wear. Many operators, despite having
gone the legal route, still see cannabis
first and foremost as medicine-and if an
illegal source is a patient's only access to
safe cannabis, so be it.
" There's still a market for people who
go and find a pound of cannabis in
Humboldt County (California) and bring
it home and share it with their friends.
The cannabis isn't being tested, but by
looking at it and feeling it, smelling it
and even taking a little sip of it, you can
tell the quality. I'm not sure if we want to
get rid of that, " Goldsberry said.
Short of federal legalization-or at
least banking and tax reforms coupled
with many more states legalizing
recreational cannabis-little can be
done to eliminate the illicit market.
" It's an issue, and frankly, it's probably
going to remain an issue until cannabis
is legal nationwide and we can really enjoy
the economies of scale of interstate,
international commerce that'll bring
pricing down to a point where it'll be
virtually impossible for the illicit market
to compete, " Krane said.
But why wait for federal legalization
to compete with the illicit market? In
the following pages, Marijuana Business
Magazine shares insights and advice
from cannabis executives familiar with
this seemingly indomitable foe.
August 2020 | mjbizdaily.com 39

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MJBizMag August 2020

Table of Contents for the Digital Edition of MJBizMag August 2020