How marijuana legalization played itself

In July, New York City Mayor Eric Adams convened police officials and media to proudly announce that the city had made terrific progress in its much-publicized crackdown on illegal marijuana shops.

Unlicensed shops had sprung up in empty retail storefronts with jaw-dropping speed after New York state legalized marijuana in 2021. There are the bodegas that keep THC products discreetly under their counters, the leaf-emblazoned “food” trucks, the folding-table operations, the brightly lit smoke shops packed with pipes, vapes, and THC-laced hot cheese curls as far as the eye can see. They have become so ubiquitous and so popular among the city’s cannabis users and tourists that officials have been playing a fruitless game of whack-a-mole with them for three years.

So Adams’s showy crackdown, dubbed “Operation Padlock to Protect,” seemed to be a success, with the city shuttering more than 700 shops and seizing tens of millions of dollars worth of weed and THC-laced products. There’s only one problem: There are thousands more stores still operating.

In many ways, that’s emblematic of how marijuana legalization has spun wildly out of the control of states, more than two dozen of which have now legalized recreational use. States’ efforts to create and then tightly regulate legal markets for pot have, ironically, made the black market for weed bigger than it’s ever been.

In California, which legalized recreational marijuana in 2016 and oversaw its sale in retail outlets beginning in 2018, that market has manifested as countless illegal suburban grow operations — many alleged to be connected to organized crime. They’re cultivating more weed than residents of the state even want to buy and funneling it (in violation of federal law) to buyers across the country.

In Oregon, which legalized in 2014, it looks much the same. In Washington, DC, where recreational weed sales were never legalized, there are an estimated 100 illegal weed shops, 10 times the number of licensed medical dispensaries, according to its city officials. And in midwest Michigan, where legal sales have surprisingly outpaced even California’s, illegal growers flourish, and courts and prosecutors are reluctant to quash them — if they even could.

The intensifying battles against an untamable black market come just as the country inches closer to big federal changes that could open the door to nationwide legalization. The Drug Enforcement Agency, at President Joe Biden’s behest, is considering whether to reclassify cannabis from a drug on par with heroin to one recognized as having moderate-to-low potential for physical and psychological dependence, like ketamine or steroids. The change would leave the drug still highly regulated but loosen restrictions on access. And both presidential candidates are signaling support for a massive change on federal regulation of the drug.

What’s happening in the states that already allow recreational marijuana offers a startling glimpse at what it might actually look like to fully legalize the drug across the US. Which is to say, messy.

Mostly, it reminds us that drugs — and those who grow, sell, and use them — have a way of being resistant to the machinations of policymakers. That was true at the height of the war on drugs and remains true now, even when the policies are markedly friendlier.

The rise of the black market has, in many ways, blindsided states.

States that had hoped to rake in tax dollars from marijuana legalization are instead seeing their legal markets soften. Take Colorado, once a national model of how a state could legalize weed and also profit wildly from it. It made an estimated $1 billion in tax revenue in the first five years after it legalized retail sales in 2014, money it pledged to put toward education. Now, that revenue is dwindling, decreasing by 11 percent in just the last year, according to a state forecast.

The truth is, most buyers don’t really care whether the shop selling their THC-laced spicy cheese snacks is licensed, but they’re fully aware when they have to pay an additional $20 in taxes.

“There’s more public acceptance and interest in the plant, and so [illegal] situations are of course going to continue to thrive — especially if the regulated market is essentially overregulated … and there’s a price difference,” says Jason Ortiz, a founder and former president of Minority Cannabis Business Association and director of strategic initiatives for Last Prisoner Project, which calls for an overhaul of the nation’s drug laws.

Still, because the laws of supply and demand apply to marijuana, too, the price of even the licensed good stuff has also dropped precipitously in state after state, driven in part by black market products.

That has infuriated licensed shops and growers, and sapped enough of their potential income that in California, for instance, the number of legal marijuana growers and brands is down 70 percent — and many shuttered companies owe millions in back taxes to the state, according to reporting by SFGate. And if the black market has dashed the dreams of many a weed entrepreneur, it has also caused another surprising turn of events.

The rise of brazen, unlicensed marijuana sellers is a relatively new phenomenon, probably driven in part by growing public acceptance of marijuana and the relatively easy access to pot being cultivated for legal sale in dozens of states. There is something eerily familiar, however, about the attempts to quash them.

The last time most of us saw law-enforcement agents posing on the local news with confiscated drugs and boasting about successful drug raids, it was the height of the war on drugs.

But in state after state, and for advocates across the country, cannabis legalization was, by design, supposed to undo the injustices of that era. It was supposed to reduce criminalization, bring about the release of people convicted of nonviolent drug offenses under harsh, antiquated laws, and even provide business licenses to formerly incarcerated people to participate in the future of the market they helped to create.

But experts Vox spoke with questioned whether the licensing infrastructure set up by states would have ever encouraged illegal sellers to get licensed. In some ways, it was short-sighted legalization policies and nearly-impossible-to-meet regulations that created the perfect storm that states find themselves in today. New York, for example, took more than a year to license a single seller, which sent many weed-seekers right to unlicensed sellers instead.

“We have a limited, regulated access model, and that did not provide opportunities for all the people currently selling weed to go legit,” says Ortiz, who worked on Connecticut’s legalization effort, which he now calls nothing short of a debacle. “When you do that, you are practically guaranteeing that a lot of the folks in the illicit market will stay there.”

States such as Connecticut and Massachusetts also legalized despite not having much of a strong agricultural base for actually growing marijuana; illegal sellers filled the gap by simply bringing in better weed from other states.

Advocates like Ortiz say the only fix now is no longer to try to stymie the trafficking or illegal shops, but full federal legalization and more licenses.

Instead, states are wrestling back control of the market through raids like those in New York, and DC, and California, and Oregon, and — well, you get the picture.

“States and cities are trying to build a market that’s unnatural. We’ve always had a cannabis market; it’s grown on the West Coast, it’s brought to the East Coast and other parts of the country, and that market worked,” says Rafi Aliya Crockett, who was an appointee on Washington, DC’s Alcoholic Beverage and Cannabis Board until 2022. Now, states are trying to stop that market to ensure that licensees are rewarded, she says, “by knocking out their competition.”

Crockett left the regulatory board frustrated over enforcement. “It’s the drug war 2.0,” she says. “And we’ve decided who are going to be the winners and who are going to be the losers.”

In 2019, a rash of vaping-related illness broke out across the US, killing several dozen people.

According to the Centers for Disease Control, most sufferers reported smoking not just e-cigarettes before getting ill but THC vapes specifically. At the time, Vox’s Julia Belluz wrote: “The agency isn’t tracking whether people were using legal or black market sources to vape, but the data we have from states suggests it’s overwhelmingly illicit.”

The deaths were a reminder that while buyers may not make a distinction between black market products and regulated products sold at licensed shops, the difference between them can be stark. DC’s Alcoholic Beverage and Cannabis Administration, for example, began testing drugs confiscated from unlicensed sellers and reported recently that it had found methamphetamines in marijuana flower.

Cases like these — and the slew of illicit shops padlocked by police on the local news — have the potential to alarm Americans who have only just begun to support the notion of legalization, and provide fuel for those who are opposed to it.

And they come as a growing number of reputable sources within medicine and the scientific community sound the alarm about increasingly potent products sickening users. There’s almost no doubt that at least some of those products are illicit and unregulated. As a report from the National Academies of Sciences, Engineering and Medicine recently noted, the patchwork laws from state to state have contributed to the risks.

In that way, the black market could backfire against the very legalization movement that has allowed it to come out of the shadows.

There is a truth about the marijuana black market that we ought to acknowledge.

The legal cannabis market is not even 15 years old. But the illegal market is nearly 100, going underground after the US officially criminalized marijuana in the 1930s. It is nimble.

Perhaps it was naive to ever believe that a legal market would stamp it out for good. What was harder to foresee was the black market’s roaring growth in the shadow of that legalization. Now, in the battle for consumers, it just might win.