Is NY’s Approach to Weed Creating a New Black Market?
If you are a recreational cannabis user living in New York City, you have to love your new mayor’s attitude to weed. Mayor Eric Adams told attendees at a recent cannabis conference to go ahead and ‘light up’ while the state figures out how to regulate recreational use. He also encouraged cannabis users to ‘spend money’ on weed even though businesses cannot legally sell it yet.
Is New York’s approach, as encapsulated by Mayor Adams, creating new black market in the Big Apple? Before you shrug the question off as illegitimate, take a look at the problem California is having with its black market. The problem is very real; it is not the figment of some politician’s imagination.
Dwarfing the Legal Market
Numerous estimates over the years have made it clear that California’s black market is dwarfing the legal market. Black market cannabis sales still account for the lion’s share of all sales in the Golden State. It is not hard to understand why. Just ask legal operators who will tell you they cannot compete on pricing because taxes are so high.
Even legislators are starting to get it. A few of them have been calling for tax reductions in order to help the legal market compete. There have even been a few whispers of eliminating weed taxes altogether. That is not going to happen, but at least some people in California are talking about it.
How does this relate to New York City? By encouraging residents to purchase adult-use cannabis from illegal operators, city officials are helping those operators build their businesses. What is going to happen when the state finally gets its act together to start taxing these businesses and collecting licensing fees? How many of the operators will go legit? How many of them will continue to ply the black market?
Giving and Taking Away
The danger of NY’s approach lies in the problem of giving and taking away. Look at Prohibition. Prior to its enactment, alcohol was completely legal throughout the United States. Then congress took alcohol away from the people. Did that stop alcohol manufacturing? No. Did people stop going to bars and nightclubs to drink? No. Taking a legal substance away from the common man did not change consumption habits. It only made once legal behavior illegal.
New York State made a tactical error when they legalized recreational use without having industry regulations ready to go. They now find themselves in a position of telling businesses they cannot legally sell weed even though their customers can legally buy and use it. The conflict between legal and illicit sales should be obvious to anyone with a brain.
Utah represents the antithesis of NY’s carelessness. In the Beehive State, regulations have been thoroughly vetted to ensure that the medical market does not become a free-for-all. For the record, Park City medical cannabis pharmacy Deseret Wellness says that recreational cannabis is still illegal in the state. Only medical use is allowed.
No doubt the black market exists in Utah. However, it is probably a safe bet that the black market is smaller there than in New York City. It’s probably also safe to say that the state’s careful approach to regulation means recreational use is a long way off in Utah, if it’s ever approved at all.
In the Big Apple, residents are being encouraged to purchase recreational cannabis from unlicensed sellers. City leaders could very well be creating a whole new black market with this approach. It will be interesting to see how it all plays out once legal sales begin in earnest.