A look into california’s black market or whatever
The docu-series Murder Mountain on Netflix depicts the dark side of the cannabis industry, showing hippies with handguns; camo-clad rural armies brandishing AK-47s, demonstrating how isolation, opportunity, and outlaw mentality have fueled Humboldt County’s renegade cannabis grow operations for decades. The series ends with legalization taking full effect: one-time fugitive weed growers now have binders full of documents with all of their licenses and permits in neat order. Others who refuse to adapt to legalization or simply can’t afford the new compliance fees are essentially pushed out of the industry by legally-compliant operations and increased pressure from law enforcement.
But how much has actually changed since voters approved Prop. 64, the ballot initiative that legalized recreational, adult-use cannabis?
One aspect of cannabis legalization that has garnered overwhelming support from voters is the potential to take profits away from the illegal drug market and invest that money into the state’s coffers. In theory, by regulating and taxing cannabis, voters are ensuring that cannabis profits benefit the public instead of funding cartels, gangs, and run-of-the-mill dealers (yes, even your weird hippie friend who slung eights from their college dorm). But the reality of the cannabis market is more complicated, more nuanced, and – to put it bluntly – legalization hasn’t done much to stop the illegal and untaxed sale of cannabis.
Why Is There Still A Market For Illegal Cannabis?
California has always been an epicenter of the cannabis trade. Over ⅘ of the cannabis grown in California in 2016 was transported across state lines – 2.5 million pounds consumed in-state, vs. 13.5 million pounds grown in total. By some estimates, CA growers have historically produced up to 80% of the country’s black-market cannabis – meaning anytime anyone across America buys a bag of weed from a dealer, there’s roughly an 80% chance that that gram or eighth was grown in the Golden State.
And while officials have cracked down on illicit grow ops, many long time black-market growers say business is now better than ever.
That demand for black-market cannabis has two fronts: consumers who are sick of paying the hefty taxes in licensed dispensaries (as high as 45% in some counties), and growers who can’t afford to comply with the new legal market regulations.
Some argue that the state is at least partially to blame. When voters approved Prop. 64, the proposal to legalize recreational cannabis, they approved very specific language that limited growers to one acre of cannabis operations on a single property with a single growing license. This was part of a five-year moratorium on large-scale cannabis cultivation intended to give small farmers a competitive edge against big agricultural interests with corporate money. But after voters already approved the measure, legislators released new “emergency regulations” on the cannabis industry which allowed individuals and corporations to stack as many small-cultivator grow licenses as they could afford without any cap on total cannabis acreage.
Some in California have alleged that elected officials have effectively doublecrossed small- and mid-size cannabis farmers by courting their votes with false promises of acreage limitations. State Senator McGuire and Assemblymember Wood went so far as to write a letter to CalCannabis, a division of the Department of Agriculture, arguing that “a lack of a cap on small cannabis cultivation permits is undermining the desires of California voters expressed through Proposition 64.”
Many long-time growers who spent years working in the shadows had hoped to go the legal route once recreational cannabis was legalized. But the reality is that many farmers simply can’t afford the high cost of permits or the new requirements on zoning and facility maintenance/security. Getting a farm up to code can cost farmers hundreds of thousands of dollars, and in some regions of the state, securing a cultivation license itself can cost up to $80,000 in annual fees.
It didn’t take long for “big canna” to buy up the available permits. By February 2018, 10 growers already owned 30% of the state’s 250 issued permits.
This so-called “green rush” has forced many small farmers outside of the industry that they helped pioneer. As of April 2018, only about 6% of the state’s estimated 50,000 growers had acquired the proper cultivation license to enter the legal market.
Until the state works cooperatively with small farmers – and lowers the taxes that consumers face at the cash register – there’s no clear sign that the illicit cannabis market will dry out in California any time soon.