California has the biggest legal cannabis market in the world – it’s a larger economy than some small nations. But while the Golden State’s regulated market is massive, it’s illegal market is far bigger.
California has a big illegal cannabis market problem
Back in 2019, I quoted reports that there were 3,000 illegal businesses in the state. Other reporting from last year estimated that the illegal market was only double the size of the legal market. By one more recent estimate, 2/3 of sales are illegal market sales. This is not a good thing. You’d expect a state with such a robust market and appetite for regulation to actually do something about it. But it hasn’t. And it won’t.
Let’s back up and look at why we are in this mess in the first place. Cannabis is federally illegal. California only opened state recreational licensing in 2018. Before that, and with some exceptions for medicinal use, all cannabis was illegal. From the state’s point of view, there are really two big-picture ways to get legacy operators to come into the illegal market.
Option 1: Make the legal cannabis market easy to join
First, the state could have made it very
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