21 states have legalized adult-use cannabis, another 10 have decriminalized its use, and medical cannabis is legal in 37 states. This cannabis legalization process began over 25 years ago, with the most substantive policy changes occurring in the last 10 years. This change in approach has provided a roadmap for new states, local governments, and law enforcement to learn from one another and develop best practices that leave room for unique political and socio-economic differences between communities while streamlining the implementation of the medical and adult-use markets.
While the expansion of legalization has disrupted the illicit market for cannabis, the illicit market continues to exist, posing a threat to the regulated market because in some cases it is competitive in size and scope to a state’s legal markets. It also remains a threat to public health and safety, making enforcement against illegal operators important, but complex and sometimes ambiguous. Finding solutions to curbing illicit activity is paramount to the industry, consumers and law enforcement.
Why Does the Illicit Market Still Exist?
The uphill battle law enforcement faces in diminishing the illicit market is compounded by the reality that consumers often see it as the cheaper option, as it circumvents hefty excise and consumer taxes, which can make legal cannabis twice as expensive as illicit products. The barriers to market entry for illicit production are also much lower, as illicit dispensaries can launch with as little as a few thousand dollars, whereas getting legal operations off the ground can require several million dollars as well as significant time spent waiting for requisite permits and licenses from state and local authorities.
Additionally, large portions of the country have not legalized adult-use cannabis, which has opened the door to counterfeit products and illicit business-to-business activity. Some states have had thriving illicit cannabis markets for decades, and even as enforcement tightens, they’re yet to be replaced by a robust, fully regulated adult-use market. While the regulated market has clear legal advantages over the illicit market, it remains much more expensive.
What Challenges Exist for Enforcement Against Illegal Operators?
The legal market also poses unique regulatory challenges for law enforcement, ushering in a paradigm shift with unprecedented obstacles. Law enforcement must now adjust to the reality that in many jurisdictions, the possession of cannabis is legal, but the patchwork of differing laws and types of cannabis in municipalities across the country creates confusion in determining where cannabis is legal and which types of cannabis are legal. Fortunately, states where cannabis is legalized have adopted software systems to assist in making this determination. The illicit market is so vast, however, that significant resources will need to be deployed to fully conduct enforcement against illegal grows.
There are also significant political and societal pressures complicating law enforcement’s ability to regulate illicit cannabis, such as a national movement to redirect resources from police departments, as well as eroding public trust between law enforcement and their local communities. In addition, the myriad regulatory frameworks legal markets must adhere to create confusion and uncertainty in compliance requirements, complicating transparency between law enforcement and the regulated community attempting to act in good faith.
Because it can sometimes be difficult to distinguish between legal and illicit cannabis, not only is law enforcement stuck attempting to identify and disrupt a deep-rooted illicit market, but they’re not supplied with the resources and education to do so. Hemp, a class of cannabis with less THC than marijuana, is grown primarily for medicinal use and has been legalized federally. This has created a unique challenge for law enforcement, as there have been some examples in the past of officers confiscating millions of dollars of hemp mistaken for its illegal look-alikes. On-site or reliable roadside testing of THC potency would resolve this confusion, but such technology is not readily available for local law enforcement.
Furthermore, law enforcement simply cannot address the scale of the illicit cannabis market alone, as the number of illegal marijuana plants seized by the Drug Enforcement Agency rises each year while the illicit market continues to expand, with roughly 75% of revenue in the cannabis market originating from illicit sales. However, there is a path forward.
The Future of Enforcement
Because the adult-use cannabis market is largely uncharted territory, an unprecedented opportunity exists for law enforcement to collaborate with the industry. Cannabis consumers have much to gain from law enforcement and the regulated market working together. Building trust between the two to better understand compliance and regulatory frameworks is imperative. It will also be foundational to gaining an improved understanding of the illicit market – and how to combat it – as those who recently joined the adult-use market are likely to have insight and experiences with the illicit market that would greatly inform law enforcement’s efforts.
Building this trust and collaboration won’t be easy, and will require patience and vision. However, the opportunity for law enforcement and the adult-use market to work side-by-side to curtail the illicit market will make the cannabis industry safer, cheaper, and more accessible for all.
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