Black market may be marijuana legalization’s biggest challenge
Regulation drives up costs, but high costs drive customers away
First of two parts. Read the second part here.
STATE-LICENSED MARIJUANA stores began opening across Massachusetts two years ago, but it is difficult to say whether legalization has been a success or a failure because the bulk of cannabis sales continue to take place illegally.
An estimated 68 percent of Massachusetts marijuana sales this year have taken place outside of the state-regulated market, according to an analysis done for CommonWealth by cannabis market research firm BDSA. The inference is that it is cheaper and easier to buy marijuana on the black market.
A strong black market creates all sorts of challenges. Legalization sent a signal that marijuana is safe to use, but the safety that comes with regulation is lost if consumers are buying the product on the black market instead. The continuing existence of the illegal market also means the potential ties between problem usage and legalization are harder to identify and more difficult to control.
Edible marijuana products provide a good example. Massachusetts dispensaries are forbidden from selling to anyone under age 21 and cannot sell edible products that look like candies. Yet Mark Waltzman, chief of pediatrics at South Shore Hospital, said since legalization he has seen an uptick in cases at the hospital involving children buying edibles off the internet infused with THC, the psychoactive ingredient in marijuana. The emergency room at South Shore Hospital treated one child who ate a THC-infused fruity pebble marshmallow treat with a Fred Flintstone theme.
“There’s a perceived bias that these products are safe since they’re decriminalized in Massachusetts, and people are buying more products over the internet,” Waltzman said.
Safdar Medina, pediatric director at Tri-River Family Health Center in Uxbridge, said since legalization, he is seeing more kids using marijuana, including smoking, vaping, and eating edibles. Medina believes legalization itself, more than the operation of particular dispensaries, is contributing to youth use.
“Teens assume this is a safe thing…It’s the messages they’re hearing,” Medina said.
Britte McBride, a member of the state Cannabis Control Commission and a former legal counsel to the state’s Department of Public Safety attributes the strength of the illegal market to price and convenience. She said Massachusetts’s high prices are somewhat unavoidable because of the cost of complying with strict state regulations on security, testing, packaging, and labeling. If those regulations disappear, she said, “We’re taking away a big part of the entire reason for regulating it in the first place.”
McBride said she hopes the Cannabis Control Commission’s decision to soon begin licensing home delivery will address the convenience factor and incentivize more customers to buy legally.
More than half of Massachusetts cannabis consumers who responded to BDSA surveys in 2019 and 2020 said they got their marijuana from a friend or family member.
New research released by the Cannabis Control Commission on November 19, based on the International Cannabis Policy Study, found similarly that illegal sales remain strong. The study, which surveyed 1,143 Massachusetts residents in 2018 and 2,476 in 2019, found a sharp uptick in people buying from a legal dispensary, rising from 18 percent to 40 percent of users. Over the same time period, purchases through illegal internet mail-order or delivery services dropped.
However, there was not a statistically significant change in the number of people obtaining marijuana from friends or family – which is where two-thirds of users were getting their marijuana – or in those buying in person from a dealer. (Some users bought from multiple places – for example, from a friend and from a legal store.)
The Cannabis Control Commission and Attorney General Maura Healey’s office have recommended creating a multi-agency task force to address the illicit marijuana market, similar to a group set up to deal with illegal tobacco sales. A bill pending in the Legislature would let the Department of Revenue levy civil fines on illicit marijuana businesses. Lawmakers have not acted on either recommendation.
Meanwhile, records are mixed on how strongly the police are cracking down on illegal sales. According to the FBI’s crime database – which includes crimes reported by most municipal police departments but not the State Police or Boston police – arrests for marijuana possession have, unsurprisingly, gone way down post-legalization. There were just 191 possession arrests in 2019, compared to 477 in 2015. But despite the persistence of the illicit market, distribution arrests also declined precipitously – 442 arrests in 2019 for possession with intent to distribute, down from more than 1,000 in 2013 and 680 in 2015.
One argument made during the legalization battle is that a disproportionate number of those arrested for drug crimes are black and Latino. Of the 2019 arrests for marijuana possession recorded in the FBI database, 144 of those arrested – 70 percent – were white, and 44 arrestees – 23 percent — were black. For marijuana distribution, 235 people – or 53 percent of those arrested – were white and 187 people – 42 percent — were black. Data on ethnicity, showing how many arrestees were Latino, were not available.
Walpole Police Chief John Carmichael, a member of a board that advises state regulators on cannabis policy, said the police have been more lax about making routine marijuana arrests, choosing instead to focus on other drug violations or crimes, like distribution of opioids or fentanyl. Carmichael said he is seeing a “gray market” where people who grow or import marijuana are taking advantage of lax enforcement to sell it.There have been some high-profile busts of major marijuana distribution rings, and Trial Court data, obtained through a public records request, show that prosecutors have focused on larger-scale drug trafficking offenses, which require someone to be caught with at least 50 pounds of marijuana. (These figures are different from the FBI numbers because they also include distribution of hashish, and unlike the FBI data, include all charges filed in the state.) From fiscal 2015 to 2017, there were between 12 and 28 marijuana trafficking cases filed each year in state courts. That rose to between 39 and 46 cases annually from 2018 through 2020.
At the same time, the number of cases involving a charge of marijuana distribution, or possession with intent to distribute, dropped from just over 3,200 a year in 2015 and 2016 to 2,376 in fiscal 2019 and 2,065 in fiscal 2020.