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Business, News, Research

Cannabis Research Explores What’s Better: The Illicit Market or Legal Market

Chane Leigh

by Chane Leigh

January 31, 2023 08:00 am ET Estimated Read Time: 6 Minutes
Cannabis Research Explores What’s Better: The Illicit Market or Legal Market

Despite the fact that the legal cannabis industry is growing, many people are still purchasing from the illicit market. A recent study investigated this matter and found that buying cannabis from the illicit market may be “better” than legal weed. The obvious reasons for choosing the illicit market over the legal market include the likes of easier accessibility and lower cost. However, the illicit cannabis market may be better than the legal market for reasons other than that. But what about the risks that come with illicit cannabis? 

Researchers Reach a Moral Conundrum 

According to Vikiana Clement, the former executive director of the Cannabis Education Task Force at Brooklyn’s Medgar Evers College and the researcher, purchasing cannabis from the illicit market may be the “true moral choice” depending on circumstances. Clement explains that these illicit cannabis operators perform better than their legal competitors on several metrics, including the “triple bottom line.”

According to Harvard Business School, the triple bottom line refers to “a business concept that posits firms should commit to measuring their social and environmental impact—in addition to their financial performance—rather than solely focusing on generating profit, or the standard “bottom line.” It can be broken down into “three P’s: profit, people, and the planet.” 

Obviously, the illicit market cannabis operators are doing so unlawfully. However, Clement states that the manner in which they operate is “actually what should be the models for business development in this industry.” Forbes explains that Clement has been working on the survey and research over the past two years and that more than 80 individuals were interviewed in New York City. Those who were interviewed included the likes of retailers, delivery services, and cultivators. Apparently, her research is still ongoing and has not been published yet, but Forbes states that “the findings are already clear enough to report.” 

The Findings on the ‘Traditional’ Cannabis Market

Clement’s research found that the illicit market, which Forbes and Clement refer to as the “traditional market,” is “far removed from the trope of a ‘corner boy’ drug dealer.” She found that business owners in the traditional market pay their employees well, provide good customer service, and are “deeply involved in the communities they service.”

When assessing the traditional market on the grounds of the three Ps, Clement found that they scored better than some of the Fortune 500 companies. Forbes states, “For consumers, then, choosing to continue to patronize the legacy-market [the traditional or illicit market] operator means spending dollars locally, with merchants who—generally speaking—are good business citizens, or at least better than the legal alternative.” 

Clement stated that “you have not found, at this time yet at least, the 5 or 10 blue-chip cannabis companies continuously doing that” in reference to good business operations. She added, “I very much respect how they operate as a business. People should copy them. And that’s not me taking from the heart. This is a data analysis.” The benefit of purchasing from the traditional market, known as the illicit market, appears to lie in the fact that locals will be spending their money locally. Annette Derandez, a Washington Heights resident, told Forbes,

“People should not be driving over the bridge to give MSOs their money. That’s taking money out of our communities. How are you going to have this guy deliver to you for years and years, he comes from the hood, he goes out of his way to make a business and be your supplier, and the minute [business] goes live in New Jersey, you’re going to take your business across the bridge? Leave him high and dry? You’ve got to support your plug in New York until the market opens. Cannabis is about community, and this money supports local communities.” 

Merging the Old and New Cannabis Industries

While Clement brings a fresh perspective into reasons why it may be better to purchase from the illicit market, can what she found really be applied to all illicit cannabis operators? Her sample size was localized to New York City and was rather small. Supporting local businesses is important for keeping cash within the local economy, but rationalizing the local market on such an argument may pull on heartstrings and promote the danger that comes with purchasing from the illicit market

While good illicit suppliers can be found, there are just as many dodgy and dangerous suppliers who contaminate products, mislabel products, mislead consumers, scam consumers, and may even be engaging in other illegal and more dangerous activities. Just as one can not say that all illicit cannabis operators are bad, one can not claim that they are all good. However, one aspect of Clement’s findings that we can agree with is looking toward those good traditional suppliers as models for the legal market. Perhaps this would be too radical of a suggestion for some, but authorities could approach those good, traditional operators and collaborate with them to establish an effective legal industry.

David Holland, a New York City-based cannabis law and criminal defense attorney as well as executive director of the National Organization for the Reform of Marijuana Law’s Empire State chapter, told Forbes, “I don’t see why people need to go to New Jersey for legal weed except for the novelty of it,” and that when one purchased on the illicit market, “you’re supporting local growers, for the most part” who have demonstrated responsible operations and support for the community. Once again, how can we be sure that all of these operations are responsible? Is there a manner in which authorities can weed out the bad from the good? 

While the most reported barriers to purchasing legal cannabis are the price and inconvenience, people may be motivated to continue supporting traditional operations out of loyalty and a desire to support locals. Regardless of the reasons for continuing to support the legacy markets (i.e., illicit/traditional markets), it appears that replacing the illicit market with the legal one will be far more challenging than one may think. It certainly does not help when there is an inconsistency in legal access points, with some locations being densely populated with dispensaries and vast areas without any at all. 

Post Your Comments

Terrance Manion says:

February 3, 2023 at 9:13 am

It seems to me (I have a medicann card and I occassionally buy street weed) that putting aside the legal question, the main reason I don’t buy all of my needs on the illicit market is that what I buy from licensed dispensaries is vetted for me. I see the paper trails created by the legal side of the business and am confident that, like most major U.S. industried centered around consumer’s ingesting, inhaling or drinking various food, drink and orally delivered meds that the producers of the cannabis/THC products that I buy and use are NOT poisoning me, purposefully or otherwise. People I know tell me that their weedguy manages his own production from starting plants or seeds to finished product. That does not, in any way, assure me that the guy doesn’t use bad ag chemistry, bad distillation/concentration chemistry or adulterants–hello, fentanyl!–to either “stretch” the product or otherwise increase profit at my health’s expense. I do not see that being an issue that is taken seriously. Sorry, but I’ll continue to buy legal, packaged product–until I can produce my own–which process I am hoping to begin soon.

Reply
Andy Milot says:

February 3, 2023 at 9:50 am

I buy my cannabis legally with my Florida medical card. But, the prices are high enough that going dope (buying a bigger batch for longer purchase intervals) is simply unaffordable. In addition to the prices, certain ‘traditional’ products aren’t available (that I’ve been able to find) to the willing purchasers anymore. Namely, Hashish. In the ’60s, Hashish was widely available from not only US grower/producers, but from international sources. I can’t even find well formulated production methods to create my own. I used to love multi-national sources like; Turkish Red, Iranian Black (the all time best), Moroccan Green, and so many others. Of course, back then, the reason for using hashish was for effect (mind altering), but no longer.. So, the article hints but doesn’t go far enough in discussing the real differences between ‘legal’ and ‘traditional (illicit) cannabis products.

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Greg says:

February 3, 2023 at 10:05 am

Thing is, it’s waaaay cheaper to buy off the street where you can an ounce for a couple hundred bucks. Couple hundred bucks at a dispensary doesn’t go very far.

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M.F. Laboo says:

February 3, 2023 at 12:39 pm

These are my main criteria: Quality, variety, accessibility, price. For the first three, my local dispensary has the edge. For the fourth, traditional sellers are losing their edge as market dynamics continue to evolve.

Quality means a robust tracking system that gives me some assurance that my herb is as represented and unadulterated, as well as the fact that my state mandates a full assay for THC and other cannabinoids as well as terpenes. You’ll never get that on the street unless the product has been diverted from legal channels and is still labeled and sealed.

Variety. My local dispensary typically has maybe 20 extracts, 20 concentrates, 20 edibles and 30 strains of flower on any given day. Most I’ve ever seen from a traditional marketer is maybe five strains at any one time, and rarely much variety with the other products.

Accessibility: I’m very fortunate. My dispensary is only 10 minutes away and open 9-9 seven days. Not everyone will be so lucky, but I’m not trying to advocate across the board, just saying accessibility is an important factor.

Now as to price. In many places, in the early days of legalization we’ve seen that street prices beat the dispensaries — as predicted by many. With the passage of time I feel there’s been a leveling effect where prices tend to equalize over the long term and the old dichotomy is fading. And again, I can only speak primarily of my local dispensary, but lately I feel they can beat the street price most times. They have regular daily sales, entire product lines at substantial discounts. This lets me get, for example, 30%-THC quarters for $30 on Thursday and 85% half gram carts for $25 on Tuesday. Week in, week out. Combine that with the other factors and I personally see no compelling reason to remain in the traditional market.

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stpidamrkin says:

February 3, 2023 at 5:00 pm

What is the difference between illicit and legal considering this market? Legal simply means the powers that be get their cut and illicit they don’t. Where is the victim or injured party under the title illicit? It’s all about the control and money. Has absolutely nothing to do with right, wrong, good or bad, legal or lawful. Show me the money.

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Michael Clark says:

February 15, 2023 at 7:37 pm

Thanks for the post on legal & illegal buds.
Very interesting.

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John Carlson says:

February 19, 2023 at 7:18 pm

Weed used to be really good back in the 80’s. Home growers and cartels seemed to do a better job. The genetics were far superior than what is available today as far as potency. There was a greater variety of effects from different strains than what is available today (they seemed to have normalized all the weed so that one strain is no different than another). You could get strains that felt like a roller coaster ride or strains that made you hallucinate, everything today is like smoking mid grade from before legalization. The flavors were much better, I go to a dispensary today and choke on the nasty stuff they are selling.

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