Black market marijuana coexists with legal marijuana in Oregon, and competes with it in California

In a growing number of U.S. states, it is legal to grow and sell marijuana. But the price remains highest in the states where it is illegal, and so black markets persist alongside legal markets. 

Politico has the story:

‘Talk About Clusterf---’: Why Legal Weed Didn’t Kill Oregon’s Black Market. Legalization was supposed to take care of the black market. It hasn’t worked out that way.  By NATALIE FERTIG

"Over the last two years, there’s been such an influx of outlaw farmers that southern Oregon now rivals California’s notorious Emerald Triangle as a national center of illegal weed cultivation. Even though marijuana cultivation has been legal in Oregon since 2014, Jackson County Sheriff Nate Sickler says there could be up to 1,000 illegal operations in a region of more than 4,000 square miles. The Oregon Liquor and Cannabis Commission, which oversees the state’s $1.2 billion legal cannabis industry, estimates the number of illicit operations is double that.

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"What is happening in the woods of the southern Oregon represents one of the most confounding paradoxes of the legalized marijuana movement: States with some of the largest legal markets are also dealing with rampant illegal production — and the problem is getting worse. Oklahoma, where licenses to cultivate medical marijuana are some of the easiest to get in the nation, has conducted more than five dozen raids on illicit grows since last April. In California, meanwhile, most of the state continues to purchase cannabis from unlicensed sources — straining legal operators already struggling with the state’s high taxes and fees.

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"One of the underlying promises for legalizing cannabis was that legalization would make the illegal drug trade, with all its attendant problems of violent crime and money laundering, disappear. But 25 years into the legalization movement, as 36 states have adopted some form of legalized marijuana, the black market is booming across the country. Legal states such as Oregon and California — which have been supplying the nation for nigh on 60 years — are still furnishing the majority of America’s illegal weed.

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"Oregon’s weed is some of the cheapest in the nation, and Oregonians predominantly purchase weed from licensed dispensaries. Economist Beau Whitney estimates that 80-85 percent of the state’s demand is met by the legal market. But most of the illicit weed grown in southern Oregon is leaving the state, heading to places where legal weed is still not available for purchase such as New York or Pennsylvania — or where the legal price is still very high, like Chicago and Los Angeles. In Illinois, which legalized medical marijuana in 2013, only about a third of the demand for cannabis is satisfied by legal dispensaries, according to Whitney. Differences in tax rate and regulations plays the major role in differences from state to state, Whitney explains.

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And in California it appears that high taxes on the legal market allow the black market to exist alongside. NBC has the story:

Craft cannabis industry in California is 'on the brink of collapse,' advocates say. Small cannabis growers and operators say the state's hefty taxes are shutting them out despite promises to expand the industry and make it more inclusive.  By Alicia Victoria Lozano

"Last month, marijuana companies warned Newsom in a letter that immediate tax cuts and a rapid expansion of retail outlets were needed to steady an increasingly unstable marketplace shaken by illicit dealers and growers.

"More than two dozen cannabis executives and legalization advocates signed the letter after years of complaints that the heavily taxed industry is unable to compete with the widespread illegal economy, which offers far lower consumer prices and has double or triple the sales of the legal market."