Leafly Report Shows that Black Markets Thrive Where Communities Are Opting Out of Legal Cannabis

​A new research study by Leafly and Whitney Economics concluded that communities that do not support legal cannabis sales are inadvertently supporting black market sales.

The Opt-Out Report 2022 project had analysts and economists examining a variety of sales, population, and adult market data from 14 states with operating adult-use retail markets.

The Leafly/Whitney team found that the more per-capita cannabis stores, the fewer street dealers. States with more legal, licensed, and regulated stores had far more success in putting illegal marijuana sellers out of business. Whereas states with fewer legal, regulated cannabis stores tended to have the strongest black markets.

Most of the legal recreational cannabis states allow local municipalities to choose if they want to opt out of allowing businesses, which the study found is effectively creating an economically protected illegal street selling zone, without competition from legal regulated sales.

Many local leaders vote to opt out of allowing legal regulated cannabis, because they assume this will keep it out of their community. But in reality, that’s never going to happen. People will always find a way to access weed. And in an unregulated market, black market sellers don’t worry about product quality or check for age verification.

Legal, regulated retail cannabis stores offer quality, lab-tested products. Consumers know they will find a wide variety of safe products, along with helpful staff in a legal environment. That draws people away from black market sales, and therefore creates an environment with far fewer illicit sales, and all the negative consequences that come with a black market.

​The research study’s report said that communities that opted out of allowing legal cannabis were indirectly encourage adult consumers to purchase illegal products. This, they found, is putting public health in jeopardy with untested products. They are also losing out on the tremendous tax revenue potential from legal sales. 

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