Washington Has Been Much More Successful Than California in Displacing the Black Market for Pot
A new report indicates that Washington, which legalized recreational marijuana in 2012, has been much more successful at displacing the black market than California, where voters approved legalization in 2016. In a 2021 survey by the International Cannabis Policy Study (ICPS), 77 percent of Washington cannabis consumers reported buying “any type of marijuana” from a “store, co-operative, or dispensary” in the previous year, while 17 percent said they had obtained pot from a “dealer.”
The share of Washington consumers who report buying marijuana from a “store, co-operative, or dispensary” is higher than the average for states that have legalized recreational use, which was 57 percent in 2021, according to a nationwide ICPS survey. Washington’s Liquor and Cannabis Board (LCB) paid for the ICPS report on cannabis consumption in that state, and the ICPS has not published California-specific survey data. But calculations based on estimated total consumption and legal sales suggest that the black market accounts for somewhere between two-thirds and three-quarters of marijuana purchased in California.
California’s striking failure to shift consumers from illegal to legal dealers is largely due to a combination of high taxes, onerous regulations, and local retailing bans. While Washington has a relatively high retail marijuana tax (37 percent, plus standard sales taxes), in other respects the state has made it easier for licensed suppliers to compete with illegal sources.
A 2022 study from Reason Foundation (which publishes Reason) notes that local restrictions in California have created “massive cannabis deserts” where “consumers have no access to a legal retailer within a reasonable distance of their home.” Washington has more than three times as many legal dispensaries per capita as California.
In their book Can Legal Weed Win?, economists Robin Goldstein and Daniel Sumner of the University of California, Davis, report that prices for “low-end” marijuana in Washington are among the cheapest in the country. “Low-end retail prices in California are more than double the low-end prices in Washington State,” they note. Goldstein and Sumner describe Washington as a state with “relatively light regulations,” adding that there is “no clear reason that costs would be lower in Washington State unless the differences were based on regulations.” After all, “cost of production for other crops where markets are integrated—such as wine grapes, apples, and blueberries—are all simi
Article from Latest