As someone who has been writing about cannabis issues since 2009, it’s always gratifying to see the things those in the legalization movement have been saying for decades being proven true in the real world now that legalization is becoming a reality.
Marijuana legalization advocates have long said that legalization will undercut the black market, reducing criminal profits and lessening their ability to sustain violence in pursuit of their goals. And this is exactly what’s happening.
Mexican cannabis farmers are reportedly now only getting about $30 per kilo, a big drop from the $100 a kilo they used to get. And this is with just four states and Washington D.C. legalizing for recreational purposes, along with the 20-plus medical marijuana states. Imagine what nationwide legalization in the U.S. will do to the black market in Mexico.
As supply increases north of the border, the need for supply from south of the border becomes less necessary. While Mexican marijuana used to account for some two-thirds of U.S. supply, it now accounts for less than a third.
This is the market at work. It didn’t take a psychic to see it coming, just anyone with a basic understanding of supply and demand and the advantages a legal supply has over an illegal supply. A legal supply in the U.S. will always dominate an illegal supply from farther away, as long as the prices and quality are competitive. Even if the black market cannabis remains cheaper overall, it still comes with too much risk for consumers.
The marijuana black market is taking a serious beating right now, and the beating will only get worse as more states legalize and allow legal growing and retail sales. It will never completely go away; some people simply like and trust the person they buy from. But the cannabis black market will shrink to a point of insignificance — just as we said it would.