In Colorado, Lower Legal Prices Drove Black Market Out of Business
By Rick Sobey
Local marijuana dealers have disappeared in Colorado over the last five years, but the underground grow market continues to thrive as traffickers ship illegal marijuana out-of-state, according to experts from the Rocky Mountain State.
Colorado in 2014 had a much faster legal marijuana sales rollout compared to Massachusetts, where legal sales started in November. However, Colorado still had an active black market in the first year with legal prices soaring, said Adam Orens, founding partner of Denver’s Marijuana Policy Group.
Then more stores opened and the price came down, he said.
“If Massachusetts expects consumers to purchase this in the regulated market, it has to be priced similarly and make it easy to get,” Orens said. “You can’t have all these barriers.”
The black market in Colorado for residents and tourists has been virtually absorbed by the regulated market as the price has come down, he added.
Nobody’s buying from their neighborhood drug dealer anymore, emphasized Peter Marcus, communications director for Terrapin Care Station, which has multiple marijuana stores in Colorado.
“That’s just not a thing that happens here,” he said.
Colorado lawmakers and those in the industry took steps to make sure retail prices would not exceed the black market by opening numerous retail facilities simultaneously after growers had time to produce a supply, Marcus said.
While the local drug dealer has been axed in Colorado, law enforcement officials continue to investigate the underground market -- where people grow huge amounts of marijuana to ship to non-legalized states, according to experts.
“In rural areas, where there’s dozens and dozens of legal cultivators, some people might think an illegal grow operation would blend in,” said Paul Seaborn, who taught the first-ever Business of Marijuana course at University of Denver.
Marijuana sales in 2014, Colorado’s first year, came in at $683.5 million. Then sales increased to $995.6 million in 2015; $1.3 billion in 2016; and $1.5 billion in 2017. Sales only inched up by about $38 million from 2017 to 2018, indicating an inevitable plateau.
Weekly sales in Massachusetts, launching with two stores last Nov. 20 to 25, started with $2.22 million. Purchases have gradually risen with more stores opening. Gross sales hit a new high of $6.1 million in the final week of March, boosted by people checking out the newly-opened NETA location in Brookline.