When Black Market Cannabis Is So Much Cheaper, How To Get People To Buy It Legally?
Black Market Cannabis Prices are so Cheap, How Do You Get People to Buy Retail? from CannabisNet on Vimeo.
One of the main objectives of cannabis legalization is to get rid of the illegal, predominantly Cartel controlled, cannabis market. The idea behind this objective is similar to what happened to illegal alcohol sales during Alcohol prohibition; where once legalized, the black market began to shrink drastically.
Under a legal cannabis program, it would technically be more difficult for illegal operations to compete with legal businesses because legal businesses would be protected under the law. This means a greater access for consumers and more controlled product (potency, purity etc) than the illegal alternative.
However, due to the novelty of cannabis legalization and the fact that one of the major arguments in favor of legalization is “Tax Revenue”, the executable plan of diminishing the black market cannabis becomes more difficult.
High taxes on cannabis makes the appeal to buying black market cannabis higher. In turn, many people turn to black market solutions to provide their weed for them, especially if they can save a few hundred dollars per month.
So what do you do to motivate the user to purchase legal weed as opposed to street weed?
The Difference between the “Grey Market” and the “Black Market”
Before we jump into strategies on how to reduce black market appeal, let’s first identify the difference between the grey market and the black market. This is a necessary distinction because the ‘intent’ behind the markets are very different.
Black Market Cannabis we all know. We have been dealing with it for decades now. Essentially, this is ‘for profit’ markets under the control of the ‘criminal element’. Of course, I could dive a bit deeper in the philosophy behind the ‘criminal element’, but that’s for another day.
So who are the main participants within the Black Market. We know for a fact that a vast majority of the ‘illegal cannabis’ or ‘ditch weed’ as the cannabis consumers call it, comes from Drug Cartels South of the border. Currently, many of these Southern Cannabis operations moved across the border and ‘illegal grows’ in national parks and what not have been on the rise.
The reason why Cartels are risking the ‘Northern Border’ operations is because the legal cannabis market has already reduced the price per kilo in Mexico by a large margin. Cartels realized that they couldn’t compete with “ditch weed” as people are more likely to spend $20 on a gram of supreme quality weed, as opposed to getting a shitty baggy for the same price.
Furthermore, the appeal of premium cannabis means a larger profit incentive despite the risk of growing on US soil.
The Grey Market is completely different than the black market despite the fact that the sales are still technically ‘illegal’. Grey market producers tend to be individual growers that sell to their direct social network. These are people who don’t necessarily do it for profit. They might just have some extra weed, a few regular buyers that aim to save a few dollars while still maintaining quality.
The grey market is very small compared with legal and the black market. Furthermore, while we would be able to diminish the size of the black market via legalization, the grey market will always remain the same – that is, unless you manage to drive the retail weed prices so low that it doesn’t matter if you buy from a friend or a dispensary.
How to Motivate Consumers to Buy Legal
Now that we’ve explained the different types of markets, let’s see how we can reduce the demand for the black market and motivate consumers to buy legally.
Price is the major factor when it comes to black market appeal. The only reason why legal prices are so high is due to the excessive taxation of cannabis. However, this is a tricky situation since ‘taxing legal weed’ is one of the primary arguments for legal cannabis.
So how do you balance the two so it makes sense both for the government and for the individual consumer to go legal?
A reduction in excessive taxation is an absolute must. If legal cannabis businesses can’t compete with street prices, then the idea of removing black market incentives become more difficult. What is needed to be done is to utilize the data generated over the past six years of legal recreational cannabis and find a price median that would justify consumer demands.
In other words, what would be the best price per gram/ounce of cannabis that would satisfy consumer demands?
COMMUNITY QUESTION: What is the ‘most’ you’ll pay for a gram of weed [highest quality] where you don’t feel like you’re giving up too much money? $5? $10? $15? $20? What about an ounce of quality bud?
Once you have identified the median price range per bud, you need to make sure that the taxes won’t surpass that price point.
If reducing taxes is a problem, then you can increase competition. What this would do is drive down the price per gram/ounce based on the amount of cannabis available within the marketplace. When Supply exceeds the Demand the prices will naturally drop due to competition within the marketplace.
It’s simple economics.
The only real way to reduce black market appeal is by matching their price point. The other question I have for you guys is the following.
COMMUNITY QUESTION: How much more are you willing to spend to buy legally vs buying illegal per gram? $1, $2, $5, $10?
Black Market Cannabis Prices are so Cheap, How Do You Get People to Buy Retail? from CannabisNet on Vimeo.
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