The California Cannabis Black Market is So Big It is Eating the Entire World Right Now
Fool me once, shame on you, fool me twice, shame on me.
A strange theme has popped up this week across different platforms of information that seems to be saying that cheap California weed is decimating cannabis prices and markets not only in the US, but across the entire planet earth.
In doing research on our piece covering the Maine’s OCM report on why close to 40% of medical marijuana caregivers are leaving the industry, we learned that illegal cannabis from other states was one of the “top 5 problems listed” by caregivers as to why they are leaving the industry. Now, Maine shares a large border with the Atlantic Ocean. Assuming it isn’t getting smuggled in by boat, that means illegal cannabis has to be making its way to Maine through New Hampshire or Massachusetts. Let’s not say there is a flood of cheap, Canadian weed coming down from the North, that means that the rock bottom prices in California are still so much cheaper than Maine’s illicit market, it makes financial sense to ship California cannabis all the way across the country and into Maine’s markets. Maine is a very poor state when you get off the oceans and lakes, ranking in the bottom 3 of most financial rankings for GDP per state and income levels.
As one source told us for our story, “I can only check to make sure the grower has the correct Maine licensing and business credentials, but if they are getting Cali weed at $300 a pound and selling it to me for $900 or $1100, I have no way of knowing where those buds really came from in the end”.
Wait, some independent agents can get decent California cannabis all the way to Maine and still make a profit selling it for $300 a pound? Wowzah!
But the plot thickens…
This week an article on MSN claimed Thailand hemp and cannabis farmers can’t make any profits on their products because their markets are being flooded with, you guessed it, much cheaper US cannabis. The title of the article was actually “Thailand’s Cannabis Sellers Say US Growers Are Eating Their Lunch”.
Hypothetically, we can draw a line that shows how California weed shipped all the way to Maine is still able to undercut a poor state’s own illicit market, but now Thailand is saying US weed is killing their market? The same Thailand that is on the other side of the world and where the average worker gets paid $220 to $275 a month? The statement infers that a region with perfect cannabis growing conditions and almost no worker expense to speak of, can’t compete with California cannabis not only coming over by boats and planes ($$$) but also in a system where every middle man and government agent has to cut their cut in order to make the system work. After all travel expenses and payoffs, Cali weed is still more desirable and cheaper than cannabis grown in Thailand, Loas, and Vietnam?
Maine is one thing, but now poor markets on the other side of the world are complaining about US black market weed running their legal marijuana programs.
And you think every state bordering Oklahoma was grouchy and whiny. Goodness gracious.
What Does It All Mean?
Blink reaction? 1. The amount of cannabis being grown and shipping from North America (being kind to include our illicit grower friends in Canada) is MASSIVE and literally altering markets across the planet earth. 2. There is so much, and it can be got for so cheap, that even poor markets that require transportation by plane and boat can’t compete on price with US black market growers. 3. What happens when low-cost provers like Colombia ($0.05 a gram grow costs) start ramping up and shipping much larger amounts of cannabis worldwide, legally and illegally? Remember, they are already shipping cannabis around the world thanks to an amendment to their cannabis laws known as Resolution 539.
You think New York setting aside $16 million to combat the illicit market will make a dent in this industry?
Much like the AI headlines predicting doom and gloom, the illicit cannabis market has been unleashed, a genie let out of the bottle that will never be put back in as legalization continues around the world. We wrote about how we would be on Latin American cannabis in the long run, and short European cannabis in the long run, not because we don’t think Europe could be one of the biggest cannabis markets in the world, but because it will also create the biggest black market on the face of the earth as well. Many European countries that were once part of the Soviet Union are still very poor, not to mention the countries in Northern Africa that will grow and produce cannabis and considerably less cost and with less regulation than EU growers.
While the EU cannabis market will be huge, the EU illicit market, if history holds true, will be the biggest on the planet.
Buckle up, the worldwide cannabis markets are being guided by fundamental economics like supply and demand, not legalization borders.
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