Thread: Amendment 64
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Old 11-29-2012, 11:19 AM   #530
Joined: Jun 2011
Location: Front Range, CO
Oddometer: 372
Originally Posted by selaznog View Post
Lotta periods in there. I don't claim to know the quality of CO MMJ vs. CO black market MJ, but I've got to believe a cartel with years of experience and billions of dollars on the line will make a product superior to that of a green (pun intended) newcomer. I do agree that the vast majority of sales will come from taxed, legal sales, because the quality is empirically proven to be satisfactory to the market, which, coupled with the convenience factor and the now absent risk of participating in an illegal transaction, will trump other market forces.

But that doesn't mean there won't be a black market. More people will grow their own simply because they can, and many will have a surplus beyond their needs. Many of them will sell it outside the legal market because they don't have enough to bother going into the legit MJ business with its regulations and hoops to jump through. They will have to sell it below the legal market price, because, for the reasons mentioned above, black market prices are lower. This phenomenon will occur regardless of the new law's effect on the market price. The downside is not the emergence of organized crime, but rather the fact that it makes criminals out of otherwise law-abiding citizens who would be selling a legal product.

Now, the new law will likely bring down the cost of production. This is true because the current cost of production includes a premium for the risk of getting caught (in the form of higher fees/profits for middlemen, the cost of detection avoidance, increased cost of manufacture associated with remote areas, over-utilization of electricity for light). Unless the fees and taxes are so great as to cover the gap between the new cost of production and the market price in neighboring states, the lower cost would encourage a black market, not in CO, but in other states whose citizens would see CO as a source of supply. Actually, I think you can expect the fees and taxes to be greater than the gap, because the taxing authorities know that the CO market will not switch to black market MJ until the price differential is so great that the black market product becomes preferable despite the risks and loss of convenience.

It's going to be fun to watch.
MMJ growers have had no problem competing with the black market, and those same people will be helping out commercial growers and making the crossover themselves. I've never been able to say that x bud is from the cartel, but it's well known that any buds from Mexico are going to be "brick weed"/"ditch weed" (horrible quality). Same with tourist buds in bought in Mexico, the best there is CO's bottom dollar. I have no reason to suspect the cartel is now going to spend millions of dollars trying to compete with legitimate businesses.

As I've spoken to before, the black market will always be around in one form or another. What I've more so spoken to in my previous posts is about the fall of the traditional black market, the black market that will still exist for all other narcotics for example. The cartel, "drug dealers", organized crime will still all be there, just not in the CO and WA pot scene. Of course there will be all sorts of victim-less "new black market" crimes going on, but as you mentioned, who cares? The government will, but eventually that might get changed as well given the evolving sentiment of the people that is caring less and less about victim-less crimes.

Either way, will this "new black market" of marijuana actual compete on any significant scale with the legitimate marijuana market? I doubt it. All the people with "surplus" will be peons who know they won't get busted for having an extra ounce in their apartment. Their bud quality will be generally be inferior and even if there's millions of these people, their buds will not compete directly with legit buds of supior quality. Most people won't want to deal with the illegal black market when they have legal alternatives. Most legitimate businesses with superior buds aren't going to risk their livelihood on selling their surplus under-the-table. I believe this to already have been demonstrated by MMJ dispensaries...I've not heard of one case of their surplus making it to the black market (I'd be all over that if it was cheaper bulk, and I have friends who work at dispenaries). Has it happened? I'm sure, but it's probably not a significant market force, i.e. not competing with legitimate sales. What would their customers think if they found out their dispensary was selling the same stuff for cheaper out of the back door? That'd be real bad for business. These legitimate businesses are on the books, easily investigated by law enforcement unlike the black market operations. All of that would apply to new commercial growers.

The same set of circumstances applies to local black market growers who are not part of some larger organized crime ring...people with grow ops in their barns who've been peddling weed to friend dealers who distribute for them, etc. These are the people who have been supplying CO's black market before MMJ hit the scene since no one wants cartel ditch weed even if it does make it here. These local growers' buds are generally inferior to MMJ (MMJ being where the new commercial businesses will get their quality from) but their prices have not reflected that until MMJ hit the scene. Even now, their bud's value is crap and their prices still don't reflect the value (i.e. half the price of MMJ but only 1/4 of the quality...obviously MMJ is a better value). This won't change under A64. These people will still be running illegal operations growing inferior buds that even if priced according to their actual value (dirt cheap) won't compete with legal buds.

Just like MMJ has basically run the traditional black market out of town with MMJ's own legitimate and black markets, legalization will put the last nail in the coffin for most local traditional black market sources of cannabis. It will do so by and large with the new legal commercial market with the "new black market" picking up the slack. One thing I can imagine happening is with the small-time local illegal growers that I spoke to above...some might try to sell their products outside of CO because that's the only place it'll sell. But it'll be on a small scale given the immense risk and unless it's quality is better than the local market supply it won't compete well there either. What we'll see a lot more of is Joe Schmoe taking his homegrown surplus and/or MMJ buds to WY and NE and selling them for top dollar. Both those situations may produce significant market forces outside the state but won't effect things much in state.

P.S. I think I said "period" once, maybe twice in my last post...maybe you're talking about my punctuation? My posts are long but it keeps the idiots and intelligent but ignorant people from reading it.
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