COVID-19 and the Illicit Weed Market: Who’s Winning?
The coronavirus pandemic could actually have a positive effect on the legal cannabis market!
The illegal weed market has been booming in the US for years; up until now.
Despite being a national problem, the issue is most pronounced in states like California that impose huge taxes on legal weed sales resulting in higher prices of 40% to 50%. At the end of 2019, over a dozen raids of illegal weed shops were carried out in LA alone.
Yet with the ongoing COVID-19 pandemic, the illicit market might be weakening.
With increasing health risks, people are becoming more concerned about questionable products and the risks associated with items bought off the black market.
Kris Krane, CEO of 4Front Ventures, a company that operates cannabis shops in several states, says people are more hesitant to buy weed products from unregulated sources. They are also less likely to visit the homes of dealers, or have strangers come to their house, he adds.
Legal shops were quick to take advantage of the newly-created situation.
After they were declared essential services, cannabis dispensaries expanded shopping options to include home deliveries and curbside pickups.
Additionally, the virus played yet another role for weed legalization.
Cities that previously didn’t allow weed shops (even in states where cannabis was legal) are reconsidering bans, tempted by the double benefit of reducing illegal sales and receiving huge tax revenue.
Determining a clear win is still hard, though.
Credible data on sales from the black market is, naturally, hard to acquire and it might be that those sales are booming as well.
However, according to industry experts, an increasing number of Americans are turning towards the legal market. Revenues are expected to go up to $3 billion this year in the US, the New Frontier estimates, which is a 25% increase from the past ten years.
New legal markets are driving up sales, with Michigan and Illinois taking the lead. Both states legalized recreational cannabis use earlier this year.
Sales are growing in older markets, as well. Weed sales revenue in Oregon, where adult-use cannabis has been legal since 2014, went over the $100 million in May and June 2020.
While it’s still uncertain if the COVID-19 pandemic will erode the illicit pot market, experts believe that it will at least cause more states to reconsider their rigid cannabis policies.