The New Weed Whackers

An exploding black market in states that legalized pot has sparked another government war on marijuana.

Steven Malanga
October 24, 2022

Californians who opened their voters’ guides to the state’s 2010 elections could read a pitch from backers of Proposition 19, an initiative designed to legalize the recreational use of marijuana. The argument: that “Prohibition [of marijuana] has created a violent criminal market run by international drug cartels.” The advocates promised that, “By controlling marijuana, Proposition 19 will help cut off funding to the cartels.” Though voters failed to approve Prop. 19 that year, advocates returned six years later with a more focused initiative, backed by a similar justification—in sum, that legalization “creates a safe, legal system for adult use of marijuana” in California. This time, voters agreed, and recreational pot use became legal in the state.

California has yet to see its black-market disappear, however. In fact, illegal growing and selling of pot have increased so rapidly in the past six years that earlier this month, Sacramento vastly expanded the state’s war on pot by taking a decades-old seasonal commission designed to curb illegal growing and turning it into a full-time, multi-agency task force with the job of snuffing out a booming black market. Nor is California alone in watching its black market explode after legalization. In Oregon, where recreational pot became legal in 2015, officials now estimate that thousands of illicit marijuana farms operate in the southern part of the state, where gun battles among rivals have become common. Despite legalization in 2016, more than two-thirds of pot transactions in Massachusetts take place in the black market, state officials estimate. Mexican cartels and other foreign gangs, meantime, have reportedly moved into the business in Colorado—another of the 19 states that has created a legal market for recreational pot.

Undeterred, marijuana-legalization backers now argue that the real way to kill the black market in pot is congressional legislation to permit recreational sales and use throughout the country. But there’s little evidence that they’re right.

The notion that legalization would end the often-violent crime surrounding drug markets, including the pot business, dates from at least the 1970s, when President Jimmy Carter endorsed national legislation to end criminal penalties for pot. The waves of violent crime and addiction that emerged from the cocaine epidemic of that era, however, effectively ended talk of drug legalization, even for pot, which was linked in some studies to later cocaine use.

It took more than 20 years for supporters to find another route to legalization— in marijuana’s case, through so-called medicinal pot as a painkiller for severely ill people. California led the way with 1996 legislation setting up a legal market for medical marijuana. Other states followed suit. Despite limited evidence of pot’s medicinal value, and doubts among many doctors about its usefulness, the momentum created by the medical-marijuana movement eventually led to today’s growing passion for legalizing recreational pot.

The real message we should have taken from medical marijuana was quite different. Soon after voters approved medical pot in 1996, California’s black market began expanding. A 2010 NPR article on the speedy growth in illegal sales quoted a former Drug Enforcement Administration agent, who traced the “cultivation boom” of illicit pot in the Golden State to the 1996 legalization for medical use. Federal agents said that so much illegal pot was being grown in California under the cover of legal weed that the product was being shipped to every state. Overwhelmed agents had trouble simply trying to keep track of what was legally grown and what was illegally grown.

Instead of hitting the pause button because of these problems, many states moved ahead with full-on recreational legalization, spurring what Politico has called “one of the most confounding paradoxes of the legalized marijuana movement: States with some of the largest legal markets are also dealing with rampant illegal production—and the problem is getting worse.”

Opponents of legalization say that the problem isn’t so confounding. The legalization wave, kicked off by states’ medical-marijuana legislation, gave pot a patina of respectability, without subjecting the drug to the same scrutiny and approval process that prescribed pharmaceuticals must undergo. This move normalized pot use, sending demand soaring. At the same time, many growers and sellers have balked at adhering to state regulations and paying taxes and fees on their products. In California, for instance, growers have tried to evade the environmental regulations that all farms must observe, including ones on water usage. Investigators have found miles of complex, illegal irrigation systems in the state’s national forests, diverting hundreds of thousands of gallons of water daily to illegal farms, as streams run dry. These methods have allowed illegal growers to create and market a product with a price far below that of legal pot.

At first, officials in some states were reluctant to gear up for a new war on drugs, but that’s changing. Earlier this month, California attorney general Rob Bonta announced that the state was creating a new, year-round effort to eradicate illegal pot-growing by expanding a program started in 1983 when pot was illegal and the black market much smaller. The joint effort involves seven state and federal agencies, including the California National Guard. The effort is a response to press reports about infiltration by Mexican cartels and other international gangs into the growing business—accompanied by rising violence, including the deaths of illegal, itinerant laborers imported into the state to work these pot operations.

In Oregon, where rising crime attached to the black market has become an election issue, Governor Kate Brown called a special legislative session late last year to address the problem. Legislators approved $25 million to bolster agencies fighting the black market, including money to investigate growing theft of natural resources like water by illegal farms. Officials say that buyers from at least 20 foreign countries have poured into southern Oregon to snap up land for cultivation. In one week alone this year, officials reported busting illegal farms run by Bulgarian and Argentinian gangs. Meantime, residents of once-quiet Oregon rural communities say they are beset by violence and often left without protection because police resources have been overwhelmed.

Defenders of legalization say that the black-market problem is confined to agricultural areas in a few farming states. But in Colorado, the problem has been suburbanized. A multiyear investigation by federal and state authorities led to busts in about 250 homes and businesses largely in suburban Denver, where investigators destroyed more than 80,000 pot plants and confiscated some $2.2 million in cash. Some of those arrested were Chinese nationals who had come to the Denver area, purchased suburban houses, and used the basements for a coordinated growing program. They then used social media accounts to launder the money from their sales back to China.

Legalization advocates claim that the root of the black-market problem lies with states that have refused to legalize pot. Those jurisdictions, the argument goes, are the ones driving sharp increases in illegal cultivation taking root in legal states. It’s a theme that, unsurprisingly, the press has picked up on; local stories about the new black market suggest that the blame lies with places that still prohibit pot sales. That argument is also fueling a new push for national legalization, embodied by a bill introduced by New York senator Charles Schumer in July to make pot legal nationwide. In lobbying for the bill, Oregon senator Ron Wyden has cited his home state’s black-market struggles as an example of “why federal cannabis prohibition is just not working.” Advocates are banking on polls showing that a majority of Americans now favor, at a minimum, decriminalizing pot.

On the other hand, the Schumer bill also contains new federal law-enforcement funding to help states stamp out the black market that advocates promised would disappear with legalization. It seems that, one way or another, we’ve got a new drug war on our hands.

Steven Malanga is the senior editor of City Journal and the George M. Yeager Fellow at the Manhattan Institute.

https://www.city-journal.org/legalization-no-cure-for-black-market-in-pot