Legal Recreational Weed In California Has Potential To Create Black Market

Stricter law, high prices, and limited locations may send cannabis customers to illegal distributors.

Legal sales of recreational marijuana halted in California.
David McNew / Getty Images

Stricter law, high prices, and limited locations may send cannabis customers to illegal distributors.

Citizens in California will be allowed to buy legal recreational marijuana on January 1. However, new cannabis rules have made getting the product more difficult and likely more expensive, pushing many weed users to find alternative suppliers.

While legal recreational marijuana goes on sale in California January 1, some municipalities are simply not ready for consumers to buy. San Francisco has yet to issue the necessary licenses to dispensaries to operate lawfully. ABC News reports recreational adult-use cannabis won’t be available in Los Angeles for several weeks.

To further complicate getting an approval, medical marijuana shops already doing business in LA must get additional licensing to comply with updated guidelines even as the city re-assures them they can stay open. However, since the government has been slow in issuing new licenses, many remain skeptical about continuing to operate until the new rules are completely implemented.

While LA’s government plans to look the other way as dispensaries continue to sell medical marijuana under the old rules, these shops are essentially violating state law by operating business as usual after January 1. The Los Angeles Times reports some have simply made the decision to close temporarily until everything is worked out.

“The problem is, the city is giving them limited immunity for behavior that would violate state law,” said Aaron Lachant, a partner in the law firm Nelson Hardiman who represents several marijuana shops. “Which is making a lot of businesses uncomfortable … I can’t advise my clients to go out there and break the law.”

Many California residents will not be able to buy recreational weed on Monday.
Legal sales of recreational cannabis start in California on January 1. David McNew / Getty Images

Statewide, only 44 licenses for recreational cannabis and 69 for medical have been issued so far. The shutting down, even temporarily, of dispensaries will likely send customers to other, potentially illegal, sources.

The limited number of legal cannabis dispensaries is not the only obstacle Californians face in obtaining pot. Price is also going to be a factor.

New recreational marijuana laws in California require a 15 percent tax on retail purchases of pot, including medical. On top of state tax, local governments will levy their own. Additional taxes and fees paid by consumers will likely raise the cost of cannabis by as much as 70 percent in some areas. Some retailers are already predicting the new higher price will send consumers to the black market.

Despite many communities in California not ready for legal recreational marijuana, consumers in some areas will be getting product as soon as Monday. Multiple dispensaries in San Diego, San Jose, and West Hollywood received permission to operate and legally sell cannabis on January 1.

California is the sixth and most populous state to legalize recreational marijuana. Next year, two other states, Maine and Massachusetts, are expected to follow suit with their own recreational cannabis rules.