Red Tape in Legal Pot States Pushing Industry and Market into a Corner

Bans, restrictions and government red tape in states that have legalized medical and recreational marijuana are, in many cases, undermining the industry, resulting in the continuation of an active and profitable black market. This was not meant to be.

By burying the incipient pot industry under piles of regulations, high taxes and harassment of growers and dispensaries, governments seem to be attempting to appease the pot opponents by essentially sitting on the fence while creating obstacles.

The result is that these unreasonable restrictions on the burgeoning legal marijuana market are enabling illegal dealers to continue doing what they do best—operate on the black market.

In Washington state, the Liquor and Cannabis Board recently reported that the weed market breakdown had revealed that illegal pot sales (28 percent) closely rival legal medical (37 percent) and recreational pot sales (35 percent). And, it is assumed that figures for the illegal market are vastly under-reported.

Clearly, people are willing to risk arrest buying and selling on the black market to avoid state-imposed restrictions on who, why, where, when and how adults can consume a fully legal substance.

On the positive side, Washington state lawmakers announced their support last week for creating a “pathway for legal marijuana delivery.”

Washington Senator Christopher Hurst also proposed lowering excise taxes on pot sales from 37 to 25 percent.

"The criminals love the tax rate being high, because they don't pay it, and it makes it so the legal people can't compete with them," Hurst told, which noted that the bill has stalled in the House Finance Committee.

Oregon is also having problems with marijuana taxes that are leaving both buyers and sellers confused and discouraged.

Owner of dispensary chain Cannabliss, Matt Price, told the the Oregonian that a recent tax hike in Oregon is driving buyers back to illegal vendors.

Some customers don’t mind, Price said, but others “say they would rather go back to their 'guy,' so to speak, and walk out.”

(Photo Courtesy of Modern Farmer)

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