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Grey Market and Black Market in the World of Cannabis

black market cannabis
Written by Sarah Friedman

Black markets and grey markets pervade daily life in nearly every way. The idea of below board brands, or fakes markets are certainly nothing new. What do they mean to the newly legal cannabis market? And what are the problems that have been popping up as cannabis becomes the new darling of legally sold goods?

As legal cannabis markets grow, both medicinal and recreational, governments are tasked with figuring out regulatory structures to govern the production, supply, and sale of products, because that’s how things are done. This process of making laws to govern it, whereby it can be put in a legal store, and sold as a part of the standard economy – complete with tax, and reported revenue to the government – changes the manner in which something is made and sold, as well as who is able to profit from it.

Legal cannabis markets don’t look much like the black-market setup, and they certainly seem to cost more, but they offer specification in products, and enhanced forms of otherwise scarcely-found cannabinoids, and if safety regulations ever really get firmed up, a way to control for pesticides and other bad substances.

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What’s the difference between a black market and a grey market? And where do fakes fit in?

Let’s start with some basic definitions.

Black market

“A black market is one where the buying and selling of products and services take place in an illegal manner. A black economy is a highly organized and vast market where the regular taxation rules and norms of trade are not adhered to. A black market is known by several names, including black economy, underground market, shadow economy, underdog and parallel economy.”

This describes the standard and long upheld setup of going to your friendly neighborhood dealer who works out of a backpack, and spends his/her time avoiding cops.

Grey market

“A grey market involves the buying and selling of goods and services that are not illegal, but the channels used in their distribution are either unauthorized or unofficial.”

This describes how a product that should be sold in a dispensary in America, is actually being sold by a black-market dealer in Mexico. It also encompasses – to a degree – the counterfeit market.

Counterfeit market

The counterfeit market is comprised of “phony products that are designed to mimic trademarked products without the consent of the original manufacturer. The products themselves are not illegal, but the way they are marketed is. Often, these goods can be difficult to identify, which is how they go unnoticed in the grey market in the first place.”

This describes knock-off products, fakes. Products specifically designed to look like an actual, known product. Sometimes the quality between original and counterfeit version is very close, sometimes it can mean an entirely different product – often inferior in quality and with possible dangers.

The black market cannabis world

As stated earlier, we’re all familiar with the standard black market cannabis setup. Usually you have a local dealer, who himself has a supplier. There is an entire supply chain, but no worker in it is on the books, and no product sold is taxed by the government. Products or production practices are not regulated, and often the end-user has no way of knowing anything about the supply chain.

It’s an entire business, from cultivation to sale, that exists off-the books, sometimes even with its own branding, and often with a certain amount of real pride behind the product, as many of these operations really do work to provide something good, black market or not.

In fact, some black market brands are high level brands that simply haven’t paid to go through registration and regulation processes, or are in an industry where there is no option for this. Very high quality cannabis is often sold on the black market, and sometime, if the business is known to its user, things like controlling for organic can be done. There is even a push these days by established brands to legalize and build up some of these unregulated brands in order to get their followings, and build on their already existent popularity.

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The grey/black cannabis market

Sometimes when dealing with the grey market its about fakes. But sometimes it’s about real products being sold illegally in the wrong places. While there are plenty of fake vape cartridges out there, for example, there are plenty that can be bought through the same illegal channels as the fakes, but are actually real products that are simply no longer in their intended supply chain, and instead moved to an illegal one. In this case one can picture in their head a box of perfectly good vape cartridges *falling off a truck on its way to a dispensary.

Often the counterfeit market operates along with the grey/black market, and it’s a market that is growing to massive proportions. One of the points made in this article about consumers buying black market products, is that: “California, for example, is the biggest legal marijuana market in the world, and still, the black market is three times larger than the legal one.”

This means that the majority of people are still going to their friendly neighborhood dealer rather than waiting in line for inflated prices at a dispensary. It also implies that for something like vape cartridges, of all the ones floating around out there, for which there are many, it can now be expected that only a small percentage are real, and the vast majority are fakes, or black market, unregistered brands.

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Black market dangers?

When it comes to cannabis flowers, the black market has survived pretty well through time with no real death count to speak of. Which means, if there’s some massive danger to not being able to control for pesticides, additives etc., it’s obviously not the biggest deal. We all know that if we get marijuana off the street, it’s probably not going to be the best quality, and this can even mean dangerous additives and practices. In low level buying, this is always an issue, but it’s one that prevails at the lowest monetary level of any black market structure, meant for those who will never have the ability to pay more.

If it becomes a bigger deal, with more dangerous chemicals being used on more than just low-level flowers, and if deaths pop up, this could signal a point where a regulated system really is more ideal, although that regulated system would have to actually provide something safer, which having regulation unfortunately doesn’t guarantee. Trying to pick away at the standard, centuries-old cannabis flower industry as dangerous, while bowing down to regulated brands as the only real solution, is silly at best, and supports very unnecessary fear-mongering at worst.

Considering just how long-running and functionally stable the standard cannabis black market is, the idea of saying there’s a necessity for it to be legalized sounds like way more of a ploy to create new above-board revenue streams where they are currently being lost…than a way to protect the health of users.

When it comes to fake cannabinoids, and products like fake vape cartridges, and unregistered black market brands, there is question as to what is put in them, and how safe these unknown-to-the-user additives (or production methods) are. There have – no doubt – been plenty of issues associated with synthetic cannabinoids, and fakes in general.

This article highlights some of the more recent cases which do show a disturbing trend toward using chemicals that are dangerous, but which backs up the idea, nonetheless, that it’s still an incredibly low death and injury rate associated with this issue, especially as compared to the massive death counts we’ve been seeing every year from opiates, benzodiazepines and tons of other pharmaceuticals out there.

In fact, compared to all three of these groups, synthetic cannabinoids really aren’t looking so bad. This isn’t to say that because the death rate is still technically lower than for other drugs that there shouldn’t be concern. It’s certainly a place where we collectively need to keep an eye in the future, and watch out for unsavory practices that can cause damage. Luckily for now, though, it does seem that the risk isn’t quite as intense as the fear built around it.

What’s the Deal with Synthetic Cannabinoids?


The cannabis black market is much less scary than it gets the wrap for, and we know this logically by the fact that the majority of us smokers have been using the black market to buy our cannabis our whole lives. We therefore intrinsically know that black markets can provide perfectly good products. We also know that no government entity can profit from them, and that competing enterprises would rather wipe them out or steal their clientele. These reasons often get translated to the public as a fear for safety, when the bigger fear is on the business end, of not being able to get enough of the revenue. This is then mirrored back in raised dispensary prices.

When buying cannabis flowers, it’s not hard to tell if you’re getting something weird, and if you buy it off the street you should expect a bad product. Like anything else, you have to know who to buy from. When buying cannabis products like vape cartridges or pre-packaged edibles, be a little careful if you want the real product, and not to worry about health issues from bad ingredients. But also know that some black-market brands are perfectly fine, they just never paid to be registered companies. And while most fakes might not give the best effects, and probably aren’t doing anything to help your health, they’re still (at least for now) far less likely to kill you then most pharmaceuticals with a death count.

More and more I wonder if the answer to all this is for people to grow their own flower and produce their own extracts through easier-to-use equipment meant for regular people in their own homes. Maybe making such equipment is the next direction this goes in, in order to avoid high dispensary prices and government infiltration into the market.

This would then erase the possibility of dangerous additives, or weaker ingredients, while giving freedom to users to create products to the safety level they desire, without depending on government regulation which often falls very short of actually providing safety. If there’s any question about this, I suggest doing a little research into just how many pesticides are allowed on legal cannabis in different states, and then see if you think that level of safety warrants you paying twice the price or more in a dispensary.

Or maybe that’s what my next article will be about…

Thank you for stopping by CBD TESTERS. We’re happy to keep you up-to-date on everything in the world of weed. Come back frequently and make sure to subscribe to the Medical Cannabis Weekly Newsletter to get all the important industry news.

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About the author

Sarah Friedman

I look stuff up and and write stuff down, in order to make sense of the world around. And I travel a lot too.