The excessive regulations in the U.S. states where marijuana is legal could be the reason why the marijuana black market continues to thrive, according to a new study.
This conclusion came at the end of an exploratory study that crunched the numbers on data from the first two states to legalize recreational marijuana. This quantitative analysis focused on the news reports about the crime rates in the two states.
The findings of the analysis were mixed. On the one hand, the marijuana crime rates in Colorado remained unchanged while those in Washington State increased significantly once stricter regulations were implemented.
The research that came up with these findings was in a master’s thesis of a graduate student. Sikong Song, at Portland University in the criminology and criminal justice department.
The graduate student reveals that he was interested in finding out why the black market for marijuana persists even when a legal market exists. The assumption has always been that once a regulated market opens, then cultivators, processors and other players can operate above board. But that isn’t happening, and Song wanted to find out.
For example, a study done last year found that 18 percent of adults bought marijuana from the illicit market in California.
To find out if there is any connection between the degree to which state marijuana laws are strict and the level of marijuana-related crimes, Song studied the articles that were published between 2013 and 2019. Those articles featured black market cultivators, sellers, processors and consumers. The reports included the reasons why those people were involved in the illegal marijuana market.
In Washington State, the graduate student considered June 2016 as what he called “the intervention point.” For Colorado, the intervention points were November 2015 as well as January 2017. These dates were selected because of their significance in changing the regulatory landscape in the two states. For example, new packaging rules were released in Colorado in 2017.
The news reports are full of descriptions like “overregulation,” “high taxes,” “cost of compliance,” and other such phrases to describe what the interviewees said were the barriers to their entry into the legal marijuana market.
The author of the study concludes that from his findings, the intensity of the regulations governing the legal marijuana industry could explain why there is a spike in marijuana crimes in some of those states and leveling off of such crimes in other states.
He therefore called on lawmakers to think seriously about some of the unintended consequences of passing strict marijuana regulations, such as making it harder for smaller players to gain entry into the regulated market.
Industry watchers believe this exploratory study will get industry actors like Earth Science Tech Inc. (OTCQB: ETST) and Geyser Brands Inc. (TSX.V: GYSR) thinking about what direction their advocacy can take in order to stamp out the marijuana black market.
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