Authorities in Oklahoma are worried that the state’s booming medical marijuana industry may be fueling the growth of the illicit cannabis market. Oklahoma legalized medical cannabis in 2018 and by 2021 there were over 9,400 registered grow operations competing to fulfill the state’s demand for cannabis.
While the number of licensed growers had fallen to over 2,200 by December 2024, Oklahoma’s illegal cannabis market seems to be growing in leaps and bounds. The market has become so prolific that experts have raised questions about the integrity of Oklahoma’s legal systems and the state’s public safety.
Like every U.S. state with a legal cannabis market, Oklahoma has struggled to curb illicit marijuana sales. District 17 District Attorney Jack Thorpe estimates that millions of dollars could be flowing into the cannabis black market due to marijuana’s popularity. Thorpe serves Adair, Cherokee, Sequoyah, and Wagoner Counties and all four are currently fielding illegal cannabis grow investigations.
Registered cannabis operators struggle to compete with illicit sellers and their low-priced cannabis products as they are subject to various taxes, fees, and requirements that push their product prices up. Unfortunately, this means the cannabis market is often flooded with low-quality and often contaminated products that haven’t been subjected to rigid safety standards.
Thorpe says more revenue flows into the black market than the state-regulated medical cannabis industry, robbing states of millions of dollars in sales tax revenue. Oklahoma’s relatively lax cannabis cultivation laws coupled with expansive wooded and rural areas make it difficult to find illegal grows.
As a result, Thorpe says, Oklahoma grows significantly more cannabis than its over 2,200 licensed dispensaries can handle. According to the information his office has received, some of the illegal grows Oklahoma authorities are interested in may be connected with cartels or other international organized crime syndicates.
Product safety isn’t a priority for these groups, especially when these safety procedures are costly, and their products are often contaminated with residual solvents, heavy metals, and even bacteria. They often have more THC levels than is allowed and in rare cases could be laced with more addictive and sometimes deadlier drugs.
However, high prices in most state-regulated cannabis markets have pushed many customers to the black market. States like California which generate billions of dollars annually from cannabis sales still lose a large portion of sales to the black market. Unless legal cannabis prices become competitive enough, illicit cannabis will continue to be a barrier to marijuana reform in America. New approaches to dealing with this problem need to be found so that licensed firms, such as TerrAscend Corp. (TSX: TSND) (OTCQX: TSNDF) can have a better chance of thriving in the markets in which they are authorized to operate.
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