In Defense of the Underground Marijuana Market

By now, New Jersey has been running its mouth about legalizing marijuana for so long without actually delivering results that the state qualifies as the American equivalent of the under-qualified male wasting everyone’s time at your company meeting with pablum he half-remembers from a TED talk.

Bad news: You can’t fire a state, and since it is highly likely whatever New Jersey does with legalization New York may attempt to copy — meaning cannabis policy in the country’s largest city does at least somewhat hinge on what happens in Trenton — what happens there is actually fairly significant. This is failing up.

Good news: In the meantime, there is plenty of cannabis available and there is a good chance that, unlike in other states where the industry is regulated and taxed, the people selling it are ethnically diverse. This is the “underground market” that is alive and well in New Jersey, which of course means that it is a “problem” that lawmakers want to get rid of.

The Asbury Park Press recently spent a night at a cannabis pop-up, one of many New Jersey marijuana sales events. The event was what the kids may even dare to call a “sesh,” or a “secret sesh,” of the kind that they advertise on Facebook-owned Instagram to anyone who bothers to click “follow.”

At places like this, according to the newspaper, “pot dealers… are going to stay in business, regardless of what the law says.” After all, “[t]he dealers have a vast supply of weed, imported illegally from California and Washington, D.C. They’ve got a loyal customer base and years of experience. And, unlike legal weed dispensaries, they can sell tax-free.”

The reason why all this works, one cannabis merchant told the newspaper, is simple market dynamics. People want cannabis. There is no legal cannabis available. Lo, a market inefficiency that someone will fill.

At some point, New Jersey Gov. Phil Murphy will sign a bill that the New Jersey state Legislature will send his way. The current plan is to tax cannabis at $42 per ounce, which could be an effective rate of 10 percent on the low end to closer to 30 percent at current street prices. How tight-fisted the state will be with awarding licenses — and thus, how absolutely cutthroat the competition for a license will be, and how much greater a mountain of capital a would-be entrepreneur would need to enter the industry — is not entirely clear, but if the state’s approach to medical cannabis is any indication, it will be neither generous nor easy.

According to the photos of the cannabis purchased at the pop-up seshes posted to the Asbury Park Press website, what’s available would be comfortingly familiar to anyone who has ever purchased marijuana elsewhere in the country — because it appears that’s exactly where it came from, down to the branding and packaging.

ThePress quoted an official from the state police lobby, which predictably is one of the main components of the anti-legalization effort, as saying that the regulated market will find it difficult to compete with the unregulated market. Flaws in his analysis aside — if the cannabis is coming from California in a form other than massive turkey bags, it is subject to some regulation — he is onto something.

If there is an underground market, that means the regulations are bad, or inadequate, or the taxes or too high, or too few licenses are issued, or some combination of these or other problems that arise when lawmakers view an industry as an ATM or treat cannabis like a dangerous commodity that should be regulated more strictly than alcohol. In other words, a thriving underground market is a diagnosis and a critique. Demand for cannabis will never go away. If almost 50 years of federal prohibition has proven anything, it is that people like to smoke weed and are willing to run sizable risks to do it. Thus, if an underground market is still kicking, it means the regulations are somehow not competitive.

And also, so what? Here is the libertarian argument, when the Venn diagram of Ron Paul supporters and weedheads approaches a very odd circle. Can there truly be something wrong with procuring some home-grown outside of the legal market in a way similar to trying your buddy’s home brew? There could be, sure — it is a simple thing to come up with a problematic scenario in the hypothetical. But really what the underground market shows is what the rest of us are doing wrong. Like the mutating dinosaurs in Jurassic Park, the underground will find a way if the regulated market gives it a path.

TELL US, have you ever been to a sesh?