Sarah Friedman posted: " There's no rule that says legal markets have to be bigger or smaller than black markets. In life, legal markets and black markets form counterparts that can change and vary in size and growth. In the case of cannabis, the black market wins out easily, an"
There's no rule that says legal markets have to be bigger or smaller than black markets. In life, legal markets and black markets form counterparts that can change and vary in size and growth. In the case of cannabis, the black market wins out easily, and for very good reason.
Legal markets are your above-board markets. Products or services that are registered, that are taxed, that are counted in official inventories, and reported on to local and federal governments. If you want to buy a shirt and you go to Walmart, congratulations, you've helped support the legal clothing market. You've also helped support sweat shops and slave labor, but that's beside the point.
The market itself, however unsavory, is legal. I point out the unsavoriness for a reason though. In all the talk about the negative aspects of black markets, it should always be remembered that legal markets can be just as dirty, dangerous, and detrimental to those involved.
Black markets (and I'll include gray markets here) encompass the large blurry underbody. It's like the big hulking iceberg underneath the tiny Titanic-tearing tip. It's every sale that no government knows about. Every untaxed product and service. Every unregistered item that will never be counted in official inventories or reported to government bodies.
So if you're buying knock off sunglasses from a guy on a street corner, or getting an 1/8 of really great skunk from your friendly neighborhood pot dealer, or giving in to the super cute kids on the street selling lemonade from a stand, you, my friend, have participated in a black market purchase. To be fair to those cute little kids, there aren't many government bodies that are going to bust up their lemonade selling operation, but if the same kids continue that same operation into adulthood, they could be arrested for tax evasion.
The first things to know about the cannabis market is that it's old, it's huge, and it's pretty stable. For as long as humanity has understood what the cannabis plant is, it's been using it in different formulations ranging from medical applications to relaxing and feeling good.
When talking about the size of the market there is no definite or specific number. When splitting off legal markets it's easier to be exact – like last year, global legal cannabis sales hit about $15 billion. When it comes to how much the legal cannabis markets are able to expand, you won't find a shortage of estimates from nearly every publication out there, but the numbers vary by publication and report.
When it comes to the idea of the global cannabis market, it includes every legal recreational sale, every legal medicinal sale, and every illegal sale made. While the legal recreational and medical sales are counted and tallied, reported to governments and taxed, the illegal ones are not. And they encompass every single deal that goes down between people, in every little corner of the world. From buying a gram of bush weed from a friend in South Africa to getting a pound of high-grade marijuana in New York from a delivery service.
Every single time that any amount of money is transferred for the acquisition of a little of the plant, it counts. Every single sale, in every single place. Unlike many products, cannabis only showed up in stores recently, meaning that whereas some markets have natural legal and illegal counterparts, until recently, cannabis only existed in the black market, with every single sale counted as a black market sale. Now, its split between legal markets and the black market, but how much really is it all together?
The company New Frontier Data has been putting together cannabis related research for a little while now, and they seem to be one of the only organizations to really tackle the question of how big the global cannabis market is – legal and illegal. In last year's Global Cannabis Report: 2019 Industry Outlook, it was estimated that the global cannabis market is valued at about $344 billion.
The report also put the number of global cannabis smokers at 263 million people. Are these numbers accurate? Not a chance! But they could be close, and if nothing else, they at least start to give a numerical peak to the extent of what's being spoken of when we're talking about cannabis markets, and how much they're worth.
The cannabis black market didn't come as an offshoot of the legal cannabis market, or a reaction to it, but rather the other way around. So, it's not the black market diverting revenue away from the legal market, so much as the legal market diverting revenue away from the black market. Which means the legal market can technically reach as high as the black market so long as it can divert the entire revenue stream through legal markets.
How well legal markets are set up to divert this revenue stream will be what really determines their ability for growth. Most estimates I've seen fail to take into account, not the limit that's possible to get to as per the size of the total overall cannabis market, but the realistic possibility of capturing it at all.
Most people looking to get a little cannabis, really don't care where it comes from. They care about the price, the type (if they have the luxury to do so), and not getting into trouble while procuring it. Having a personal cannabis dealer is so typical, that in many parts of society it's very much a standard, and not often put into the same category as having a dealer for harder drugs. While governments and official organizations might have a hard time with this concept of differentiation, no one in regular life does, and this is how the regular life marijuana market functions.
I can verify it on a personal level, a thousand times over. It doesn't need to come in fancy packaging, it doesn't need to be lab-made super-weed, it just needs to get the job done, and to do it for no more money than it ever did in the past. And that last part, is monumentally, painfully, critically important. In fact, while I have no official documentation to back this up, I expect there's a pretty airtight positive correlation here which dictates that the amount a consumer cares about quality, it directly related to the amount of money they can spend.
Then, with smaller amounts of money, that care for quality goes squarely out the window making any higher-than-necessary priced item, not likely to be bought. Understanding basic and realistic price points seems to be an issue in this new cannabis industry, and these high prices back up the disconnect between industry intentions and buyer requirements.
Legal markets have presented a fantastic research point for establishing consumer behavior when it comes to cannabis. And like it or not, if estimates aren't taking into account this behavior, they're not worth the clicks their publications get.
One of the best cases for showing the disparity between legal cannabis markets and the black market, is California, which is currently the biggest single cannabis economy in the world – bigger than Canada or Uruguay, the two countries with recreational legalization.
As of 2019, California legal cannabis sales reached approximately $3 billion alone – an 18% increase from 2018, which right there shows us that there is a valid interest in buying from dispensaries, whether for reasons of quality or legality. The second largest market is Colorado which saw $1.77 billion in sales for last year, and then Canada which brought in about $1.2 billion in non-medical sales. In terms of Uruguay, the longest running legal market, supply issues, and a slower running structural format which requires recreational users to be registered (which in and of itself might be hindering the process) has meant lower sales that aren't competitive in nature to the US or Canada.
Black market numbers are hard to tack down, but they can be estimated. While California brought in about $3 billion in legal sales in 2019, the black market took in an expected $8.7 billion. What this really means is that the legal market diverted about $3 billion from the black market last year.
One of the many reasons undoubtedly causing Californians to forgo the legal means of buying cannabis, is the price. Buyers have a state tax, sales tax, and excise tax to pay. And that's on top of a standard cannabis price which is already a black market price or above. I never bought from a dispensary in California, but I did buy from one in Boston, and I paid 20% tax on the products since in that State, that's the cannabis tax.
I can say personally, I will never buy in a Massachusetts dispensary again, or any dispensary that charges that much. If my options are that, or my friendly neighborhood pot dealer, just guess which one I'm going to pick. Cannabis is a cheap product. The reason it's called 'weed' is because of how readily and easily it grows. So long as a legal market jacks up prices unnecessarily in comparison to its black market counterpart, it should never, not ever, expect to even come remotely close to fully diverting its revenue stream.
In Canada, a similar experience is being felt. Despite the market growing, its not to the desired amount. In fact, in reddit forums for Vancouver, it was repeatedly stated by users that the government cannabis is too expensive, and not high enough quality.
I don't care about most of the estimates out because they're not being realistic to life, or paying attention to trends or complaints. The one glaring issue with the legal cannabis industry is that the price is high. Far too high for people who already have easy and established means of getting their marijuana fix without paying taxes, and who simply can't afford a higher price. If legal cannabis markets really want to divert more income from the black market, they have to lower their prices, and if they don't, the black market will always win. Hands down.
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Alexandra Hicks posted: " In case you haven't heard, Delta 8 THC business has been the talk of cannabis industry stakeholders for a few months now, but is it a worthwhile investment or just a risky move? To understand if investing in Delta 8 thc is a smart business move, you w"
In case you haven't heard, Delta 8 THC business has been the talk of cannabis industry stakeholders for a few months now, but is it a worthwhile investment or just a risky move?
To understand if investing in Delta 8 thc is a smart business move, you will first need to understand: What is Delta 8 THC and what is its legal status in the United States? Let's quickly get a few of those main, burning questions out of the way.
Is it legal? For the record, Delta 8 THC IS legal where it's sold, although the specifics there are bit hazy. Next, does it get you high? Yes, it does, although the psychoactive effects are not as strong as with the Delta-9 THC that most of us are used to. Is it worth it? YES, when bought in bulk from the right manufacturer, you can expect a huge markup on retail pricing, so you will make a lot more than what you bought it for.
Let's dive deep and explore all of these topics in some serious detail. However, before we move on, please subscribe to our DELTA 8 newsletter below, and learn more about the products currently available at the market today.
What is Delta 8 THC?
Although it wasn't so commonly discussed until recently, Delta 8 has been studied for decades and it's one the four most prevalent cannabinoids in the cannabis plant. As expected, it is similar to Delta-9 THC, but there are differences in the chemical structure of this compound. Delta 8 THC is what's known as a cannabinoid analog, also referred to as a structural analog or chemical analog. An analog is a compound that has a similar structure to another compound but with some key distinction.
Think about water, for example, with the chemical formula H2O. This is two hydrogen atoms and one oxygen atom. Water is vital for all forms of life on Earth. If we were to simply add one oxygen atom to this molecule, we would have Hydrogen Peroxide, and drinking that can be fatal.
The efficacy and stability of delta-8-THC make it an extremely valuable cannabis-derived chemical compound. Just like Delta-9 THC, Delta-8 also has some psychoactive properties (less than Delta 9) and some similar medical benefits, although research indicates that it can also be used to shrink tumors and reduce symptoms of nausea in chemotherapy patients.
Cannabis plants only have trace amounts of Delta 8, so companies are extracting this compound and infusing it into various items. Most commonly, it can be found in pre-filled vape cartridges, Delta 8 THC softgels or consumable tinctures.
Now this is where things can get confusing. Is Delta-8 THC legal? The answer is, technically yes, but only in certain states/regions. The following points describe when Delta-8 may be legal and when it is unlikely to be, however, keep in mind that the laws can vary greatly.
Delta-8 THC is likely LEGAL in:
Any country/state where cannabis is legal, delta-8 is legal. This should go without saying, but if the cannabis plant and all its parts and components are no longer prohibited, then delta-8 will obviously be legal as well.
Any country/state where THC and analogues are legal and approved for medical use, delta-8 products are legal - with the correct prescription. This applies as long as a medical system does not exclude THC and its analogues, or require minimal amounts in products of no more than .2% (Europe) or .3% (US).
Delta-8 THC is likely ILLEGAL in:
Any country/state that illegalized all forms of cannabis, delta-8 is illegal. This is because, in this scenario, all parts and compounds found in the cannabis plant are illegal.
Any country/state where THC and analogues are illegal, as well as industrial hemp and hemp flowers, then delta-8 is also illegal. This is because all possible places the delta-8 could be sourced from are prohibited.
In any state/country where THC and analogues are illegal, but the sale of industrial hemp products is legal and regulated independently, delta-8 enters a gray area with a possible legal loophole. Meaning it's technical not prohibited, yet. Keep in mind though, that if any country or state fits into one of the scenarios above, but has wording in their laws that more specifically bans THC and analogues, then the loophole does NOT apply and Delta-8 is likely illegal still.
Is Investing in Delta 8 THC is Good For Your Business?
If you made it this far, you're likely on board with Delta 8. So let's quickly cover why investing in Delta-8 THC could be a great business move for you.
First and foremost, it's legal in most states (42 to be exact). Even though it's prohibited in some areas or stuck in a legal limbo in others, it is certainly much less regulated than Delta-9 THC.
It's in extremely high demand. For obvious reasons – health benefits, slight high, legal status – but it's also great for patients who have found CBD therapy to be unsuccessful.
There is a huge retail markup when purchased from the correct source. For example, we can source you Delta 8 vape cartridges, Delta 8 softgels and Delta 8 tinctures for an extremely low per-unit price, so you will be able to make a good profit when you sell these products individually. Subscribe to the CBD Flowers Business for pricing!
Investing in Delta 8 THC will set you apart from the competition. Yes, Delta 8 is a common topic of discussion in the industry these days, but it's still relatively difficult to find in shops and online stores. Having it readily available make you distinguishable from the other retailers selling only CBD products.
Final Thoughts
There is so much more to say about this amazing compound, from both a medical and business aspect. In my opinion, investing in Delta 8 THC is a great business opportunity that can have wonderful benefits for your consumers by providing them access to therapeutic compound that's legal yet difficult to obtain.
Interested in sourcing DELTA 8 THC products? Subscribe to the CBD Flowers Business for pricing!
