Diversion from the Black Market Also Involves People, not just Plants

Much of the focus in the coverage of state regulated marijuana has been on the plants, the product, and the money. Michelle Alexander, Associate Professor of law at Ohio State University and renowned author, has illuminated the irony of a movement where whites are now looking to marijuana with dollar signs while communities of color still suffer the consequences of the failed war on drugs. “Here are white men poised to run big marijuana businesses, dreaming of cashing in big—big money, big businesses selling weed—after 40 years of impoverished black kids getting prison time for selling weed, and their families and futures destroyed. Now, white men are planning to get rich doing precisely the same thing?” This highlights the importance of focusing on the people, especially those communities who have been affected most, in the rehabilitation of California’s relationship with marijuana.

No matter how you view marijuana reform, any chance of a successful rehabilitation of California’s drug policy must focus on people. Some see marijuana reform as a civil rights issue, citing the failed war on drugs and overcrowding of prisons as evidence that change is needed. If you view reform as a civil rights issue, how do you reconcile that belief with a system where the people who have been the most adversely affected by the war on drugs are now precluded from taking part in the state-regulated market? Others see drug use as something that isn’t going to change, so the government might as well collect additional tax revenue. If you are part of the group who sees dollar signs from tax revenue, the success of taxation depends on a shift from the black market to the legitimate market. This would depend on those currently operating in the shadows being able to operate, or get hired by, legitimate businesses. Regardless of the policy goal, the most important aspect of rehabilitating California’s relationship with marijuana is the shift from the black market to the legal market, which includes the people.

Black market marijuana is grown and sold by a black market labor force. What happens to that labor force when marijuana is legalized? The Cannabist recently published an article on black market growers in Colorado’s state regulated market. Titled “A divided weed world: Black market growers and legit industry jobs,” the article addresses the problems of merging the black market and the legitimate marijuana trade. First, there are the legal hurdles to overcome. If a person has a certain criminal record, he or she legally cannot receive a business license. Those looking for employment at a cannabusinesses must be of good moral character, meaning any criminal history will be considered. Additionally, black market growers aren’t financially incentivized to enter a legal market, where they will take a significant pay cut if they can even get a job. The competition for work is high and most available jobs are entry-level, paying $10 per hour.

Additionally, the legitimate marijuana business is wary about including those who previously operated in the shadows. Being “in any way connected to black market growers (or any type of crime) is the kiss of death in this business.” Not only is it a legal issue, legitimate marijuana businesses are split on the benefit of including black market growers in their operations. Some business owners cited applicable knowledge and experience as the positives of a black market background, but applicants are “better off never mentioning he or she has experience growing and selling their own.” Even in the absence of a criminal record, there is a “stigma that comes with being a black market grower.” There is the concern about bad habits that would be carried over and the sometimes-rocky transition of going from being your own boss to integrating into an already established and functioning business.

While the Cannabist article explored some the problems faced by a small segment of the black market in Colorado, it provides a lens with which to view the broader problem of integration into the legal market in California. Not only will there be growers needing to transition to the legitimate market, there will be trimmers, processors, and dealers. Street level dealers and trimmers do not have the same level of specialized skill and knowledge as growers. Dealers may arguably have more of a tendency to flout laws, for example by selling to minors. Each different area of employment will bring to light different problems and policy considerations.

There is also the criminal history of black market workers to consider. A criminal record makes it difficult to find any gainful employment, but this will be exacerbated in the legitimate marijuana market by regulations that exclude the justice involved from receiving licenses or being hired. The effect of criminal records for both licensing and employment purposes will have a greater impact on communities of color in California, where Latinos are arrested at higher rates than whites, and Blacks are arrested at an even higher rate. While there will be disparate impacts from barriers based on criminal history in California, there are also race-neutral reasons for excluding the justice-involved in the state regulated market that require consideration. For example, it would be reasonable to refuse a business license to an individual convicted of financial crimes to prevent money laundering. Also, because legitimate marijuana is still a cash-only business, barring convicted tax evaders or embezzlers would be sensible policy.

Furthermore, economic requirements, wages, and competition will be a contributing factor to keeping black market workers from turning legit. The licensing structure and any vertical integration requirements could prevent individuals from opening their own businesses. Like in Colorado, those making money in the black market will not be incentivized to transition to the legal market at a significant pay cut, where their wages will also be taxed. In California, where we have one of the nation’s highest wealth gaps and where Black and Latino communities have much higher poverty rates than whites, economic barriers also adversely affect communities of color. This reinforces Michelle Alexander’s point that those with the money and the privilege will be the people profiting off of marijuana reform.

My future posts for the Drug Law and Policy Blog will delve into the barriers to entry into the future state-regulated market for black market workers in California, with a focus on policy that will best serve to bring them into the fold. Ultimately, there is a general lack of information in about the black market in California, including the racial make up of the labor force, so there are questions that will go unanswered. This fact remains true – without transitioning the black market workforce to the legitimate market, marijuana reform will not succeed in the way we hope. Stay tuned for more information as I wade through the murky waters of black market industries and the ever-evolving arena of state-regulated marijuana.

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