Dive Brief:
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After a year of being able to legally sell their wares, Washington’s and Colorado’s weed retailers are struggling under heavy taxes and fierce competition, reports the Associated Press. Medical marijuana dispensaries and their customers pay lower taxes than those of the retailers, and black-market dealers, of course, pay none.
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Contrary to many people’s predictions, licenses for medical marijuana dispensaries have actually risen, and the black market is also thriving.
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While tax revenues have been part of the attraction for states deciding whether or not to legalize marijuana, Colorado and Washington have generated less revenue than they anticipated, according to the report.
Dive Insight:
Many weed retailers thought they’d continue to face some competition from medical marijuana dispensaries and even traditional black-market dealers, but the growing business in those two areas is surprising many. Many consumers frequenting legal weed shops tend to be tourists and more occasional users who don’t mind paying extra for buying marijuana on the up-and-up, the retailers report. The situation will likely affect other states considering the legalization of marijuana and calls into question the viability of legal pot retail as a business.
"How can you have two parallel systems, one that's regulated, paying taxes, playing by the rules, and the other that's not doing any of those things?" Rick Garza of Washington’s Liquor Control Board, which regulates marijuana, told AP.
