Legal pot vs. black market a balancing act – Crain's Detroit Business

Last week, a Michigan Court of Claims judge issued a temporary order to prevent the state from forcing roughly 52 unlicensed medical marijuana dispensaries to close. The judge gave those dispensaries another two weeks to obtain a license to sell the medical cannabis in response to the state’s slow pace of approving licenses.

Michigan regulators are battling to rally enough resources to approve the glut of new applicants — more than 140 medical dispensary applications are waiting for approval — at the same the framework for recreational adult-use marijuana industry is being drafted.

Four months ago, Michigan voters made recreational use of marijuana legal, and now regulators must tiptoe the line between strict regulation and economics to create a whole new market. The trick is keeping the barriers to entry low enough to dampen the illicit black market of drug dealing, while making good on the promise of creating a robust new stream of tax revenues for the state.

It’s a complicated balance.

California allowed recreational marijuana sales on Jan. 1, 2018, with high hopes of filling tax coffers. Yet sales fell instead.Roughly $2.5 billion of legal cannabis was sold in California in 2018, down from $3 billion in 2017 when only medical marijuana was legal, according to sales tracking firm GreenEdge.

Getting residents to vote for legal recreation weed proved easy in Michigan, California, Colorado and seven other states, but getting users to stop buying from the black market is proving difficult.

In Michigan, the gray area between legal and illegal sales since the November vote is causing police to largely turn a blind eye, said Stuart Carter, owner of medical marijuana dispensary Utopia Gardens on East Lafayette in Detroit. The dispensary also plans to apply for its recreational license when the state starts accepting applications later this year. 

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