State legislators are trying to dissolve the marijuana black market, which was one of the goals under Amendment 64. Since recreational marijuana was legalized in Colorado the projected production is significantly lower, which is creating inflated pricing that contributes to make the black and grey markets flourish.
The Marijuana Enforcement Division’s data was revealed today, it estimated that Colorado needs about 287,259 pounds of marijuana for 2014. So far, approximately 170,000 pounds is available, leaving about 40 percent of the cannabis market to be seized by unlicensed sellers. Now Colorado is looking to increase legal pot production.
Rocky Mountain PBS, Inews spoke with Executive Director of Marijuana Industry Group, Mike Elliott who said the state needs to match production with demand. Elliott believes if the balance of supply and demand for marijuana tilts too far one way, the state could lose marijuana business to other states, and open paths for the black market.
State policy makers believe more pot is needed, but legal marijuana business owners disagree.
While Colorado lawmakers consider changing policy regarding the legal production limits, marijuana shop owners say it’s the tax policies that pushes up the cost to consumers. Legitimate pot shops pay federal income, but under an outdated tax code, 280E, business owners can’t take the same deductions like other companies. They also have to contend with excessive high rents, and state fees.
Colorado legal marijuana sales tax is about 21 percent, while the medical marijuana industry is about 50 percent lower, at 7.6 percent. In turn, this creates high retail costs, and so cannabis connoisseurs are most likely going to purchase pot from the “grey market”-- from those allowed to grow up to six plants, people can easily purchase cheaper weed.
Local Colorado 9News reported, Ron Kammerzell, deputy senior director of enforcement for the state Department of Revenue said, "right now we are pretty significantly under what should be produced."
It appears Colorado legal pot production may not meet the states estimated quantity to avoid opening a black market, and will examine policy amendments to help reach their goals.