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US: Weeding out gray market cannabis operators presents special challenges for states

Efforts to legalize adult-use and medical cannabis do not show signs of slowing up, with nearly 39 states having legalized cannabis in some capacity (and 21 states and the District of Columbia now allowing adult-use). Legalization efforts usually rely, at least in part, on the promise of tax revenue which (in many states) results in higher prices than what the black (or "gray") market provides. The proliferation of that illicit market of unlicensed operators is also the result of the decriminalization of many cannabis-related offenses, and, in states like New York, previous participants in that market are at the front of the line for social-equity-related licenses.

This, unfortunately, sets up legal operators for failure in some states (as has been amply demonstrated in California, which allowed the illicit market to proliferate for over a decade). Understandably, most states are loath to engage in a "War on Drugs 2.0" by using the police to crack down on the operators of stores selling illicit (and untaxed) cannabis.

This dynamic is complicated by the fact that unregulated cannabis sales also pose significant concerns relating to consumer health and safety, as cannabis sold on the gray market is not subject to the same stringent testing requirements as cannabis sold under state laws and regulations. Indeed, cannabis sold on the gray market is not subject to any testing or regulatory requirements at all, raising the risk of contamination and other harmful side effects.

Read more at reuters.com

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