A Thought About Black Markets

A line from John Hudak’s book Marijuana: A Short History is worth thinking about if we are someone who frequently thinks about public policy. Hudak writes, “The black market just has to deliver marijuana; the legal market must meet consumer demand.” 

 

Hudak’s line comes from an early paragraph in his book where he discusses historical trends in the strength of marijuana overtime. Marijuana strength is often measured by the amount of THC in the final product to be consumed. Dr. Mahmoud ElSohly, a researcher with the University of Mississippi, has been analyzing the THC content in seized marijuana since the 1970’s and has found that THC content has increased overtime from about 3% to 7-8%. However, marijuana that can now be purchased in dispensaries in states that have legalized marijuana often has a much higher THC content, closer to 20% or more.

 

My interest is not so much in the marijuana itself, although the plant and product is interesting (Note: I have asthma and can’t smoke and I have never tried any edible forms of marijuana). What is really interesting is the degree to which the black market under-served those who wanted to purchase marijuana from 1970 to today. Marijuana that could be purchased from a drug dealer or a friend was not as potent as people would have liked. If people were intent to buy marijuana, their only option was a product that we would consider inferior to the options available in states that have legalized marijuana today, a product that many likely wouldn’t chose if they’d been able to chose an alternative product.

 

The point I want to highlight is not that people were purchasing weak marijuana from the 1970’s until 2019 when Hudak’s book was published. Instead, the point I am trying to make is that the black market delivers sub-par products to people who use them. In the case I am writing about, illegal supplies of marijuana were simply less potent, not something that non-marijuana users are likely to care much about. However, if we think about other black markets, we should be more concerned about the products that people purchase illegally. Other black market products, that people cannot obtain legally and that cannot be regulated by a true market mechanism, likely come with more dangers than just being weak. Other illicit drugs can be even more dangerous and harmful when purchased on the black market. Health products, purchased on the black market where they might be cheaper than licensed and regulated products obtained legally, could also pose serious risks of harm.

 

This creates an argument for reasonably regulated markets, even of things we find deviant and would rather people be unable to purchase. We want some type of government oversight to ensure that products and services are safe, effective, and authentic, but we should be concerned about government regulation that drives a product or service into a black market. The market itself will find a way  to deliver the service or product, but it may do so in a dangerous and illicit manner. Government and regulation can be forces for good and bad within this dynamic. What is important is that we think critically of how regulation relates to markets, and consider the impact on people’s lives, including the lives of those who will still pursue a product or service once it is forced to a black market.

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