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Nearly One in Five California Cannabis Consumers Still Buy from Black Market

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A new study has found that in California—despite having the world’s largest legal cannabis market—nearly one in five cannabis consumers have purchased cannabis products in an illicit marketplace in the last three months.

The study, conducted by cannabis delivery company Eaze, compiled 1,750 surveys from California, Colorado and Eaze cannabis consumers between July 6 and July 12.

The study found 18 percent of California respondents purchased cannabis from an unlicensed business in the previous three months, and 84 percent of those respondents are “highly likely” to continue purchasing from the same source again due to the cheaper products and no taxes. On the other hand, 96 percent of respondents made a purchase from a state-licensed business, with 92 percent saying they would definitely or probably purchase from the legal market again.

Taxes were always a concern for California when legalization began, with many noting California had the higher taxes than other states with legalized cannabis. Legal cannabis in California was expected to bring in $1 billion in tax revenue, but the state is off to a slow start. Earlier this year, Gov. Jerry Brown estimated legal cannabis sales would bring in $175 million in excise tax revenue. The state brought in $34 million in excise tax revenue during the first quarter of 2018. Including sales and cultivation taxes, the state brought in $60.9 million in cannabis-related tax revenue through the first quarter.

The high taxes on California cannabis seem to be what is keeping the black market up and running. 47 percent of Californians said their biggest complaint about the legal industry was the high taxes, and the study found a five percent cut to the state’s cannabis tax would bring 23 percent of illegal consumers back to the legal market. Other complaints included the inability to use credit or debit cards and overpriced products.