Malia Knapp celebrates the Denver 420 Rally with her friends at Civic Center in April 2012. (Hyoung Chang, The Denver Post)

After pot legalization, focusing on a new and transformed black market

The black market for marijuana in Colorado isn’t what it used to be.

Nine or 10 years ago, the narrative of illicit cannabis in the state focused on illegally grown product filtering in from Mexico, California and elsewhere. Now it seems officials and experts are more concerned about Colorado-grown marijuana infiltrating other states, a trend that is seeing a significant upward trajectory, according to data obtained by The Denver Post.

“In a lot of ways, our legal industry has become the black market for other states,” said Tom Gorman, director of the Rocky Mountain High Intensity Drug Trafficking Area.

Although some facets of Colorado pot are simple to quantify — taxes, sales, demand — the black and gray markets are by definition difficult to track, especially in the first year of legal recreational sales. It doesn’t help that the underground market is a complex, multi-headed beast.

“There are four black markets,” said Mark Kleiman, a professor of public policy at the University of California Los Angeles. “There’s people growing it in Colorado to sell in Colorado. People bringing stuff up from Mexico to sell in Colorado. People with medical cards reselling their marijuana in state and out of state, including sales to minors. And there may be some diversion from the commercial market: People buying it retail in Denver and selling it in Chicago or somewhere else.”

For example: The black market is straight up illegal. The gray market represents gray areas of the law among unlicensed, unregulated caregivers.

It’s true: How legal pot forced this weed grower out of the biz

So what do the local black and gray markets for marijuana look like almost a year after recreational sales started on Jan. 1?

“We say this with regard to everything on these societal impact-type questions: It’s too early to tell,” said Ashley Kilroy, the city of Denver’s executive director of marijuana policy.

Some industry experts agree with Kilroy on that point.

“It’s absurd that a system that has grown over 80 years would end in a week or a year,” said Mason Tvert, communications director for the Marijuana Policy Project and a director on Colorado’s pot-legalizing “Yes on 64” campaign. “This is an issue that cannot be addressed in a year.”

Ripple effect

With the pot coming into Colorado, the situation looks to be improving. Some Mexican marijuana growers have abandoned the crop entirely because stateside legalization has cut wholesale costs in half. “I wish the Americans would stop with this legalization,” 50-year-old lifelong pot farmer Rodrigo Silla told The Washington Post in April. Another Mexican farmer, identified only as Nabor, told NPR in November: “If the U.S. continues to legalize pot, they’ll run us into the ground.”

But with the pot leaving Colorado, a sticking point for the U.S. Justice Department is that it must prevent “the diversion of marijuana from states where it is legal … to other states.” The situation is getting worse. There is substantial data pointing toward an increase in the amount of legal and illegal pot being seized on its way out of Colorado to other states.

The number of Postal Service-mailed packages containing pot intercepted in Colorado increased by 1,280 percent from 2010, when there were 15 seizures, to 2013, when there were 207, according to HIDTA, a federally-funded drug task force. (The data did not include FedEx, UPS or other carriers.) The agency said the pounds of marijuana in those packages increased by 762 percent in the same time period, from 57.2 pounds in 2010 to 493 pounds in 2013.

“Some of the pot is out of dispensaries,” said Gorman, who spent 30 years with California’s Bureau of Narcotic Enforcement. “Some is out of retail stores, some is out of home grows, some is from co-ops, some is from patients and caregivers — you take that whole segment, and that to me is what the black market looks like now in Colorado.”

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