[Canniseur: The black market will only recede when there’s plenty cannabis (flower) on the shelves. In the medical cannabis market there’s an absolute shortage of cannabis. When adult use dispensaries open later this year, the shortage will become so acute the black market will flourish…just like it is now. There are just not enough State licensed cannabis growers to properly supply stores. Way to go Pure Michigan.]
Michigan State Police Lt. Chris Hawkins knows where the illegal weed is.
He’s sent undercover police officers to dispensaries, who have bought “medical” marijuana without having to show patient registration cards or any form of I.D.
Will he go after the people who sold the cops weed? Probably not.
Hawkins, who is in charge of the state police’s Marihuana and Tobacco Investigation Section, said his department has limited resources to address black market marijuana.
“We want to try to focus our resources in areas where we will obtain criminal charges and prosecution,” Hawkins said.
Fortunately for most of the brick-and-mortar criminal enterprises in the state, they’re located in counties where prosecutors aren’t hard on weed, Hawkins said.
And so the police let it slide. The issue is rampant.
“We’re literally seeing hundreds of businesses that have opened up across the state and sell recreational marijuana without a license,” Hawkins said.
It’s caught the attention of both Marijuana Regulatory Agency Director Andrew Brisbo and Attorney General Dana Nessel, who had a meeting about illegal operators.
“We talked about, at some point we really have to start coming down on those who are operating illegally. Just the same way we would, by the way, if you were selling cigarettes illegally. Just the same way we would if you had manufactured moonshine in your bathtub, and nobody had tested that to find out if it was safe, and you didn’t have a license to sell it,” Nessel said of her conversation with Brisbo. “So, at some point, you know, that’s going to be part of the function of our office is to make certain that the laws are enforced and that it’s properly regulated.”
The Marijuana Regulatory Agency responded to questions from MLive with the following statement: “The MRA cooperates closely with our law enforcement partners — particularly the Michigan State Police — and will continue to forward on complaints and information related to unlawful operations. We believe the goals of the MRA, law enforcement, and the regulated marijuana industry are the same — reduce the black market so that consumers are safe and legal businesses are successful.”
Much of the marijuana on the black market is coming from patients or caregivers that have grown too much marijuana for their own needs, Hawkins said. A 2008 law allows caregivers to grow up to 12 plants per up to five patients — a total of 72 plants.
Since the regulated medical marijuana market launched in late 2018, caregivers have been selling their overages directly to licensed provisioning centers. State regulators allowed it to happen by telling businesses the practice would not put their state license in jeopardy.
“Growers would rather sell to a provisioning center than to a guy on the street. It’s safer,” said a Metro Detroit caregiver who MLive is keeping anonymous, as he sells marijuana illegally on the black market.
That practice ended this May due to state intervention, though caregiver marijuana is still dominating the regulated market: 19 percent of all of the flower sold in June was grown at a licensed facility, according to state figures.
Now caregivers can only sell their product to licensed growers or processing facilities.
But to caregivers, the black market is still more lucrative — and easier to deal with.
The Metro Detroit caregiver said a licensed Ann Arbor business told him it would take five weeks to complete a sale.
“Five weeks? I could sell it in five minutes,” the caregiver said, explaining he has unlicensed dispensaries and unlicensed delivery drivers asking for his products.
Since the adult-use legalization law took effect in December 2018, the caregiver said demand has skyrocketed, the supply has shrunken and prices have gone up across the board.
As licensed medical marijuana provisioning centers are charging higher prices for their products to cover the costs of mandatory testing and regulatory fees, black market operators like the Metro Detroit caregiver are raising their prices as well. He’s now making 25 percent more on his top-tier indoor-grown weed, and is making double on his mid-grade quality greenhouse-grown product.
It’s not just brick-and-mortar dispensaries operating outside the bounds of the law. Illegal delivery drivers cruise Michigan streets daily; their activities broadcast for all to see online through the website Weedmaps.
Medical marijuana businesses — both legitimate and illegitimate — pay to list their inventory on Weedmaps. Some sellers have been offering home delivery for months, long before state officials were able to issue any official licenses.
Weedmaps declined to comment for this story, but the company has not let the Michigan market go unnoticed: highway corridors across the state were peppered with Weedmaps billboards this spring.
The state officials who are in charge of licensing medical marijuana businesses and legitimate home delivery drivers won’t comment on Weedmaps, as it’s not an entity they regulate. Hawkins and the MSP know about them too, but can’t do much.
“The resources we have to address black market unlicensed marijuana are very limited,” Hawkins said.
To licensed medical marijuana businesses who have paid tens of thousands of dollars to play by the rules, action can’t come soon enough.
“We work with LARA inspectors, we work with the state police, we work with the regulators. Our compliance is perfect,” said Stuart Carter, owner of the licensed medical marijuana provisioning center Utopia Gardens in Detroit. “Yet we’re seeing a downturn in our sales. For every dispensary, there’s four illegal delivery services.”
Carter said he’s tallied up more than 200 unlicensed delivery drivers advertising on Weedmaps — most of which operate in metro Detroit. Unlicensed delivery services offer a bigger menu of products — which could come from anywhere — and none of it is tested, taxed or tracked by the state.
“They are the 800-pound gorilla in the room,” Carter said of Weedmaps. “Anyone who wants to do business in the industry has to do business with them.”
That includes Carter’s Utopia Gardens. He pays $15,000 a year to advertise his business on the website.
Though Utopia Gardens and several other provisioning centers have launched their own state-licensed home delivery service for medical marijuana, Carter said it’s not enough to stop Weedmaps. Carter said he’s working with lobbyists to push for legislation similar to a bill that has passed the California House and is now before its Senate.
Faced with their own influx of illegal delivery drivers working through Weedmaps, California lawmakers put forward a bill that would require anyone advertising marijuana sales to include the state license number for the establishment it’s connected to — and face a fine of $2,500 per violation per day.
Carter said passing a similar law in Michigan would give authorities something concrete to enforce.
Weedmaps has previously skirted California authorities. The site claims its activities are protected under a section of the Communications Decency Act — a clause that protects websites like Facebook from being liable for what users post.
With or without Weedmaps, the black market in Michigan would find a way.
“I’m not aware of any state that has legalized and commercialized recreational or adult use that has made a claim that it has eliminated or even diminished their black market,” Hawkins said. “In some cases it’s even grown.”
That doesn’t mean police are doing nothing. Hawkins said his officers are investigating a recreational marijuana “gifting” scheme at the request of a county prosecutor. Giving marijuana as a gift is legal in Michigan, but it’s not legal to accept any form of remuneration. Some entrepreneurs have tried to skirt the law by selling unrelated items like T-shirts and chocolate with gifts of weed.
Many are hopeful that once the regulated market for medical and recreational marijuana is fully functional, the black market will diminish. But that will take enforcement — and time.
“I don’t know how the licensed industry survives when there’s a thriving black market where marijuana can be sold untested,” Hawkins said.
— Amy Biolchini is the marijuana beat reporter for MLive. Contact her with questions, tips or comments at firstname.lastname@example.org. Reporter Emily Lawler contributed to this story. Read more from MLive about medical and recreational marijuana.
This article first appeared in M-Live