Tag: black market

Too High To Thrive: Excessive Cannabis Taxes Are Undermining Legal Markets

In recent piece, The New York Times editorial board called for a federal tax on cannabis and urged states to raise their own taxes to “dollars per joint, not cents.” That argument assumes cannabis is lightly taxed today—but across the country, the opposite is true.

Taxes on legal cannabis are higher than almost every industry in the United States and have generated nearly $25 billion since adult-use sales commenced in 2014. Despite these rates, efforts to increase cannabis levies are continuing to gain steam.

In 2025 alone, Maryland, Minnesota, Maine, Ohio, Michigan and California attempted to raise or expand cannabis taxes. This year, Colorado and Oklahoma are looking to do the same. Many of those proposals emerged as lawmakers confronted budget shortfalls and the expiration of federal pandemic aid. Cannabis has increasingly been treated as an untapped source of revenue.

In several large markets, cannabis taxes are layered on top of one another. Excise taxes are combined with state sales taxes, wholesale taxes, local taxes and, in some cases, potency-based taxes. In states such as Illinois, Michigan and Washington, the effective burden can exceed 40 percent. This is in addition to the federal tax burden cannabis businesses carry under §280E, which limits their ability to deduct ordinary operating expenses.

These structures are straining the legal market. High tax burdens are contributing to business closures (particularly among smaller operators) and pushing many consumers to the illicit market.

According to publicly available data, several highly taxed states, including California, Colorado, Illinois, and Washington, have experienced year-over-year declines in adult-use sales and industry job losses in recent years. At the same time, the illicit markets across these states remain entrenched. In California, one of the nation’s oldest legal cannabis markets, estimates suggest that roughly 60 percent of sales still occur outside the regulated system.

Higher taxes do not eliminate consumer demand. They simply change where consumers buy their cannabis.

Licensed businesses pay for testing, packaging, compliance systems, labor and sometimes local licensing. Unregulated sellers do not. When the legal price rises too far above the illicit alternative, price-sensitive consumers shift accordingly. That weakens the regulated market that legalization was intended to build. When tax increases take effect, the impact shows up quickly in wholesale pricing pressure, retailer margin compression, and shifts in purchasing behavior.

The cannabis industry is still new, but data tell us that the type of tax matters as much as the rate.

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Owners and CEO of Wholesale Pharmaceutical Company Sentenced for Distributing More Than $92M of Black-Market HIV Drugs

Two owners of a pharmaceutical wholesale company were sentenced Friday to a total of 38 years in prison for orchestrating a complex, nationwide drug diversion scheme that harmed vulnerable HIV-positive patients, placed countless others at risk, and corrupted the supply chain for prescription drugs in the United States.

“Patrick and Charles Boyd did not just commit fraud and cost taxpayers millions of dollars, they preyed upon some of the most vulnerable members of our society: HIV patients who depend on life-saving treatments to manage their disease,” said Assistant Attorney General A. Tysen Duva of the Justice Department’s Criminal Division. “Fraud schemes like this one undermine the integrity of our supply chain for necessary prescription drugs. These defendants will rightly spend years in prison for their reprehensible conduct, which took advantage of people for illicit profit. This case is another example of how the Criminal Division, our United States Attorney partner in the Southern District of Florida, and law enforcement will pursue and seek convictions of those who defraud our systems, endanger our citizens, and seek to line their pockets with fraud proceeds.”

“These defendants treated life-saving HIV medication like street contraband,” said U.S. Attorney Jason A. Reding Quiñones for the Southern District of Florida. “They bought drugs off the street from black-market suppliers, shipped them in dirty boxes and discarded packaging, falsified paperwork, and pushed those medications back into the legitimate pharmaceutical supply chain. The consequences were real. HIV patients received bottles containing the wrong drugs, and at least one patient lost consciousness after ingesting medication that should never have been in that bottle. As a former military prosecutor, federal prosecutor, and trial judge, I have seen how greed can drive dangerous schemes. When criminals gamble with patient safety for profit, federal prison is the result.”

“Friday’s sentence underscores the extreme danger these defendants created,” said Acting Deputy Inspector General for Investigations Scott J. Lampert of the U.S. Department of Health and Human Services, Office of Inspector General (HHS‑OIG). “They took life‑threatening actions that showed an alarming disregard for human life in service of nothing more than a payday. Their criminal scheme endangered vulnerable patients, put entire communities at risk, and undermined the integrity of Medicare and Medicaid. HHS‑OIG will continue working with our law enforcement partners — and using every tool in our arsenal — to pursue and dismantle illegal black‑market rings that seek to corrupt the nation’s drug supply and exploit taxpayer‑funded health care programs.”

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The Heavy Pot Taxes Favored by The New York Times Would Undermine Legalization

The New York Times embraced legalization of recreational marijuana in 2014, two years after Colorado and Washington became the first states to take that step. By that point, most Americans opposed pot prohibition, and that majority has grown since then.

Although the Times does not regret endorsing legalization, its editorial board now says stricter regulation and heavier taxation are necessary to curtail the costs associated with marijuana abuse. Those recommendations elide two inconvenient facts: Cannabis is still federally prohibited, and states are still struggling to replace unauthorized pot peddlers with government-licensed marijuana merchants.

The Times emphasizes that “occasional marijuana use is no more a problem than drinking a glass of wine with dinner or smoking a celebratory cigar.” But while marijuana “is safer than alcohol and tobacco in some ways,” the Times says, “it is not harmless.”

Frequent cannabis consumption has increased substantially in recent years, the Times notes, and roughly one in 10 marijuana users “develops an addiction.” Even nonaddicted cannabis consumers “can still use it too much,” it says, since “people who are frequently stoned can struggle to hold a job or take care of their families.”

The Times also mentions cannabinoid hyperemesis syndrome, “marijuana-linked paranoia,” and the danger posed by stoned drivers. “Any product that brings both pleasures and problems requires a balancing act,” the Times says, which means “personal freedom” must be curtailed to protect “public health.”

That formulation is inherently paternalistic, since the “public health” burden to which the Times refers is borne mainly by cannabis consumers themselves. And the moral logic of the hefty marijuana taxes that the Times favors is questionable.

Those taxes would add to the difficulties that some heavy consumers face while punishing the occasional use that the paper says is no big deal. Although “adults should have the freedom to use” marijuana, the Times says, they must pay the government for that privilege.

A tax-based “balancing act” also raises practical difficulties. “The first step in a strategy to reduce marijuana abuse should be a federal tax on pot,” the Times says, gliding over the point that Congress cannot impose an excise tax on marijuana products unless it is prepared to legalize them.

The editorial does not explicitly acknowledge the need for that step. To the contrary, it implicitly criticizes President Donald Trump’s decision to reclassify marijuana under federal law, which falls far short of legalization.

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Amid Raging Drug War Trump’s Hemp Ban Will Further Empower Cartels

During his first term, the Trump Administration’s legalization of hemp in the 2018 Farm Bill was seen as a fantastic win in the crusade to legalize cannabis across the country. Thanks to the bill, not only was hemp cultivation legalized for industrial use, but an additional loophole also paved the way for the legalization of a psychoactive cannabinoid known as Delta-8-THC, which has received high praise for its numerous medicinal uses without the accompanying intensity that comes with a typical cannabis high.

According to the National Cancer Institute, delta-8-THC can be defined as:

“An analogue of tetrahydrocannabinol (THC) with antiemetic, anxiolytic, appetite-stimulating, analgesic, and neuroprotective properties. [Delta-8-THC] binds to the cannabinoid G-protein coupled receptor CB1, located in the central nervous system…This agent exhibits a lower psychotropic potency than [delta-9-THC], the primary form of THC found in cannabis.”

Hemp cultivation has a long history in the United States marred by restrictive prohibition at the behest of industrial tycoons of the early 20th century who were threatened by hemp’s capability to replace the petrochemical industry due to its potential to create more effective, cleaner, and safer alternatives for thousands of products; capable of replacing oil, plastic, lumber, paper, and cotton.

The passage of the 2018 bill presented a promising future for the cultivation of hemp in the United States to potentially revolutionize domestic infrastructure, in addition to serving as a victory for advocates of personal freedom. However, new legislation threatens to change all of that.

The recently passed federal spending bill includes a provision intended to close the aforementioned loophole, banning hemp derived THC products in a move that CNBC notes threatens a growing 28 billion dollar industry.

“What this ban is going to do is it’s going to force all those little players right now into the illegal market. Companies have got way too much money invested in this and the demand is still there and growing. They [companies] aren’t just going to go away, they’re just going to go into the illicit market and put more people at risk.” Said Boris Jordan, CEO of cannabis company Curaleaf.

The move, spearheaded by Kentucky senator Mitch McConnell, who led the charge to pass the original 2018 bill and said to be his final major act in Congress before his retirement next year has been sharply criticized by colleagues such as senator Rand Paul, who worked with McConnell on the original legislation.

“This is the most thoughtless, ignorant proposal to an industry that I’ve seen in a long, long time,” Paul said after the ban was passed. 

This move represents the latest ridiculous folly in the failed war on drugs, as Congress attempts to legislate morality over the rights of individuals self ownership, prohibition will only continue to do what it has always done and fuel the growth of illicit market industry.

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Belgium’s descent into a narco state: How cartels have taken control, with machine-gun street battles killing kids as young as 11 and so much cocaine flowing that police incinerators can’t destroy it all

At 21, Zakaria El Kasmioui was already the boss of a young criminal gang that generated an estimated £25 million by importing tonnes of cocaine through the port of Antwerp – the drugs gateway of Europe.

At 29, the kingpin appears on Belgium’s ‘Most Wanted’ list and has been sentenced to 10 years in prison, but he is believed to have evaded capture by relocating to a luxury skyscraper in Dubai where he continues to expand his collection of Rolex watches and Louboutin trainers.

Kasmioui, who goes by the deceptive nickname ‘Piwi’ (meaning ‘idiot’), is but one part of Belgium’s spiralling cocaine problem, where drug lords preside over mafia-like gangs and rival the police and judiciary for control of the country.

The situation is so alarming that a senior investigative judge broke her silence, warning that her nation was rapidly evolving into a ‘narco-state’ because of the ‘billion-dollar’ black market industry.

‘We are facing an organised threat that is undermining our institutions,’ wrote the terrified judge in her 1,000-word anonymous open letter, pleading for ‘a government that takes responsibility for protecting its own foundations’. 

The whistleblower paints a grim picture of state corruption, revealing how drug cartels have infiltrated every fibre of Belgium society – from customs personnel to police forces and employees of the justice system in prisons and courts. 

Not only that, but senior officials have been forced to live under permanent police protection because of threats from gangsters, who are using Snapchat to order home bomb attacks and kidnappings for a few hundred euros apiece.

Without immediate action, more innocent civilians – who have nothing to do with the criminal underworld – risk getting wrapped up in the violence, with Brussels alone recording 92 shootings last year, killing nine and injuring 48.

In 2023, cocaine seizures in Europe hit a record for the seventh consecutive year, with 419 metric tonnes confiscated by authorities. 

Belgium led the way with 123 tonnes – 116 tonnes in Antwerp alone – followed by Spain (118 tonnes) and the Netherlands (59 tonnes), as the three countries with major ports accounted for 72 percent of the total amount grabbed by agents.

However, seizures likely represent only 10-20 percent of the total amount of the drug in circulation, and gangs fully anticipate that a proportion of their deliveries will be discovered. 

Still, the profits are huge, with demand for the substance showing no signs of faltering – its street price has held steady at around €50 per gram for the past decade.

And as rival gangs compete to cash in on the £11 billion trade, their bloody turf wars are spilling out on to the streets.

On Thursday, the dismembered body of Tijn, a 25-year-old man who had gone missing from Alkmaar in September, was discovered at a holiday home in Belgium.

Reports in local media suggest his death was linked to a drugs dispute – the latest incident in a string of gruesome cases which have been plaguing the western European country for years.

In 2022, 46-year-old Yacine El M’Rabet was tortured to death in Brussels for reportedly stealing cocaine from his bosses Michaël Pindeville and Ahmed El Battouti.

He was discovered on the side of the street after reportedly having been burned on his genitals with an iron and with a homemade blowtorch, doused with ammonia, and beaten with a gas canister and a metal bar, which was also used to rape him.

That same year, Dutch media reported that a 17-year-old had his earlobe cut off, tendons in his hand severed, and a piece of one of his toes removed after he was suspected of having tipped off another gang about the location of 300kg of cocaine in East Flanders.

In a particularly hideous case, an 11-year-old girl was shot dead in Antwerp in 2023 after being caught up in the crossfire of warring drug traffickers.

The child, who was from the Merksem district, was having dinner with her family when the house they live in was shot at.

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Perth men charged over seizure of more than five tonnes of illicit cigarettes, vapes and loose tobacco

Two Perth brothers have faced court charged over the alleged distribution of illicit tobacco products in WA after the seizure of more than four million cigarettes, about 50,000 vapes and almost 900 kilograms of loose-leaf tobacco.

The Australian Federal Police (AFP) charged Nedlands man Hossein Al Mansouri, 32, and Dianella man Mousa Al Mansouri, 33, as part of an investigation into a national organised crime syndicate allegedly selling illicit tobacco and vaping products in WA, then sending the profits back to the eastern states.

Police allege illegally distributing the seized products would have avoided about $8 million in Commonwealth excise and taxes.

The AFP and WA Police, along with Australian Border Force, say they executed multiple search warrants in Perth in August.

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FDA’s War on Commonsense Nicotine Regulation

Nicotine pouches—small, smokeless packets tucked under the lip—deliver nicotine without burning tobacco. They eliminate the tar, carbon monoxide, and carcinogens that make cigarettes so deadly. The logic of harm reduction couldn’t be clearer: if smokers can get nicotine without smoke, millions of lives could be saved.

Sweden has already proven the point. Through widespread use of snus and nicotine pouches, the country has cut daily smoking to about 5 percent, the lowest rate in Europe. Lung-cancer deaths are less than half the continental average. This “Swedish Experience” shows that when adults are given safer options, they switch voluntarily—no prohibition required.

In the United States, however, the FDA’s tobacco division has turned this logic on its head. Since Congress gave it sweeping authority in 2009, the agency has demanded that every new product undergo a Premarket Tobacco Product Application, or PMTA, proving it is “appropriate for the protection of public health.” That sounds reasonable until you see how the process works.

Manufacturers must spend millions on speculative modeling about how their products might affect every segment of society—smokers, nonsmokers, youth, and future generations—before they can even reach the market. Unsurprisingly, almost all PMTAs have been denied or shelved. Reduced-risk products sit in limbo while Marlboros and Newports remain untouched.

Only this January did the agency relent slightly, authorizing 20 ZYN nicotine-pouch products made by Swedish Match, now owned by Philip Morris. The FDA admitted the obvious: “The data show that these specific products are appropriate for the protection of public health.” The toxic-chemical levels were far lower than in cigarettes, and adult smokers were more likely to switch than teens were to start.

The decision should have been a turning point. Instead, it exposed the double standard. Other pouch makers—especially smaller firms from Sweden and the US, such as NOAT—remain locked out of the legal market even when their products meet the same technical standards. 

The FDA’s inaction has created a black market dominated by unregulated imports, many from China. According to my own research, roughly 85 percent of pouches now sold in convenience stores are technically illegal.

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New Michigan Marijuana Tax Could Shutter Businesses And Actually Reduce The State’s Cannabis Revenue, Industry Says

As state budget negotiations drew to a close last week, members of the Democratic-led Senate and the Republican-led House were able to reach a deal to bring in additional funding for road repairs through a plan that drew much debate: levying additional taxes on marijuana.

Hundreds of individuals from the cannabis industry came out in opposition to the proposal last week, gathering on the Capitol lawn and lining the halls of the building as lawmakers worked to finalize the state budget.

While the policy won support from both sides of the aisle, its detractors were similarly bipartisan as some lawmakers warned that an additional 24 percent tax on wholesale marijuana could carry a host of issues, from smothering small businesses to expanding the black market, and even opening the state up to a potential constitutional challenge.

Although Michigan Gov. Gretchen Whitmer (D) put her pen to the new tax law on Tuesday, the future of the law has already been challenged, with the Michigan Cannabis Industry Association filing a complaint the same day, arguing the law improperly alters the law initiated by voters when they agreed to legalize marijuana in 2018.

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Oklahoma Overrun With Chinese-Operated Marijuana Farms

Chinese gangs are taking advantage of loose marijuana rules in Oklahoma to grow and transport marijuana to other states for sale on the black market, authorities say.

Oklahoma narcotics officials told Congress $153 billion worth of marijuana is unaccounted for and likely leaving the state for the black market in other states.

As many as 85 percent of licensed grow sites have connections with Chinese owners or operators, according to Mark Woodward, information officer with the Oklahoma Bureau of Narcotics.

Since 2022, the state has shut down more than 6,000 illegal growing operations. Most U.S. states have made marijuana legally available, but taxes and regulations have pushed up its price, leaving an opening for black market sales.

Donnie Anderson, director of the Oklahoma Bureau of Narcotics, said at a press conference in March 2025 that his department was conducting raids on illegal marijuana operations every day.

Here’s what we know about the ongoing crisis.

Black Market Operations Flourish

Oklahoma approved medical marijuana in 2018, licensing its cultivation and sale within the state. The state then reported an explosive growth of growers as the law established no cap on the number of farms that could be licensed to grow marijuana and no limit on how many marijuana plants each farm could cultivate.

The majority of these sites are run by Chinese nationals, according to the Oklahoma Bureau of Narcotics.

By the end of 2022, Oklahoma had 8,400 farms licensed for growing marijuana. The state stopped issuing new licenses in 2022. As of mid-2025, there are under 2,000 licensed farms, which is still more than enough to meet the needs of the 325,000 patients licensed to use marijuana for medical purposes.

As the state has increased the reporting required of the licensed growers, it has come to light that an enormous amount of marijuana is not accounted for.

Between March 2024 and March 2025, medical marijuana dispensaries sold 1.7 million pounds of marijuana in Oklahoma, according to Anderson, director of the Oklahoma Bureau of Narcotics. But farms licensed to grow marijuana reported growing 87 million plants of marijuana, with a typical yield of one pound per plant.

Anderson told Congress on Sept. 18, 2025, that the marijuana produced by 85 million plants is unaccounted for. That amount is worth around $153 billion, according to state estimates. It is unknown where all the unaccounted product went.

Locals Recruited as Straw Owners

The Oklahoma law, passed in 2018, prohibits marijuana grown in the state from being transported to other states.

Enforcing that law is a challenge. Oklahoma is at the intersection of North-South and East-West interstate highways. In addition, to obtain a license, growers must have two years of residency in the state. Anderson told Congress that some out-of-state operators paid local “straw owners” to fraudulently obtain an Oklahoma license.

These operations are growing marijuana in Oklahoma and transporting the drug to other states for sale. And in one case, one Oklahoma man was registered as owning 300 farms, said Anderson.

The vast majority of these grow sites have a Chinese connection. According to Woodward, currently there are 1,995 active farms in the state, and 85 percent are Chinese-operated or owned.

Several recent convictions of Chinese operators in Oklahoma show the connection between Oklahoma marijuana cultivation and East Coast Chinese criminal organizations.

One case from December 2024 involved Jeff Weng and Tong Lin, who were convicted of drug trafficking and sentenced to 10 years in prison. Weng operated out of Brooklyn, New York, while Tong Lin oversaw the grow operation in Wetumka, Oklahoma. According to witness testimony, they transported more than 56,000 pounds of marijuana out of Oklahoma over seven months.

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Marijuana Industry Group Pushes Congress For Tax Relief—And To Apply The Fix Retroactively For Past Payments

A leading marijuana industry association has released a report calling on Congress to treat cannabis businesses like other lawful industries by allowing them to take federal tax deductions—and also to apply that policy retroactively to provide relief for past payments.

The report from the National Cannabis Industry Association (NCIA) and a coalition of stakeholders states that “no industry understands the pain of taxes as acutely as the state-regulated cannabis industry which currently pays draconian tax rates as a result of the unforeseen consequences of” an Internal Revenue Service (IRS) code known as 280E.

That code precludes even state-licensed marijuana businesses from taking federal deductions for their expenses because cannabis remains a Schedule I drug under the Controlled Substances Act (CSA).

“This provision is a punitive poison pill that threatens every business in these state-regulated markets, but poses a particular threat to small businesses that have responded to the will of voters,” the report says. “Picture the medical dispensary serving veterans with an alternative to deadly opioids or providing comfort to cancer patients in your community: those businesses cannot survive without action to repeal §280E and, crucially, retroactive relief.”

NCIA says the costs of the IRS policy for the cannabis sector are “staggering,” with marijuana businesses paying an effective tax rate of more than 70 percent. That rate “is economically prohibitive, unsustainable, and counter-intuitive,” it says.

“In the cruelest of ironies, the failure to include retroactive relief for state-regulated cannabis businesses will fall primarily on two groups: small cannabis businesses located in early legalization states and equity-owned businesses provided state-licensing priority specifically because of injuries suffered as a result of cannabis prohibition.”

Notably, NCIA stressed that tax relief for the marijuana industry should be applied retroactively. Without that stipulation, the association said “taxes will continue to result in the closure and consolidation of many state-regulated small businesses.”

“Beyond having negative economic impacts, inaction will also harm public health by forcing consumers back to the untaxed, untested, and unregulated illicit market,” it said.

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