Tag: black market

New York Governor Proposes Repealing Marijuana Potency Tax To Reduce Costs And Combat Illicit Market

The governor of New York is calling for the elimination of a THC potency tax as part of her executive budget, aiming to reduce costs for consumers in a way that could make the regulated market more competitive against illicit operators.

Gov. Kathy Hochul’s (D) budget proposal for the 2025 fiscal year would repeal the potency tax and replace it with a wholesale excise tax of 9 percent in a way that “simplifies, streamlines, and reduces the tax collection obligations and burden for cultivators, processors, and distributors.”

Cannabis would also still be subject to the existing 9 percent state retail excise tax and four percent local retail excise tax. The changes are estimated to effectively drive down the total tax rate on marijuana from an average 38 percent to 22 percent.

For vertically-integrated medical cannabis operators and microbusinesses, the new wholesale excise tax would accrue on the final retail sale to consumers and be imposed on 75 percent of the final retail sales price, the governor’s proposal says.

The briefing book for the budget says the tax changes would “promote and support the expansion of the legal adult-use cannabis market” and also result in a “net positive impact” of $6.5 million for localities.

But by reducing costs for consumers and businesses, the tax policy reform could also help the administration and regulators address one of their top priorities: driving out the illicit market.

While licensing of legal marijuana businesses has rolled out slowly amid litigation, New York has been dealing with a proliferation of hundreds of unregulated cannabis shops with prices that are generally lower because the operators don’t concern themselves with excise taxes and abiding by other regulations that increase costs.

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Minnesota Officials Form Interagency Plan To Rein In Sales Of High-THC Marijuana Being Sold As Legal Hemp

Minnesota’s cannabis regulators say they have a plan to fill a gap in state law that could be letting some hemp retailers sell marijuana flower without consequence.

Charlene Briner, the interim director of the new Office of Cannabis Management, said Thursday that she is working with other agencies to provide a temporary method to inspect and test raw cannabis flower to make sure it does not violate current law.

She said the agency will look into using inspectors from the Office of Medical Cannabis and the Department of Agriculture to exercise the Office of Cannabis Management’s authority to stop the sale of cannabis flower that is illegal marijuana masquerading as legal hemp.

“OCM is evaluating how to leverage existing enforcement capacity at the Office of Medical Cannabis to act on OCM’s behalf and how we can develop capacity to test raw cannabis flower,” Briner said.

“We’ll be sharing more about those plans as we put them in place,” she said.

To be legal to sell now, hemp flower must contain only 0.3 percent delta-9 THC or less. Such hemp plants do not have enough THC to be intoxicating when eaten or smoked. But by processing the hemp for edibles and beverages, the THC content can be enhanced to produce an intoxicating effect.

Some hemp retailers and smoke shops have been selling raw cannabis flower that might or might not exceed those legal limits. Hemp inspectors have not acted against such sales—or even to test the flower—because while the Office of Medical Cannabis regulates hemp sales, the law doesn’t give it any authority over unprocessed flower.

The loophole became public late last year when former Office of Medical Cannabis director Chris Tholkes discussed it on the national podcast Weed Wonks. She said her inspectors have seen sales of raw cannabis flower that the stores claim is legal hemp but that the inspectors suspect is not.

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Colorado Governor’s Office Slams DeSantis’s Marijuana Stance, Pushing Back Against Claim Legalization Led To ‘Bigger’ Illicit Market

If Florida Gov. Ron DeSantis (R) needs some advice on how to promote “economic and personal freedom,” the state of Colorado is “happy” to explain the advantages of marijuana legalization, Gov. Jared Polis’s (D) office said after the Republican presidential candidate doubled down on his opposition to cannabis reform.

On Friday, DeSantis peddled a dubious claim that Colorado’s illicit market is “bigger” today than it was before legalizing adult-use cannabis in 2012, justifying his own personal opposition to the reform.

In response, a spokesperson for the Colorado governor’s office offered to correct the record for the 2024 GOP presidential hopeful in a statement to Marijuana Moment.

“The facts are that Colorado voters approved the legalization of marijuana which is curbing the illicit market, getting dealers off the streets, reducing youth use, funding school construction, supporting jobs and Colorado’s economy,” the governor’s spokesperson said. “Colorado is happy to provide the Florida governor advice on how to increase economic and personal freedom like we have in the free state of Colorado.”

In an interview on the radio station KCPS that aired on Friday, first noted by Florida Politics, DeSantis had challenged the idea that regulating marijuana sales puts illicit operators “out of business,” stating that it’s an “interesting” concept that he says hasn’t played out in Colorado, despite evidence to the contrary.

“There have been states like Colorado who’ve done things like legalized marijuana and the argument was, well, you want to have a black market? It will be above-board, taxed and all that stuff,” DeSantis said during the interview. “Yet Colorado has a bigger black market of marijuana since they’ve legalized it.”

It’s well-understood that enacting legalization doesn’t fully eliminate the illicit market, and states have had varying degrees of success to that end. But research indicates that Colorado has been among the most effective at transitioning people to the legal marketplace.

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Germany’s Top Health Official Defends Marijuana Legalization Bill Against Critics Ahead Of Next Week’s Vote

As German lawmaker prepare to vote on a revised marijuana legalization bill next week, the country’s health minister defended the reform against critics in the legislature, while briefly outlining next steps for a commercial sales pilot program. Meanwhile, one German state is signaling that it will pursue legal action to block the reform from taking effect within its borders.

At a meeting before the Bundestag on Wednesday, Health Minister Karl Lauterbach took a series of questions from members, some of whom oppose legalization and others who expressed interest in expeditiously enacting the reform.

At several points, he pushed back against lawmakers who suggested that legalization would send the wrong message to youth and lead to increased underage consumption, saying their arguments “misrepresented” the legislation, according to a translation.

“The fact remains that child and youth protection is carried out through education, and sales to children and young people remain prohibited,” Lauterbach said. “That is the only change we have made in this area: a tightening.”

“As part of this legalization, we are pushing back the black market,” he said. “The less of the black market there is, the lower the risk that our children will be brought into consumption through the black market.”

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California Attorney General Calls For ‘Lowering Taxes’ On Marijuana To Combat The Illicit Market

California’s attorney general says the cost of doing business in the state’s legal marijuana marketplace is too steep, pointing to high taxes and compliance hurdles that can create incentives for entrepreneurs to remain in the illicit market.

“The barriers to entry are too high,” state Attorney General Rob Bonta (D) said at an event in Fresno on Tuesday. “The costs to stay in operation are too high. And we should be lowering taxes at least temporarily.”

For operators trying to comply with state law, he continued, “We should make the regulatory burden less than what it is while we target the illicit market that is undercutting them.”

Bonta’s comments came as he announced a new program to aid cities and counties in addressing illegal marijuana activity through administrative enforcement and nuisance abatement. For too long, he said, fly-by-night operators in the state have gotten away with it.

“Some folks believe they can avoid the tax burden or regulatory burden and just operate and make a profit without being legal,” Bonta said at the event. “And they’ve been doing it. They haven’t been shut down. They haven’t had an administrative action taken against them. And that’s what is necessary, and that’s why this will be an important tool.”

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DeSantis Doubles Down On Opposition To Marijuana Legalization, Claiming Colorado’s Illicit Market Is ‘Bigger And More Lucrative’ After Reform

Florida Gov. Ron DeSantis (R), a 2024 Republican presidential candidate, has reaffirmed that he would not legalize marijuana if elected to the White House—arguing contrary to evidence that the reform has actually increased the size of the illicit market in Colorado.

During a campaign event in Iowa on Saturday, an attendee told DeSantis that she knows people whose children developed “cannabis-induced psychosis” and asked about whether he would move to legalize or reschedule cannabis under federal law if he became president. In response, the GOP contender made clear that he “would not legalize,” echoing anti-marijuana arguments he previously made in June.

“I think what’s happened is this stuff is very potent now. I think when young people get it, I think it’s a real, real problem, and I think it’s a lot different than stuff that people were using 30, 40 years ago,” DeSantis said. “I think when kids get on that, I think it causes a lot of problems and then, of course, you know, they can throw fentanyl in any of this stuff now.”

The candidate then pivoted to a broader discussion about the harms of substance misuse, stating that there’s an “open air market” for illicit drugs in San Francisco, and that society has “totally decayed” under policies that “really help these folks use drugs.”

DeSantis did acknowledge that Floridians have access to medical cannabis under a constitutional amendment that voters approved, saying that “we abide by that” but noting that “states have handled cannabis differently” and he would not “take action now to make it even more available.”

Florida voters may have the choice to expand access regardless of the governor’s position, as the state Supreme Court is currently considering whether a marijuana legalization initiative will appear on the state’s 2024 ballot.

“I would not do that,” DeSantis said on Saturday. “And the places that legalized it like Colorado and California, you know, the argument was—and honestly it wasn’t a crazy argument—’Look, we know people are going to use marijuana. It is a drug. If you legalize it, then you can tax it, regulate it, and it’s going to end up being safer for people.’”

“But what’s happened in Colorado, the black market for marijuana is bigger and more lucrative than it was before they did the legalization,” the governor said. “So the legalization I don’t think has worked.”

DeSantis didn’t provide data or cite any sourcing to support that argument. But private and government analyses have suggested that Colorado has in fact significantly reduced the influence of the illicit market in the decade since enacting legalization.

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Colorado’s marijuana industry calls this year’s 4/20 sales “the worst” in recent years

Colorado’s marijuana industry dubbed weed sales for this year’s 4/20 “the worst” in five years.

The Marijuana Industry Group, a Denver-based trade association, is sounding the alarm bells for the state’s “struggling” industry, as falling sales compound with business closures and layoffs. This year, the market’s entrepreneurs are contending with too much supply, not enough demand, increased competition in other states, dropping prices, a dearth of cannabis tourism, the draw of black market weed and more.

April’s marijuana sales – medical and retail combined – stood at close to $132 million, which counts as the lowest number in five years, according to the Colorado Department of Revenue. In April 2018, the number was about $124 million.

This year, total medical marijuana sales looked especially dismal in April at almost $17 million. That’s the lowest amount ever recorded for that month since sales first started in January 2014.

Meanwhile, total retail marijuana sales in Colorado amounted to almost $115 million in April – the lowest number of sales since April 2020 at $112 million. Comparatively, retail sales jumped in 2021 to close to $167 million before plunging to $132 million that month of the next year.

“Colorado cannabis small business owners count on the weeks leading up to the 4/20 holiday to be some of the strongest sales of the year,” said Truman Bradley, executive director of the Marijuana Industry Group.

His association estimates that “2023 sales are on track to be down even further than 2022.”

In Denver, the number of medical marijuana store licenses has fallen 27% over the past five years, to 144 licenses this year, according to its annual marijuana report. In 2014, that number was 255.

“As medical marijuana sales decline, some medical marijuana businesses have surrendered their licenses or let them expire,” the report said.

The drop in licenses parallels the decline in the number of registered medical marijuana patients since that year.

But some silver linings still persist for Denver’s cannabis industry. In 2023, the number of retail marijuana store licenses has jumped to 188 – a 13% increase over the past five years. That’s a rise from 109 licenses in 2014.

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Worldcoin May Have a Biometric Data Black Market Problem

Worldcoin, the digital identity and financial services crypto project that verifies people by scanning their irises, has found itself amid controversy after reports alleging that fraudsters are buying iris scans from the black market to register on the platform.

The project, which is headed by OpenAI CEO Sam Altman, is currently preparing to launch and has been registering users across the world with the help of its physical imaging device called the Orb. The project aims to give everyone on the planet some of its Worldcoin crypto token after registration while their accounts are anonymized.

The lure of free crypto that may be exchanged for real money in the future seems to have been too strong for some people. According to Chinese blockchain-focused outlet Blockbeat, fraudsters have been offering iris scans from Know Your Customer (KYC) merchants in Cambodia for less than $30. Other iris scan may come from African countries such as Kenya.

Blockbeat did not clarify whether the back market iris scans were genuine or whether they were successfully used for registration for Worldcoin.

In response to Gizmodo, Worldcoin said that the platform did not have an issue with iris scans on the black market but it did detect several hundred cases of fraud involving its digital passport World ID, the verification protocol used to determine real identities. The World IDs are being sent to a third-party World app on the black market. The company claims it has taken steps to increase security and create a new recovery process for users’ World ID.

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New York’s Heavy Hand Keeps Illegal Marijuana and Tobacco Dealers in Business

While I have fond memories of life in New York, many of them involve defying some stupid rule or regulation. It’s a pleasure to now live in Arizona where government, while still idiotic, generally has a lighter touch. Unfortunately for friends and family I left behind, Empire State officialdom still hasn’t learned its lessons, as evidenced by the heavy regulatory hand stifling sort-of-legalized marijuana, and proposals to similarly reinforce the black market with an outright ban on cigarette sales.

“Governor Kathy Hochul today signed new legislation to increase civil and tax penalties for the unlicensed and illicit sale of cannabis in New York as part of the FY 2024 Budget,” the New York governor’s office announced this week. “The legislation, first proposed by the Governor in March, provides additional enforcement power to the Office of Cannabis Management and the Department of Taxation and Finance to enforce the new regulatory requirements and close stores engaged in the illegal sale of cannabis.”

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