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Washington State Institute for Public Policy

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Suppressing Illicit Cannabis Markets After State Marijuana Legalization
Open Publication PDF

Adam Darnell, Michael Hirsch, Paige Wanner - August 2019

The 2018 Washington State Legislature directed WSIPP to conduct additional cannabis research, supplemental to the ongoing benefit-cost evaluation of cannabis legalization authorized by Initiative 502 in 2012. As part of the new assignments, WSIPP was directed to examine effective methods for suppressing unlicensed cultivation and distribution of marijuana in jurisdictions with legal markets. We found very little evidence on that topic. Instead, we identified numerous factors that could contribute to the survival of the illicit marijuana market in the context of legalization, such as continuing prohibitions in other states and regulations that reduce the competitive advantage of the legal market. We examined key regulatory features in the nine states with licensed non-medical cannabis supply systems and found that states varied widely in the level of restriction imposed on legal supply systems. We conclude by outlining a practical strategy for monitoring illicit market reductions as the state’s approach to legalization develops.

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