HOOD RIVER, Ore. — Opening a new business is never easy, but it’s been especially challenging for Cori Collins and Bob Brownback. The owners of Alpine Extracts had to comply with a laundry list of requirements to produce cannabis oil for Oregon’s new recreational marijuana market.
“We came in with our eyes wide open,” said Collins. “We knew it would be highly regulated.”
Unlike some other businesses, Alpine Extracts had to obtain various licenses. The cannabis oil had to undergo extensive lab testing. And the Hood River company was required to install security cameras to be in compliance with state regulators. It took time and money to get the company started as a legal marijuana processing business.
“There’s all these people who are trying to comply with the rules, but we’re struggling to compete with the black market,” explained Brownback.
Two years after Oregon voters approved recreational marijuana, the black market is still thriving. Illicit cannabis sales in Oregon are expected to exceed $300 million this year, according to economist Beau Whitney of Whitney Economics. Nearly one-third of all pot sales in Oregon are illegally conducted outside the regulated market, Whitney said.
Illicit suppliers don’t have to comply with taxation and regulation.
“It makes it really hard to compete,” Collins said. “They just don’t have the same overhead. They don’t have to hire employees and pay wages, workmen’s comp and all of that.”
Collins points to ads on Craigslist as the most blatant example of illicit activity. There are dozens of people advertising cannabis for sale online, including the exact same type of product Alpine Extracts is selling -- cannabis oil -- at a fraction of the price.
“No one is doing anything about the black market,” Brownback said.
The Oregon Liquor Control Commission, which regulates the recreational marijuana market, admits it doesn’t police Craigslist for people selling weed.
“Right now, that is not part of our jurisdiction. That’s not part of our mission,” said Mark Pettinger, spokesman for the OLCC.
By law, the agency can only enforce the rules for those who are licensed in the legal recreational market.
“Unlike the alcohol side of our agency where we do have the ability to write criminal infractions or citations for folks who are either manufacturing, distributing or selling alcohol illegally, we don’t have that ability on the cannabis side,” Pettinger said.
Meanwhile, local police have generally established that minor pot offenses are a low priority when compared to other criminal activity, adding that the penalties associated with many marijuana crimes in Oregon have been reduced.
That frustrates many legal business owners.
“I don’t want to compete with a black market in cannabis,” said Sara Batterby, CEO of Hifi Farms, a craft cannabis cultivation company.
Batterby admits the marijuana industry, which for years has argued against criminalizing cannabis, now finds itself looking to law enforcement for help.
“I am starting to sense in the industry, there’s a community of support and a growing community of support for meaningful enforcement of the rules,” said Batterby.
Other states with legal cannabis, like Colorado, are trying to crack down on the lingering black market for marijuana.
A bill is moving through the Colorado state Legislature that aims to crack down on those who sell marijuana illegally using online ads, like Craigslist. The legislation would make it a misdemeanor to advertise weed online if the person doesn’t have a license to sell it.
Proponents of legalization in Oregon are hoping to reduce the black market through education.
“I think we can dramatically curtail the illicit market,” said Anthony Johnson of New Approach Oregon.
Johnson, along with various industry leaders, are spearheading an awareness campaign called “Buy Legal.” The group hopes to move buyers from the black market into the regulated market by promoting quality products, free of pesticides. The campaign will also emphasize lost state tax revenue from illicit sales.
Johnson believes the black market will dissolve as legal marijuana becomes more accessible and prices more competitive.
“The day after prohibition was repealed for alcohol, the illegal market didn’t go away. It took some time,” explained Johnson.
The illicit market in Oregon is already in decline.
In 2015, illicit pot sales made up 74 percent of the market. Last year, 53 percent of marijuana sales were illegal. In 2017, only 35 percent of all weed will be sold on the black market, according to Whitney Economics.%
The owners of Alpine Extracts fears there isn’t time to wait. They’ve got bills to pay and they’ve got to compete.
“All of us are at risk,” said co-owner Bob Brownback.
He fears an unchecked illicit market in Oregon could draw the attention of the federal government and jeopardize the entire industry.
Marijuana is regulated under federal law, which gives President Donald Trump and his administration the ability to upend programs in states like Oregon, which have legalized pot. So far, Trump has not discussed whether his administration will take a hands-off approach like former President Barack Obama or reinstate federal enforcement on the national marijuana ban, although his press secretary Sean Spicer said Thursday that the Department of Justice may crack down on states with legal recreational marijuana.
“You just never know when something will come out of left field and pull the rug out from under you,” Collins said.