Will Legalizing Pot Wipe Out the Black Market?

Supporters of Proposition 19 liken their cause to the lifting of prohibition on alcohol nearly 80 years ago. Making pot legal and regulating it like alcohol, they say, could raise millions in tax revenues and wipe out the black market, along with the social costs associated with it.

But breaking the underground trade in marijuana might not be so easy.

This past summer, dozens of drug agents in paramilitary gear marched into a remote area of Northern California, west of Redding. As helicopters swirled over the sun-baked hills, the agents used machetes to chop down more than 10,000 bright green marijuana plants. The plants were then lashed into 500-pound bundles and airlifted out.

For Lt. Steve Solus of the Shasta County Sheriff's Office, this operation was one of dozens of raids on illegal pots farms this year.

"There's lots of water. The growing temperature is just right. The elevations are just right. And the big thing they have here is I-5," Solus says. All of those conditions make it easy to transport the marijuana out, he says.

Marijuana seizures are running at record levels in California, having more than tripled since 2005. But drug agents say they are getting only a fraction of the total crop. And in California's saturated pot market, dealers big and small are moving the drug out of state in ever larger quantities, using everything from overnight delivery services to tractor-trailers.

"We're seeing more and more of the marijuana cultivated in California being exported where there is a market that will pay more," says Bill Ruzzamenti, a former special agent with the Drug Enforcement Administration who now heads a regional agency that monitors drug trafficking in California.

Ruzzamenti says the pot cultivation boom in California began soon after voters legalized medical marijuana 14 years ago. Now, he believes, California could be a net exporter of the drug.

"Literally, we have had shipments of marijuana from California seized in all 50 states. And they're going to where they can maximize their profits," Ruzzamenti says.

The surging demand for California-grown marijuana is good news for some growers and bad news for the drug war. But the trend could challenge a key goal of Proposition 19 – wiping out the illegal drug trade.

The effect on the black market

A TV ad featuring former San Jose Police Chief Joe McNamara began airing this week, claiming that if passed, Proposition 19 "will generate billions of dollars for local communities, allow police to focus on violent crimes and put drug cartels out of business."

In an interview, McNamara drew parallels to the repeal of alcohol prohibition.

"Al Capone and his bootleg gangsters were shooting up the streets not because they were drunk on booze. It was for the vast underworld profits. And once alcohol was legalized, it put them out of business as bootleggers. And that's the goal of Prop 19 that would be achieved very quickly," McNamara said.

But opponents argue the black market will persist because the measure will not change federal law or statutes in other states.

"There are millions of plants being grown illegally," says George Mull, who heads the California Cannabis Association, a medical marijuana group that opposes Proposition 19. "A lot of it is being sent out of the state. There's no way to think that if Prop 19 passes, those same people are going to register their (marijuana) grows and then keep all of their plants here in California."

Mull says even if Proposition 19 passes, the black market will continue, because prices will stay higher in other states where pot remains illegal, leaving in place a premium for smugglers.

"There's a great deal of incentive to sell your product where you can get a higher price," Mull says.

'The cowboy mentality'

California Watch spoke with more than a dozen growers, from big illegal players to small-scale cultivators, and they agreed that the black market would persist, unless marijuana is legalized at a national level.

One of them is an illegal grower who works in a bunker-like growing facility located in a rural area north of San Francisco. In a large garage retrofitted with vents, fans and expensive air filters, several rows of squat marijuana plants stand in 20-gallon pots with buds about the size of golf balls, almost ready for harvest.

The grower, who spoke on the condition of anonymity, has grown marijuana illegally for years. He has also acted as a broker to major trafficking groups that ship thousands of pounds of pot out of California every six months. He says legalization in California would force prices down and probably take street dealers out of business.

But higher prices for exports would keep other illegal growers and dealers afloat. Even a massive crackdown by law enforcement probably would not affect the underground market. Where there is demand and big profits to be made, there will always be supply, the man said. But other growers say it's not just money that keeps the black market alive.

"There is a tradition that we come from here that is of the cowboy mentality. And that is steeped and it runs very, very deep," says Gabriel Martin who runs a legal medical marijuana collective in the coastal town of Ft. Bragg.

On a recent evening, Martin was busy making a batch of his award-winning hash, which requires mixing marijuana stems and leaves with crushed ice and then filtering the concoction through a washing machine.

Martin says many growers like himself support Proposition 19 because they are willing to trade high profits for a greater sense of security and community. But he says that does not mean the underground trade will go away.

"This is what I tell people: I mean, if you're going to engage in contraband sales – or private sales, as we call them – that market is going to consistently exist," he says. "It's anywhere you have finance, you're going to have (a) black market."

Some California law enforcement officials worry that the black market could grow even stronger, with criminal gangs using legalization as a cover for massive smuggling operations.

But former Police Chief McNamara says similar arguments were made against the lifting of alcohol prohibition and they proved wrong. He says marijuana is no different.

"Commercial growers would be regulated," he says. "They would be controlled. They would be subject to law enforcement. And if they were illegally exporting the drug, that would be against California law as well."

McNamara says he hopes the push for legalization will spread across the country, making it easier to enforce state regulations. California voters will decide for themselves on Nov. 2.

This story was broadcast Wednesday on NPR's Morning Edition. It was produced as part of a collaboration between KQED Public Radio and California Watch.


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