How Does the Grey Market Effect Local Communities?

Last time on the KCG Content Green Rush series, we introduced grey market cannabis. In this post, we look more closely at how the grey market influences local communities and helps pervade the green rush myth. 

For those who have come to depend on it for a livelihood, the grey-market presents one of the most volatile facets of the modern cannabis space. To this end, the entire platform is made possible by the manipulation of rapidly fleeting loopholes in the regulation of certain market segments. As such, the grey-market presents a somewhat convoluted regression in legalization efforts wherever it arises – this regression is set forth by those making a living off semi-illegal activity. In States like Oregon, medical marijuana advocates fight for safe access to medicine while growers simultaneously manipulate this process to make money. For anyone who has spent significant amounts of time in cultivation-heavy regions of Northern California and Southern Oregon, it’s evident that tensions are strong between patients, growers, legislators, and police.grey market cannabis

Within this diverse cast of characters, notions of “right” and “wrong” have grown increasingly subjective, due mainly to the fact that many grey-market producers are largely law-abiding citizens. While they do sell their cannabis illegally, they also employ a large portion of the population in destitute towns throughout the Western United States. Similarly, many grey-market cultivators own homes, pay income taxes, and have children in local schools. Looking outwards to ancillary businesses of the grey-market, growers pour millions of dollars into local garden shops and hardware stores each season. These businesses, in turn, employ many local residents. The same can be said about bars and restaurants in small towns with large cultivator populaces, where huge sums of cash consistently fill the coffers of small service-based businesses.

As large amounts of grey-market growers migrate to areas with outdoor climates favorable to cannabis cultivation, both realtors and property owners see a huge surge in profits. This financial boon is the result of increasingly competitive housing markets, and subsequent rising property values, occurring with an oversaturation of cannabis growers. Conclusively, the allowance of home-based cannabis growing opens the floodgates for a slew of opportunities, and issues, not seen in tightly controlled markets like that in Ohio. Yet, none of this business activity is sustainable, and the tightening of enforcement on grey-market activity in places like Oregon is causing the displacement of entire workforces, as well as communities.

The Green Rush Myth and the Grey Market

Cannabis grey-markets represent one of the most convoluted, as well as unforeseen, manifestations of change that is occurring with cannabis legalization. The consequences of the grey-market are extremely difficult to understand, yet they are tremendously influential in critiquing conceptions of the green rush myth. On multiple fronts, the illegal sale of cannabis in the grey-market causes wholesale backtracking in the stabilizing of a legal industry. Yet, it is difficult to deny how influential the grey-market has been. On an ideological level, the grey-market continues to misrepresent the entire cannabis industry as a get rich quick business that is saturated with criminals. However, it is also these same grey-market producers who had the gumption, as well as brazenness, to come out of the shadows with some of the nation’s first commercial cannabis cultivation operations.

Make no mistake about it, these growers also developed many of the protocols used for mass cannabis production that are cherished in legal business operations the world over. Again, clear notions of “right” and “wrong” grow increasingly cloudy when attempting to analyze these social trends with a discerning eye. Looking at the economic consequences of the grey-market, we also see an extremely perplexing atmosphere of financial gain and loss spread throughout a gamut of potential beneficiaries. Unlike Ohio’s medical program, where there is a clear, definitive progression towards a stable market and subsequent tax revenue, the profits of grey-market dealings are disseminated in an overtly disparate fashion.

These revenues, in the billions of dollars, are nearly untraceable as they exchange hands between illegal dealers, legal growers, taxpayers, and business owners. While grey-market producers generally don’t pay employment and sales taxes in the traditional sense – or deal with licensing fees – the amount of revenue they generate in places like California and Oregon has garnered the attention of both governments and big business. To this end, grey-market cannabis producers showed the mainstream how much potential money exists in an open market, which has doubtlessly influenced legalization efforts across the United States and beyond.


Speculation and controversy aside, the grey-market provides perhaps the most startling example of how quickly the cannabis industry is changing and outdating itself. Similarly, many cannabis professionals are extremely torn on their opinions of the grey-market. To this end, it gave many industry leaders their start in the first place, yet it continues to stifle industry progress by keeping cannabis professionals pigeon-holed under a criminal label. The consequences of the grey-market are extremely difficult to understand, yet they are tremendously influential in critiquing conceptions of the green rush myth. Within this ever-fluctuating landscape, new opportunities arise as others are quickly abandoned, and notions of morality and ethics become radically personalized. Moving forward, it’s anyone’s guess as to how the grey-market will finally settle and how many of its cannabis experts will make the transitions into more legitimate forms of business.

The Green Rush Series on the KCG Content Blog

Please continue following our blog if you are interested in topics like grey market cannabis and the green rush myth. Next week, will we introduce recreational cannabis.

Contact Us if you would like to discuss our cannabis content offerings at KCG Content.

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