Can The Black Market Be Stopped?

The biggest threat to marijuana startups isn’t coming from the legal competition. It’s coming from the illegal market, which thrives even in states that have legalized weed. To extinguish the threat, licensed dealers might have to work together.

- Clint Carter

One morning last August, Jonathan Doneson woke up with a cough that shot straight through his rib cage. “It was like I’d taken a really big bong hit,” says the 53-year-old, who runs a women’s apparel company with his wife.

But Doneson didn’t have a bong. He had a marijuana vape pen. Since recreational weed is still illegal in New York, where Doneson lives, he bought his cartridges through a friend and other means. Some came in a professional-looking package labeled Kingpen, a respected cannabis brand; some didn’t. Doneson didn’t really care.

What happened next will sound familiar to anyone who followed the news in 2019. Doneson’s health deteriorated, and doctors struggled to crack the case—until he mentioned that he used a vape pen. “People have died from this,” one of the doctors told him. Indeed, stories of vape-related deaths caused nationwide panic last year; more than 2,650 people had fallen ill and 60 people died by mid- January this year, leading to a deep examination of vaping.

But in the cannabis industry, this crisis underscored an even deeper problem. Despite cannabis being legal and highly regulated in many states, legitimate entrepreneurs are struggling to compete with marijuana’s black market. And they will suffer the consequences of the black market’s failings.

Take those vape cartridges Doneson was using. They may have been labeled with brand names like Kingpen, but they weren’t all legit. Some were convincing counterfeits—just like the dangerous knockoffs bearing other reputable brand names such as Brass Knuckles, Heavy Hitters, and Dank Vapes.