Inside Colorado�s flourishing, segregated black market
for pot
By Tina Griego
July 30 at 5:11 AM
DENVER � In
these, the curious, infant days of the state�s legalization of recreational
marijuana, of shiny dispensaries and touch-screen ordering and suburban parties
where joints are passed like appetizers over granite countertops, no one would
notice the duplex. Plain brick, patchy grass behind chain link, it appears
weary, resigned to what the tenant calls �the �hood� and others might call
left-behind Denver, untouched by the frenzy of investment that has returned to
downtown.
The front door of the duplex stays
closed. Sheer white curtains cover the living room window. A basement filtering
system vents air scrubbed of the sweet funky smell of the pot growing in the
basement. The tenant keeps his grow operation here small. It�s his home. That�s
his grandson upstairs watching TV with strict instructions not to open the door
if someone knocks. Should the cops inquire, they�d find a frail-looking,
middle-age Latino with diabetes and heart problems, talking about his pension
and his Medicaid and waving his medical marijuana registry card.
The red card � part of the
state�s legal landscape since 2000 when voters approved the sale of marijuana
for medical use � allows the grower to cultivate a doctor-prescribed 16
plants. It does not allow him to do what he typically does next: sell what he
does not consume to the underground market. It does not allow him a second
grow op in another rented house where he and a partner grew 55 plants until the
landlord grew suspicious.
This pound of excess weed is being sold to the gray market. The labels on his
prescriptions have been altered to protect Jorge�s identity.(Gabe
Silverman/The Washington Post)
It does not allow him, in other
words, to run his own little corner of a black market that still exists in the
state with America�s most permissive legal pot sales.
The grower says he recently sold
more than 20 pounds of his weed � Blue Dream for the mellow, Green Crack
for the perk � to middlemen who flipped it for almost double
the price.
�I try to keep it legal,� he says, �but
sometimes it�s illegal.�
Camouflaged amid the legal medicinal
and recreational marijuana market, the ever-adaptable underground market
thrives. Some in law enforcement and on the street say it may be as strong as
it�s ever been, so great is the unmet local and visitor demand.
That the black market bustles in the
emerging days of legalization is not unexpected. By some reckonings, it will
continue as long as residents of other states look to Colorado � and now
Washington state � as the nation�s giant cannabis cookie jar. And, they
add, as long as its legal retail competition keeps prices high and is taxed by
state and local government at rates surpassing 30 percent.
�I don�t know who is buying for
recreational use at dispensaries unless it�s white, middle-class people and
out-of-towners,� Rudy Reddog Balles,
a longtime community activist and mediator. �Everyone I know still has the guy
on the street that they hook up with.�
This black market boom, the state
argues, is a temporary situation. As more legal recreational dispensaries and
growers enter the market, the market will do what it does with greater
competition: adjust. Prices will fall. The illegal market will shrink
accordingly
In any case, these first curious
months of the legal recreational market have laid bare a socioeconomic fault
line. Resentment bubbles in the neighborhoods where marijuana has always been
easy to get.
The resentment goes something like:
We Latinos and African Americans from the �hood were stigmatized for marijuana
use, disdained and disproportionately prosecuted in the war on drugs. We grew
up in the culture of marijuana, with grandmothers who made oil from the plants
and rubbed it on arthritic hands. We sold it as medicine. We sold it for profit
and pleasure.
Now pot is legalized and who
benefits? Rich people with their money to invest and their clean criminal
records and 800 credit scores. And here we are again: on the outskirts of
opportunity. A legion of entrepreneurs with big plans and rewired basements
chafes with every monthly state tax revenue report.
Ask someone who buys and sells in
the underground market how it has responded to legalization and the question is
likely to be tossed back with defiance. �You mean, �Who�s been shut out of the
legal market?� � asks Miguel Lopez, chief community organizer of the state�s
420 Rally, which calls for legalization of marijuana nationally.
�It�s kind of like we made all the
sacrifices and they packed it up and are making all the money,� says Cisco
Gallardo, a well-known gang outreach worker who once sold drugs as a gang
member. For the record, he does not partake. It rattles him a little, he says,
to see the young people with whom he works shed their NFL and rapper dreams for
the next big thing: their own marijuana dispensary.
In this light, taxation is seen as a
blunt instrument of exclusion, driving precisely the groups most prosecuted in
the war on drug further into the arms of the black market where they remain at
risk for arrest or robbery. In one Denver dispensary, a $30 purchase of
one-eighth of the Trinity strain of cannabis includes $7.38 in state and local
taxes � a near 33 percent rate. As Larisa Bolivar, one of the city�s most
well-known proponents of decriminalizing marijuana nationally and opening a
true free market, puts it: That seven bucks buys
someone lunch.
�It�s simple,� she says. �A high tax
rate drives black market growth. It�s an incentive for risky behavior.�
There may be an argument there, says
Lt. James Henning, who heads Denver Police Department�s vice/drug bureau, but
one, don�t expect much sympathy and two, �you have to follow the law. If you
want to sell marijuana, find a way to sell it legally.�
Until then, there�s Junior.
He�s visiting the duplex basement,
standing amid the Cool-Bloom, the Rapid Grow, the bags of Coco, sharing an
e-cig loaded with a hash oil cartridge with the grower. Both men insist
on anonymity, for fear of being targeted by law enforcement.
�Dude, it�s
way too hot in here,� Junior says, examining a yellowing plant. �It should be,
like, 80.� The digital thermometer on the wall reads 97 degrees. The
portable AC broke, the grower says.
Junior, round-cheeked, soft-spoken,
a once-upon-a-time gang member, recently lost his job in the oil industry, so
he�s returned to an old pastime. �Would I prefer he had his legitimate job,
still?� his wife says. �Yes, but when he did he was never
home and now he is.�
You have pot to sell,
Junior will find you a buyer. You want to buy? He�ll find you product. He
prefers to deal in bulk, taking a small commission, usually $100 a pound. Every
once in a while, when he�s got extra bills to pay, he sells it himself. That�s
much riskier, felony risky, kids-visiting-dad-at-the-jailhouse risky. But
profit tempts from all directions. Two thousand dollars a pound in Colorado is
$3,200 in Oklahoma or Kansas City and $5,500 in New York City.
A July 9 study of Colorado�s
marijuana market and demand for the Colorado Department of Revenue estimates
the total adult demand, including out-of-state visitors, at about 130 metric
tons in 2014. Of that, licensed retailers are expected to supply 77 metric
tons, most of it from medical marijuana outlets. That leaves what the report
calls a �sales gap� of about 53 million tons of projected unmet demand �
not including use by minors. Enter the licensed home growers, the people
buying legally and reselling illegally, the illegal grow and distribution
networks: the underground.
Marijuana production in the state
�is like a shoe factory,� Balles says. �You�ve got
the ones that go to Nike and the ones that go out the back door to the flea
market. One way or another, it all gets sold.�
Seven months of legality is too
early to tell anything, and what is now may not be in another seven months.
What exists now, however, is profit.
The grower says he cleared $30,000
on his last big deal. �That�s the kind of math I want to be doing,� Junior
says. He has plans to start his own grow op in his stepdad�s house. He dreams
of opening his own dispensary and is now interviewing for a job at one.
�A lot of people they look at me,�
the grower says, �and they go: �Damn, must be nice baller,
driving that new car, driving that motorcycle, taking
your boat out on Sunday.� I say I worked hard for it. �Oh, yeah, we know,
you�re working hard, watering plants.� I call them my money trees.�
�They say money don�t grow on
trees,� Junior says. �They�re lying.�
The grower laughs. �They say,
�What�s that smell?� I say, �Money.��
Tina Griego
is a reporter for Storyline. Previously, Tina was a city columnist for the
Rocky Mountain News and the Denver Post for a combined 12 years.