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Coast Guard Seizes $10 Million In Black Market Marijuana Headed For U.S. Customers

The black market continues to thrive even as legalization spreads. Some believe only national legalization will solve the problem.

Opinions expressed by Entrepreneur contributors are their own.

In another dramatic example of how the black market for marijuana continues to thrive in the United States, the U.S. Coast Guard recently announced the seizure of 11,000 pounds of marijuana from international waters in the Caribbean and eastern Pacific Ocean. That equates to about $10 million in value.

Joe Raedle | Getty Images

In the same operation, the Coast Guard also seized 27,300 pounds of cocaine worth about $367 million.

The drugs  "will not reach Main Street USA, thanks to the efforts of this crew," Jeffrey Randall, commanding officer of the U.S. Coast Guard's Cutter James told NBC. The seizure was made at Port Everglades, Florida, with the drugs being taken over two months in 18 separate interdictions across the Caribbean Basin and in the eastern Pacific Ocean off the coasts of Mexico, Central American and South America.

All the marijuana and cocaine were bound for the U.S.

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Black Market Thrives Around The Country Despite Legalization

Marijuana is legal for recreational use in 11 states and the District of Columbia. It’s legal for medical use in 33 states. Yet, the black market continues to thrive.

Most experts are of the opinion that this is happening for several reasons. The first is the most obvious: In states where marijuana is illegal, the black market is the consumer’s only choice for consumption.

However, even where marijuana is legal, high prices can drive some to the black market. In California, those high prices are attributed to the amount of taxes placed on cannabis by the state. 

Also, even in states where marijuana is legal, individual cities and counties may ban cannabis, again leaving the black market as the only option. For example, 80 percent of California’s 500 municipalities do not allow retail sales of marijuana.

How big is the black market? Anecdotally, the sheriff of Mendocino County in California told the New York Times after seizing $5 million in illegal cannabis oil that “there’s a lot of money to be made in the black market” and that legalization “certainly didn’t put cops out of work.”

In California alone, illegal sellers outnumber legal sellers 3-to-1, according to numbers from the United Cannabis Business Associated, and cited by NBC.

RELATED: Cannabis Arrests Are On The Rise -- Again

What’s The Best Way To Solve The Black Market Problem?

In California, San Francisco is experiencing less issues with black market storefronts than Los Angeles. According to those interviewed by NBC, this is because the Bay Area has done a better job of getting more legal stores licensed, while cracking down more on the illegal operations.

While better enforcement will help, many believe that the black market will not get significantly reduced until the patchwork quilt of marijuana laws is eliminated. The best way to accomplish that goal is by making marijuana legal at the federal level -- which may still be years away from becoming a possibility.

Adam Smith, who works with the Craft Cannabis Alliance in Oregon, told Politico that “you’re never going to eliminate [the illicit market] until most of the states are legal. As long as half the country still can’t get it legally, there’s a market for it illegally.”

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