What’s an entrepreneur to do when marijuana has been legalized in a state but the state’s regulators haven’t developed laws or granted licenses to sell it yet? The product is legal but there is no way for consumers to purchase it legally.
That’s a dilemma entrepreneurs who want to get into the marijuana industry in Maine are facing. As a result, some are getting quite creative. The Portland Press Herald reports that more than one entrepreneur isn’t willing to wait for licenses and laws. Both The Cannabis Shack and Elevation (formerly Leaf Delivery) are providing marijuana “gifts” to people in Maine.
The Cannabis Shack accepts donations to cover packaging and handling of its products. When a purchase is made on its website, the owner hand delivers the marijuana gift to the customer in exchange for the donation. Elevation lists its marijuana gifts on Craigslist charging only a delivery fee.
Marijuana Gifts are Not New
Entrepreneurs in Maine aren’t the first to find ways to circumvent marijuana laws. The owners of Colorado’s Billygoatgreen were arrested back in 2013 for gifting marijuana.
In Massachusetts at the end of December 2016 (just one month after voters approved recreational marijuana in the state), the date for sales to start was delayed to mid-2018. Shortly after the delay was announced, Craigslist ads selling plastic bags with free gifts (i.e., marijuana) started popping up. Another company, HighSpeed, sold and delivered a variety of items to customers, including lemonade, along with a free gift (i.e., marijuana). That company was shut down in both Boston, Massachusetts and Washington, D.C.
Ironically, the practice is legal in Washington, D.C. under certain circumstances. Jacob Sullum of Forbes explains, “The test of whether a transaction counts as a sale is whether there’s a quid pro quo. HighSpeed customers get pot only if they make specified “donations,” and the amount of pot is proportional to the amount of the donation, which suggests these transactions are thinly disguised sales.”
As Cannabiz Media discusses in the Little Green Book, medical marijuana was legalized in Washington, D.C. in 2010, and recreational marijuana was legalized in 2014. While medical marijuana can be purchased from dispensaries, the exchange of recreational marijuana for payment is prohibited, and there are no regulations for a recreational retail licensing system. Therefore, it is common for people to deliver and sell other products at a much higher price – like a $200 T-shirt – and include a “gift” of marijuana at the same time.
The Marijuana License Dilemma
While states take time creating marijuana laws and licensing structures, entrepreneurs see a large market with growing demand. In other words, licensing delays are adding to the “gray market” of the marijuana industry. In Maine where residents can grow up to six mature and 12 immature plants (as reported in the Little Green Book), consumers don’t want to have to wait to purchase marijuana.
While some of these entrepreneurs will likely try to get licenses to sell marijuana legally when they’re available, the licensing process creates its own problems for businesses. As discussed in Cannabiz Media’s Marijuana Licensing Reference Guide: 2017 Edition, retail licenses can cost tens of thousands of dollars, and high taxes add even more financial burdens to marijuana businesses. It’s not surprising that some like the gray market so much.
The Future of Marijuana Gifts
It’s unlikely that the growing gray market will push regulators to create marijuana programs, laws, and licensing structures faster in the near future. However, as more states legalize recreational marijuana, it could become a motivator to push startup or micro programs through faster which can be expanded when complete regulations are developed.