Illegal Tender: How Black Market Growers Can Survive A Legal Cannabis Market

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I was a black-market cannabis grower and seller before the plant was legal anywhere in the United States, and it sure was a lot easier to make a good living doing back then. Prior to legalization, there were a wealth of buyers. Demand outstripped supply, so prices remained high. During the height of the black-market boom of the 1980s and ’90s, wholesale prices for premium craft weed were about $3,000 to $4,500 per pound. Retail sellers were pulling in $400 to $500 an ounce.

Everything you needed for growing good bud was less expensive back then, especially electricity. My cost for producing a pound of weed, including the cost of purchasing seeds, grow lights, electricity, reverse osmosis, rockwool, hydroponic nutrients and running an indoor garden space averaged at most $430 per pound of bud. Those are some incredible profit margins right there. Those were the days when marijuana truly was a money tree.

Other than the lucrative profits, the best thing about growing cannabis before legalization was that my customers treated me like gold. Unwilling to risk prison for growing this therapeutic plant themselves — or endure the hassles of finding another dealer — I was their one and only weed lifeline. Cannabis isn’t just recreational, it’s also medicinal, and many of my customers were medical consumers. In servicing them, I never had to go out of my way to accommodate their schedules or preferences. Rather, they paid the price I specified, met at a time and place that was convenient for me, and they were always effusively grateful for whatever buds I had for sale and the prices I set.

I could count on a respectable middle-class income from growing weed and didn’t need another job to help me pay my bills. It was a grower’s paradise. But all good things come to an end. And it was legalization that ended the salad days of the black-market cannabis boom.

A Cannabis Surplus = Low Cannabis Prices

Many of California’s black-market weed growers and sellers were opposed to Proposition 215, or the Compassionate Use Act of 1996, when it was first placed on the ballot as the initial medical marijuana initiative proposed in the nation.

Authored by cannabis activist Dennis Peron, at the time we feared that if Prop. 215 passed, all one had to do to become a legal grower of medical marijuana was get a doctor’s recommendation. As a result, supply would increase and prices would drop. It turns out that while those fears were accurate, they were somewhat exaggerated. After Prop. 215 passed, some black-market customers did indeed start growing their own weed instead of buying it from long-term cultivators, and prices did drop as supply increased. However, the campaign for Prop. 215 also helped change public perception of cannabis for the better, destigmatizing the plant and thus welcoming more consumers. And most of those new cannabis consumers wanted to buy marijuana rather than grow it. So, perhaps it was Prop. 215 that ultimately helped make things better for black-market weed growers like me.

Cut to 2019, and Prop. 215 is but a distant memory. Cannabis is totally legal in 10 states plus the District of Columbia, and medically legal in a total of 32 states. Legalization has crushed the black market and cultivation in many states. There’s been such a glut of weed in Oregon, for example, that pounds of premium bud are selling for as low as $800 a pound. Large-scale licensed commercial producers and the venture capitalists who rushed to bankroll them are having a tough time retaining a foothold in the cannabis industry.

Legalization has all but ruined my business while testing my resiliency and determination, forcing me to change how I conduct myself in business. When weed was illegal everywhere and my buds were the best in town, I didn’t have to care about my customers’ needs, nor the logistics of my operation. All I had to do was grow potent, tasty buds.

That’s all changed now, and with the wealth of cannabis purchasing opportunities now available to my customers, I’ve had to fine-tune not only my business model and retail strategy, but also my personality just to keep them loyal.

A Tailored Cannabis Customer Experience

My customer Danny is a 74-year-old male who wrecked his body competing in countless triathlons. After several musculoskeletal surgeries caused him to develop a painkiller addiction, and after spending a fortune on physical therapy, he decided cannabis was his best chance at a healthy life.

Before legalization, Danny would buy an ounce or two every month. He never complained about the strains I grew, never complained about my prices, never complained about having to arrange his schedule to fit mine. About a year after legalization swept Colorado, he flew into the state to stock up on such goodies as cannabis concentrates, medibles, e-cigarette oils and pens, mailing his cannabis care package back to himself.

When I didn’t hear from him like I usually did for his monthly refill, I reached out. That’s when Danny told me he had enough Colorado goodies to last several months. Months later, he was debating whether to spend the money to fly back to Colorado, or start buying buds from me again. However, now he had a list of demands: He wanted me to grow the strains he’d learned of in Colorado. He also wanted me to make concentrates, especially topical high-CBD oil.

The strain names he demanded were the typical generics I tend to not grow because they’re not unique: Super Silver Haze, OG Kush, Girl Scout Cookies, Blue Dream, Chemdawg. He claimed Colorado budtenders told him he could expect the exact same effects from those strains, no matter where they were grown.

Although strain names are somewhat indicative of genetic lineage, phenotype characteristics, cannabinoid profiles, terpenoid profiles and subjective psychoactive effects, there’s no guarantee that the so-called Super Silver Haze you bought at a Colorado dispensary will be the same as the so-called Super Silver Haze I could grow.

I steered Danny toward a more productive situation by quizzing him on the types of tastes, scents and highs he likes the most and why. After I got this data, I examined strains I already grew and tried to match them to Danny’s preferences. For years he’d raved about my strains, but in contrast to our past relationship, in which he never said anything other than, “Thank you, this is great,” Danny now said things like, “That strain makes me too sleepy,” or, “I don’t like the taste of that strain.”

I was growing strains because I loved them, and my customers did, too, but to get Danny back as a permanent customer, I made a deal with him that I’d procure and grow strain genetics he’d enjoy, as long as he guaranteed me a minimum purchase of one ounce per month.

I provided Danny with strain descriptions before I ordered seeds to ensure he was fully involved in the choices I made. It was like I was now becoming a sort of farm-to-table restaurant whose meals are dictated by the local crops being grown.

After cultivating two strains Danny selected, I gave him bud samples to make sure he liked the outcomes. He said he did, but now there was another catch: He wanted a discount. I’d been charging him around $400 an ounce. In Colorado, he saw ounces cheaper than that, and while I pointed out that “we’re not in Colorado,” he held firm on his discount demand, so we negotiated down to $310 an ounce. This was a painful experience for me.

Several days after selling him the two strains I’d grown specifically for his needs, Danny called to complain. The buds were too dry, he said — but they weren’t. The bud moisture ratio was the same as always, the same as the samples I’d given him ahead of time. He wanted to bring back one ounce for a replacement.

This pissed me off. Even legal cannabis retailers don’t offer replacement guarantees, especially after customers have sampled the buds. Nevertheless, Danny persisted, and I was further dismayed when he returned to me only 21 grams of the 28-gram ounce I’d sold him. This was a blatant ripoff, but I said nothing because I didn’t want to lose a customer.

Funny thing is, I gave him a full ounce of buds with the exact same moisture content as the ones he’d said were too dry — and he said “these buds are just how I like ’em.” He was playing me.

A couple of weeks ahead of his next refill, Danny requested painkilling cannabis lotion similar to what he got in Colorado for $85 an ounce. The label on his lotion bottle listed generic ingredients you’d find in any topical salve, along with “hemp extract.” There was no stipulation of how much “hemp extract” was in the lotion. I assumed it was cannabidiol, or CBD. He claimed all he needed for pain relief was to rub a “pea-sized” amount of this lotion on his aching body. I tried the lotion for myself and felt no effects whatsoever.

After researching transdermal application of cannabinoids, I estimated I’d have to use two to three ounces of bud in 12 to 16 ounces of coconut oil during an extraction process that involved heating the oil and bud mixture for several hours. Then, Danny threw another curve ball at me by insisting the oil be made only with CBD. He didn’t want to “get high” from it, rather, he just wanted pain relief. This forced me to buy expensive high-CBD teen clones, hastily rearrange my grow op, and immediately put the CBD clones into flowering. I’d never been interested in growing high-CBD cannabis before, but several customers had asked about it, so I figured now was a useful time to broaden my cannabinoid menu.

I eventually made a deep-green coconut oil CBD lotion that was much more potent than the $85-an-ounce commercial topical he’d procured in Colorado. The CBD oil was much more effective orally ingested rather than applied topically. I gave him a two-ounce sample and advised him to pay close attention to how it affected him, both as a topical and as an oral medicine.

He claimed it wasn’t as strong as what he bought in Colorado, and that he only wanted to pay $60 an ounce for it. Again, he was trying to play me. I appeased him, only because I’d done the work already. Now, he buys an ounce of oil per month, which he uses recreationally in the daytime or as a nighttime sleep aid. And one of my other customers is buying it from me for $85 an ounce, so I guess I’m breaking even.

Legalization also meant that Danny now demands I drive 23 miles to meet him at a café near his house. Before he had access to a supply of legalized weed to compete with my weed products, he’d driven the 23 miles to meet near my house.

Danny isn’t the only customer I had to work harder to retain, but he’s by far the most ornery, greedy and frustrating. One of my other customers is a pleasure to accommodate, but I lost her business for several months. She has a high-stress job that threatened to break her down physically and emotionally, and so had been buying 1.5 ounces a month from me for seven years.

Then, her employer announced workplace drug testing. She quit cannabis to avoid a negative test result, and began to suffer tremendously as a consequence. A psychiatrist prescribed her a pain reliever, Xanax and Zoloft. Those drugs whacked her out, creating severe mood swings, crying jags, insomnia, gastrointestinal problems, slurred speech, anger and depression — but she felt she had no choice but to stay on them. I was losing about $600 a month of cannabis income when she was on those harmful pharmaceuticals.

Fortunately, her union fought the new workplace drug-testing requirement, and the testing program was terminated after about nine months. She called me up more excited than I’d ever heard her, saying, “Get on over here with some weed!”

How To Retain Black-Market Cannabis Customers In A Legalized Market

Legalization has empowered cannabis consumers with lower prices and more choices. Some consumers now choose to grow their own product, while others head straight to their nearest legal dispensary. It seems the easy boom days of black-market weed growing and selling are now a thing of the past. However, if you’re a black-market cannabis provider and want to stay in business, there are several proven tactics one can adopt:

  • Ask your customers exactly what they want from their consumption experience. And be willing to grow strains that matched their needs and wants.
  • Provide free samples so customers can give you helpful feedback.
  • Be willing to make such popular products as cannabis concentrates, tinctures and edibles.
  • Lower your prices if you must, but pay close attention to the cost-benefit ratio to ensure you keep prices as high as you can without losing customers.
  • Institute such strategies as loyalty programs, bulk-buy discounts and bonus buds that reward repeat customers, increased-quantity purchases and new referrals.
  • Recognize that you’re an employee of the customer — a paid farmer, if you will — and that you can no longer call all the shots and expect the consumer to automatically go along with them.
  • Be sure to use no pesticides or dangerous inputs in your grow ops, and sell only the cleanest possible, perfectly dried and cured buds and cannabis products.

I make sure my customers understand that I grow rare strains they can’t get elsewhere, that I grow strains for their specific needs, and provide fresher, cleaner craft cannabis than any dispensary could ever provide. Customers empowered with knowledge are willing to pay more and stay loyal, especially once they realize your cannabis products are safer, more potent, and all-around better than what they can get elsewhere.

I’ve lost about 30 percent of my income due to the legalization of cannabis. This means I’ve had to source new clients, grow rarer strains that can be tricky to cultivate, learn to make non-solvent concentrates and topicals, provide additional customer service, and work harder for a smaller profit.

Still, I love growing weed, and won’t surrender to legalization anytime soon. Black-market growers have risked their freedom for decades; they’re the ones who started the cannabis boom, and we sure as hell plan on sticking around to participate in the new cannabis ecosystem.

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