The lingering black market: illegal pot dealers still undersell licensed marijuana merchants in Colorado, but their advantage may be fading.

• Author: Sullum, Jacob

On New Year's Day, when Toni Fox became the first state-licensed marijuana merchant in Colorado to serve recreational customers, nearly 200 reporters crowded into the 3D Cannabis Center while hundreds of customers waited patiently outside the store. "It was controlled chaos," she recalls with a smile. "We saw close to 500 people that day. We ended up turning away over 300 people."

Business since then has been brisk, validating Fox's decision to switch completely from medical to recreational marijuana. "Pre-2014," she says, "we were seeing, on average, 25 customers a day, doing $1,000 a day in sales. Today we see, on average, 200 people a day, and we're doing $11,000 a day in sales. In the first three months of recreational sales, I did as much as three years of medical revenue." It does not hurt that Fox's store is conveniently located for tourists, on the way into Denver from the airport.

Fox has had no trouble attracting customers even though she charges substantially more than black-market dealers do: about $60 for an eighth of an ounce after taxes, compared to something like $40 for pot of similar quality purchased from unlicensed sellers in Colorado Qudging from Craigs list ads and Price Of Weed.com, a website that collects data from consumers, and assuming a 30 percent discount for buying an entire ounce). Some dispensaries in mountain resort towns charge as much as $70 for an eighth after taxes, and people happily pay it.

"It's a night-and-day difference between medical and recreational," Fox says. "We did medical for three years. We operated in the red. We dealt with patients who were on serious budgets, who were making sacrifices to get their cannabis. They wanted the best price. Something extra. There was always negotiating. And they were always making a conscious choice on whether they were going to use cannabis or pharmaceuticals. Their pharmaceuticals are covered under insurance, but cannabis helps them, so it's a vicious struggle. And everybody is sick and wants to tell you why they need the cannabis because they're sick. With recreational, it's tourists coming in with cash, pockets full of money, saying, 'I want the best. I can't believe this is happening. This is amazing.' Night and day."

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