As the green rush sweeps through legalized states, it turns out that most cannabis consumers are choosing to go legit. With nearly 80% of buyers now lighting up with products from licensed retailers, the black market’s days may finally be numbered.

In states where marijuana has been legalized, a significant majority of cannabis consumers—nearly 80%—are purchasing their products from licensed retailers. This trend lends strong support to the idea that regulated markets are effective in curbing the influence of illicit sellers, a long-standing challenge for the legal cannabis industry.

Despite the rapid spread of marijuana legalization throughout the U.S., the black market has shown stubborn resilience. Illicit sales cut into the revenue and profits of the cannabis industry and have been a headwind for investors. But it appears that the tide is turning.

The findings come from a recent survey conducted by NuggMD, a prominent cannabis telehealth platform, which revealed that 77% of consumers in legal marijuana markets acquire most or all of their cannabis from authorized stores. The survey was released August 12.

More specifically, 65% of those surveyed reported that they exclusively purchase their cannabis from licensed outlets, while an additional 12% indicated that the majority of their purchases also come from these regulated sources.

On the other hand, a smaller portion of consumers remains divided between legal and illegal avenues. About 7% said they obtain roughly half of their cannabis legally, 4% stated that less than half of their marijuana comes from licensed retailers, and 6% admitted to relying entirely on unregulated sources. Interestingly, 4% of respondents were unsure whether the stores they frequented were licensed or not.

This survey, which included 473 participants, has a margin of error of approximately +/- 4.51 percentage points, according to NuggMD.

Source: NuggMD

Deb Tharp, who heads legal and policy research at NuggMD, commented on the survey results, saying, “Although the current legal and medical marijuana markets have their imperfections, this poll indicates that they are successfully attracting consumers. By choosing to purchase from regulated stores, consumers are supporting the broader movement toward sensible drug policy reform while also contributing to the creation of legitimate, well-paying jobs.”

The poll also highlighted state-specific trends, particularly in California and New York. In these states, consumers were slightly less likely than the national average to shop at legal stores, but they also had a higher proportion of individuals who exclusively purchased from licensed outlets.

In California, which accounted for 27% of the survey’s respondents, 70% reported buying all (52%) or most (18%) of their marijuana from legal stores, with 9% stating that none of their purchases came from licensed outlets. Similarly, in New York, where 13% of the respondents resided, 68% said they always (50%) or mostly (18%) obtained their marijuana from licensed sources, while 10% said they never did.

One crucial aspect of the NuggMD survey is that it does not differentiate between legally obtained marijuana and cannabis acquired through alternative legal means, such as home cultivation or gifts. This lack of distinction means that the survey could be including activities like home growing, which is legal in both California and New York, alongside unregulated purchases.

The survey results suggest that a substantial portion of respondents are daily cannabis users, which could indicate a strong representation of medical or habitual consumers in the data. NuggMD acknowledged this, stating that their polling might be over-representing these frequent users, whose behaviors could be indicative of future market trends.

This survey is particularly encouraging for investors in the legal cannabis industry. The growth of the illicit market has been a significant barrier to profitability, with unregulated sellers often undercutting licensed businesses on price. However, as more consumers gravitate towards legal, regulated stores, the legal cannabis market stands to gain substantial ground.

This shift not only helps legitimize the industry but also enhances its potential for profitability, making it an increasingly attractive sector for investors looking for long-term growth opportunities.

However, obstacles remain to marijuana sales in jurisdictions where weed is legal, notably red tape and slow-moving bureaucracies. Just because something is technically legal doesn’t mean officials are expediting its use.

Illegal purveyors of weed are adept at rapidly shifting tactics and tailoring their products to customer tastes. They don’t pay taxes, so their products are cheaper than the taxed and regulated products available in legal markets.

Marijuana industry leaders and investors are frustrated by the persistence of illicit pot sales. The black market undercuts potential legal sales, to be sure, but it also poses a health hazard and tends to feed crime.

Illicit marijuana is unregulated and isn’t subject to any sort of quality assurance or tests. What’s more, unlicensed marijuana dealers often intersect with the criminal element; street deals sometimes involve weapons, physical violence, and the purveyance of harder, more dangerous drugs.

WATCH THIS VIDEO: Takin’ Care of Business: 10 Traits of Profitable Pot Firms

You still can reap enormous investment gains in the fast-growing, global marijuana industry. However, as the resilience of the marijuana black market shows, expectations don’t always pan out. When picking a pot stock, you need to be especially careful.

I’m the editorial director of Investing Daily. I’m also the chief investment strategist of our premium trading service Marijuana Profit Alert.

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