A sticker advertising illegal cannabis delivery in downtown Chicago found in September 2021. Credit: Mike Fourcher / Grown In

Just before we all hit the dining room tables to overeat and avoid talking politics with our families, Philip Smith said the quiet part out loud to my Grown In colleague, Zack Huffman.

“I think there is plenty of business in the industry for everybody,” he said. “Our main competition is definitely the black market. It’s not the legal market.”

Smith is running a legal, licensed delivery business in Massachusetts. And his business, Freshly Baked, is not even in the Bay State’s dark, urban heart of Boston. He’s in ex-urban-ish Taunton, population 59,408. That’s next door to East Taunton, where defense contractor Raytheon makes the kind of missiles strapped onto fighter jets.

So, maybe we can’t say delivery is just a big city problem?

Smith then tells Zack that his company is actually disadvantaged versus underground delivery companies when it comes to advertising. 

Advertising is another barrier for newcomers to the legal market. Smith said that while some illicit operators will post online advertisements, or hang flyers and stickers in public places, his company is bound by tight state advertising regulations. Cannabis companies are forbidden from advertising in spaces where less than 85% of those exposed to the advertisement are over 21.

“All of my delivery vehicles are totally unmarked,” he said. “There are certain places where we cannot advertise in the community.”

It’s not hard to find advertising for illegal cannabis delivery. Walking around downtown Chicago and Boston recently, I’ve seen stickers everywhere. The local weed guys just slap them on lampposts, parking meters, bathroom stalls. If you call 867-5309, you won’t get Jenny, but maybe Jeremy who’ll happily take your order.

There’s a well-known delivery service on Chicago’s North Side that guarantees delivery within an hour. Which is fun, since delivery is illegal in Illinois.

I’ve checked out websites in Michigan that offer delivery to Ypsilani, Wayne County, and Ann Arbor, as well as Detroit. Independent delivery services are illegal in Michigan.

And the offerings are sophisticated. Not just weed, but multiple strains – often the same kinds you can get in dispensaries – gummies, THC lollipops, shatter, and pre-rolls too. They come nicely packaged, with branding.

Pricing is almost always about 30% less than what you’d pay in a dispensary. Dispensary prices go down, so do underground prices. They’re paying attention.

The underground market is here, but I’m not sure the legal cannabis market knows what to do about it.

Cannabis operators don’t have a lot of answers when they’re asked about the problem. The Michigan Cannabis Manufacturers Association thinks the solution is to regulate caregivers, which is a sort of gray market. But I’m betting that regulating gray markets would result in pushing many operators back underground.

Of the big cannabis companies, Ascend Wellness Holdings is the only company I’ve seen admit the underground market is a force to be contended with. They actually put state-by-state underground market estimates in their investor deck. It’s a nifty way to illustrate total market size, and is maybe the right way to think about the cannabis industry: It’s not a greenfield business, it’s actually a long-standing, disaggregated market with savvy players who don’t play by the same rules as SEC regulated companies. 

It’s a kind of asynchronous warfare, like fighting the Taliban, which is a wholly appropriate analogy, since one of the Taliban’s bigger income streams is illicit drug manufacturing. So it shouldn’t be surprising that last week a false rumor spread that an Australian company was bankrolling a new Taliban hashish processing plant.

Seems like a good business idea, right? Get into the illegal pot business with the protection of a rogue state. 

“We’ve had probably 40 or 50 calls today,” the Aussie company CEO told Reuters. 

I’m betting they were mostly calls from folks who wanted to know how to get in on the action. Just not delivery. There’s probably someone already handling that part.

Correction: The original version of this column incorrectly stated that cannabis delivery is illegal in Michigan. The story has been corrected to state that independent delivery services are illegal. Licensed dispensaries may legally offer local delivery services.


Editor Mike is a co-founder and the editor of Grown In, a U.S. national cannabis industry newsletter and training company. His career has taken him from Capitol Hill to Chicago City Hall, from...