The dawning of legal weed in Los Angeles was supposed to be the end of the wild west for cannabis: the end of the semi-legit, semi-shady weed dispensary, and the beginning of the totally legit tax-paying cannabis retail business. But instead of closing off the frontier, so far Proposition 64 has created a brand new form of outlaw in LA.

Recreational retail shops wait on licenses, follow regulations, and inflict a whopping 45% tax on their customers. Not surprisingly, that gives consumers a hell of an incentive to seek out more convenient, cheaper alternatives in the city’s cannabis black market.

As a result, legit pot shops are hurting, according to a report from Leafly. “It’s gotten worse” since legalization, says Jason Kiloh. Kiloh is not only president of the United Cannabis Business Alliance (a trade group that helped put together the city’s cannabis regulation Measure M), he’s also the owner of Higher Path dispensary in Sherman Oaks.

Kiloh couldn’t even get a city license for the first month of the New Year, and he says he had to watch his customers go elsewhere for their wares. “Come January an uneducated part of the market said, ‘I can buy weed anywhere now.’ Guess what they are doing? They are going anywhere. They’ve come out in droves to the illegal shops,” Kiloh told Leafly.

Not only do consumers have taxless alternatives than the few legit shops in town; they can also just call up one of the city’s delivery services. Kiloh estimates that about 200 delivery services have opened up since the first of the year. Licensed businesses can’t keep up with them, because, as Kiloh pointed out, “Delivery is not even legal in the city of Los Angeles.”

According to Leafly, the city of Los Angeles is expected to issue 157 priority licenses, 300 total retail licenses, and currently has roughly 1,500 illegal cannabis storefronts.

Photo via Flickr user Emmanuel.D_Photography