The Gray Market Gamble: Playing with Fire in Unregulated Markets
The Gray Market Gamble: Playing with Fire in Unregulated Markets
Grey market products are getting worse… not better.
The bustling bazaar of psychoactive chocolates, gummies, vapes, beverages, and atomizers is a breath of fresh air for many.
After patiently waiting through half a century of prohibition, cannabinoids and mushrooms can be ordered online and delivered directly to your front door — even in places where both cannabis and psychedelics remain highly illegal.
Sleek packages and colorful brands populate dispensaries and gas stations. We are literal kids in a candy store.
But when it comes to the gray market, appearances can be deceiving.
Many of these allegedly "legal" products have also brought a mysterious vaping lung illness that put thousands in the hospital in 2019 and 2020. Known as EVALI, the crisis is linked to 68 deaths.
The CDC pointed to chemicals added to THC-laden vapes, specifically vitamin e-acetate, a thickener sometimes added to the oils used in vape pens. The precise causes of the illness are debated to this day, and accountability by producers has been lackluster.
But EVALI was nothing but a bump on the road for a gray market that has quickly grown into a multi-headed beast worth several billion dollars more than its legal counterpart.
What started as a THC loophole has evolved into endless concoctions of exotic cannabinoids and psychedelic candies.
Consumers and businesses seemed to have forgotten about EVALI — that is, until the summer of 2024, after another round of hospitalizations and some sketchy deaths prompted the government to investigate what's really inside gray market products.
Some of the results are pretty shocking...
Related: Nootropic or Narcotic? The Dual Faces of Gas Station Heroin (Tianeptine)
The Big Gray Monster: How Did We Get Here?
In 2018, The US Farm Bill attempted to create a market for the cultivation of hemp. Officially called the Agriculture Improvement Act of 2018, the bill created a definition of hemp that differed from 'marihuana,' which was still a Scheduled Substance in 2018. Farmers could grow Cannabis sativa as long as it contained less than 0.3% THC by dried weight.
And most importantly, products with less than 0.3% THC could be sold legally across the US.
The bill was, from a business perspective, a huge success. Farmers grew lots of hemp and sold it to companies that use modern extraction methods to create cannabis concentrates.
At first, products with delta-9 THC were popular. Gummies, chocolates, vape pens, and various other consumables flooded dispensaries or shipped directly to consumers through online stores.
But that was just the start. Underground grey markets have long been the source of innovation in the designer drug sphere. Growth is significantly faster without regulation.
Growing lots of hemp and extracting only delta-9 THC and CBD wasn't efficient. Hemp plants, by definition, only contain 0.3% THC, after all.
However, beyond D9, there's a dizzying array of cannabinoids available. While many compounds cannot be easily extracted directly from hemp plants, clever chemistry can transform one cannabinoid into another.
Producers knew this and were sitting on an abundance of plant material. With strong budgets and state-of-the-art chemistry kits, teams set out to work manufacturing alternative cannabinoids like delta-8, Delta-10, THCa, HHC, THCP, and many others.
How A Legal Loophole Birthed A Multi-Billion Dollar Industry
For the most part, bans on these alternative cannabinoids are conveniently missing from legislation. And in the world of drug laws, no news is good news.
When laws don't explicitly ban a substance, it's generally considered free game. This legal environment has led to an untold number of "technically not-illegal" products with never-before-seen blends of cannabinoids being sold to consumers.
The main psychoactive cannabinoid in cannabis is delta-9 THC — but there are several other forms of this molecule that do virtually the same thing:
HHC (hexahydrocannabinol)
THCJD (tetrahydrocannabioctyl)
THC-O (tetrahydrocannabinol acetate)
HHC-O (hexahydrocannabinol acetate)
THCP (tetrahydrocannabiphorol)
THCV (tetrahydrocanabivarin)
Delta-8 THC
Delta-10 THC
11-Hydroxy THC
THCA (tetrahydrocannabinolic acid)
Before you head out to find some, we should note that bans have begun appearing in many states.
This ongoing game of cat and mouse has been going on for decades. Governments ban a substance, so chemists create a fresh version to avoid the ban. Regulators then follow up with a fresh wave of bans — rinse and repeat.
Most Alternative Cannabinoids Are Not Well-studied
Some cannabinoids, like delta-9 THC, have tons of available research to prove what they can and can't do.
Others, you'll be hard-pressed to find more than a couple of small exploratory papers. Maybe some stuff from the 70s… But in large part, chemists are still playing the age-old game of "Will this get me high?"
This might go without saying, but this is a pretty risky practice.
Even Alexander Shulgin — the KING of inventing and testing new psychoactive substances, knew the risks and applied meticulous caution when he tested anything new — often starting at sub-milligram doses and building up very slowly over days or weeks until he found the active dose.
Just because a compound classifies as a cannabinoid doesn't mean it's safe. These compounds interact with a complex hormonal system that can trigger all kinds of unexpected downstream effects ranging from nausea and vomiting to full-on seizures, psychosis, and even death.
We saw this firsthand during the Spice craze of the mid-2000s, which flooded the market with synthetic cannabinoids and led to widespread hospitalizations.
Contamination & Carelessness
It's not just the widespread use of research chemicals that make gray market products unsafe — it's the lack of expertise and disregard for proper production practices. Many of these companies simply don’t know what they’re doing, and worse, they don’t care to hire professionals who do.
Many cannabinoid extracts and vape pens contain problematic chemicals. The extraction or synthesis of cannabinoids is tricky and often relies on the use of toxic chemicals to get the job done. You certainly wouldn't want to ingest compounds like hexane, benzene, or toluene.
Even professional labs use these chemicals — but the difference is that with skilled technicians, expensive equipment, and tight quality control protocols these compounds can be removed from the final product.
Low-quality, unethical, and negligent manufacturers are silently dosing their customers with poison.
Beneath the Surface: The Risks of Harmful Chemicals in Cannabis Production
The legal cannabis market has infamously implemented very high testing standards. A great deal of pesticides, fungicides, and other chemicals are often used in cannabis production. Evidence suggests consuming contaminated cannabis products could be harmful to your health (shocker!).
One report even found that cannabis users have higher levels of heavy metals in their bodies than non-users.
This problem isn't isolated to gray market cannabis — it's a known issue in the cannabis world overall. That's part of the reason why there are so many regulations around how crops intended for human consumption are grown.
Legal cannabis producers have to wade through a mountain of paperwork and bureaucracy just to grow and sell weed. It's pretty hard to produce top-shelf, clean cannabis these days. So hard, in fact, that despite all this government oversight, even legal markets are riddled with contaminated products.
Licensed brands have even been moving into grey markets to reach higher profit margins that simply aren't possible in the clear market.
The grey market isn't held back by pesky government audits. A huge number of brands are black boxes — we just don't know what is in them, how their hemp was grown, or what state it was in before undergoing the extraction process.
One cost-cutting measure many companies take is ordering their raw hemp from places like India or China. Labor here is cheap, but the land is notoriously contaminated with heavy metals like lead, arsenic, and cadmium.
Thankfully, a significant number of brands send their products for third-party testing and will even share the results on their websites.
But even this isn't all it's made out to be…
Sham Third-Party Testing
Even gray market products understand that people want safe products and brands they can trust.
To gain this trust, brands will post Certificates of Analysis (CoAs) online. Some make it part of their brand by promising to test every batch of product they make and publish it online for the whole world to see. Some even provide tracking features like batch numbers and QR codes to help users make sure their product is contaminant-free.
For many brands, though, testing is simply a token page on the website. Many publish false tests or simply edit the date and republish the same test over and over again.
Unsurprisingly, there's even a gray market for the testing industry — with plenty of reports of sketchy lab practices.
Cannabis testing is big business. Labs compete with each other to win and keep producers. Labs undergo accreditation, but insiders often complain that the testing industry is corrupt, with fines and lawsuits fairly commonplace.
Reporting contamination in a cannabis producer's products can mean a lab losing valuable business. In fact, lab shopping is a well-known phenomenon in cannabis, with certain labs having reputations for giving the results a brand needs… For the right price, of course.
Modern cannabis culture is also obsessed with potency, with labs holding the keys to the kingdom. Independent investigations have tracked brands that shop around for labs that will provide them with inflated THC concentrations or have inconvenient details removed.
Michigan has even pushed for a state-run reference lab to audit test results, standardize testing, and determine product recalls.
What all of this means is that reading a lab report is more than understanding the numbers on a page. Knowing a lab's and brand's reputation helps, but at the end of the day, it can be hard to trust a few PDFs published online.
The first step is to verify a brand hasn't simply photoshopped its own tests by scanning a COA's unique QR code and verifying the document's authenticity on the lab's official website.
Navigating cannabis products means having a skeptical eye. Labs can be faked. Established brands, both above and below ground, are often imitated. California recently cracked down on sales of products packed using forged seals, which were supposed to be reserved for legal products.
And these days, any label or marketing of what compound is in a product should be taken with a grain of salt.
What to look at when reading third-party lab tests:
Test Date & Batch Number: Ensure the test is recent and matches the batch number of the product. Reused or outdated tests are a major red flag.
Cannabinoid & Terpene Profiles: Verify that the levels of cannabinoids (THC, CBD) and terpenes match the product packaging.
Pesticides: Check for common pesticides like myclobutanil, imidacloprid, and bifenthrin. Harmful chemicals should be at undetectable levels, and "N/T" (not tested) next to any indicates the lab didn’t screen for them.
Heavy Metals: Ensure the report includes tests for lead, arsenic, cadmium, and mercury, as cannabis can absorb these from the soil. Results should be shown in parts per million (ppm).
Residual Solvents: Look for solvents like butane, propane, ethanol, and hexane used in extraction. Safe products should show non-detectable levels.
Microbial Contaminants: Verify tests for mold, yeast, and bacteria like Aspergillus and E. coli, which can grow on improperly stored cannabis and can end up in the final product.
What About Magic Mushroom Chocolates? Are Any Legit?
A growing trend in the grey market is magic mushroom products. Producers already have customer bases and distribution channels, so adding magic mushroom chocolates and gummies was an easy move.
Usually, magic mushrooms mean psilocybin-containing mushrooms, a Schedule I substance. Some brands have dived headlong into selling what seems to be illegal psilocybin openly, but others have opted for legal or undefined stand-ins.
A popular choice for chocolate bars (and likely so-called psilocybin vapes) is 4-AcO-DMT. Another "sort-of-legal" drug, 4-AcO-DMT, is also called psilacetin and serves as a pro-drug to psilocin (a psychedelic compound in magic mushrooms). What this means is that once 4-AcO-DMT is ingested, the liver goes to work converting it into psilocin. The effects are virtually identical to that of magic mushrooms.
This compound has been found in mushroom chocolate bars dozens of times — and while it has been taken safely by many people, it isn't psilocybin. The effects are comparable to shrooms, but that's not the point — consumers need to understand what they are taking.
Recent events have made it clear that the bigger problem with grey market products is that no one can tell what's in them.
The problem is best illustrated by Diamond Shruumz, a brand of mushroom chocolates and gummies that has put well over 100 people in hospital. There are several deaths thought to be linked to this brand as well (still under investigation).
Diamond Shruumz "premium microdose chocolates" showed lab results with ibotenic acid and muscimol in them — which are the active compounds in Amanita muscaria mushrooms.
Is Amanita muscaria Safe?
Amanita muscaria does alter your perception and has been used for thousands of years by shamans — but its effects are closer to a deliriant or oneirogen (dream-inducer) than psychedelic.
The grey market doesn't care for splitting hairs about such things, though. Amanita fits perfectly — we could technically call it a 'magic mushroom,' and it's not explicitly banned in (most) states and countries around the world.
Amanita's safety is a bit of a contentious issue, however.
A long history of traditional use implies that it can be done safely, and people continue to use it today. But like any substance, the devil is in the details — specifically the dose. Amanita can produce very unpleasant side effects, and deaths are possible if the mushroom isn't prepared correctly.
We don't have a ton of faith that most of these fly-by-night gray market vendors are doing their due diligence to ensure their products are prepared safely.
The Diamond Shruumz Brand Illustrates Why Grey Market Products Carry Unknown Risks
Diamond Shruumz claims that it was the (legal) muscimol that caused problems in their products. This defense did not stand up to the scrutiny of the FDA investigation.
While muscimol and ibotenic acid could have caused problems, and some bars did contain these substances, the FDA found most Diamond Shruumz products didn’t contain this constituent at all — many tested positive for completely unrelated ingredients — some legal, but not advertised, others straight up banned.
Some examples of the kinds of chemicals the FDA discovered in Diamond Shruumz samples included various kavalactones (which should never be taken in isolation), a prescription drug called pregabalin, psilocin, 4-AcO-DMT, and various other synthetic tryptamines.
The Diamond Shruumz case is the perfect example of why tests for every batch are essential. Had the producers of the chocolate bar been clear about what was in the product, hospitalizations (and potentially some deaths) could have been avoided.
There are hundreds of grey market brands, many of them connected. For example, Diamond Shruumz’ parent company, Premium Prophet Blends, owns several brands dealing in vapes, cannabis, kratom, and CBD.
The manufacturing protocols and testing practices these brands use is a complete mystery, and that unknown is what makes the grey market unsafe.
Regulators are noticing this problem, and it stands to reason we can expect a crackdown coming.
Just a few weeks ago, California passed laws banning the sale of any hemp product containing THC or other intoxicating cannabinoids. This means all THC — so even those with less than 0.3% by dried weight are now banned within the state.
Profits are being prioritized over honesty and safety.
There are professional grey market producers who are diligent and honest — but it's become almost impossible to separate the legitimate from the reckless.
If you choose to engage, always demand transparent, third-party lab results and do your research on the brand’s track record before trusting their products.
Alternatively, both weed and mushrooms are surprisingly easy to grow yourself at home…
Further Reading
The Dirty Secret of California’s Legal Weed (LA Times)
Mushroom-Laced Candy Recall Highlights FDA's Limited Safety Role (NYT)
Enjoying Tripsitter? 🍄❤️
Don’t Journey Alone! Tripsitter was built by a community of psychedelic advocates — but it’s people like you that enable us to thrive.
If you found this newsletter insightful, share the love ❤️ using the link below.