By Donald Kenkela, and Grace Phillips

This paper discusses the long- standing illegal markets for cigarettes and the more recently emerged illegal markets for e- cigarettes. We identify three distinctive market fundamentals that help explain many features of the illegal markets. First, in contrast to some illegal goods, many countries have sizable legal markets for cigarettes and e-cigarettes alongside the illegal markets. In 2024, tobacco products generated almost $1 trillion in revenues; e- cigarettes generated $26 billion dollars. It is estimated that illegal markets account for about 10 percent of global cigarette consumption. Second, the illegal markets have arisen to evade high excise taxes that increase prices and regulations that restrict the availability of desirable features of legal products. The taxes and regulations have been adopted as public health measures with the goal of reducing tobacco consumption; however, these same policies drive the formation of illegal markets. Third, demand- side linkages mean that taxation, regulatory, and enforcement policies targeted at legal and illegal markets
for cigarettes will affect legal and illegal markets for e-cigarettes, and vice versa. The connection between the
markets means regulatory policy for one product can drive consumers both to the illegal market for the product and to the legal and illegal market for the other product.

By: Beckner Andersano , Thomas M. Cahill , Michael Grommes , Maxwell C. K. Leung

Despite public health concerns, fentanyl, cocaine, and other illicit drug contaminants remain largely understudied in unregulated cannabis. Here, we developed an analytical method to quantify a panel of common illicit drugs in cannabis and tested the law enforcement seizures in Arizona and California in evaluation of the illicit drug contamination in black- and gray-market cannabis. One hundred and eighteen
cannabisdried flower samples were collected by the Maricopa County Sheriff's Office and theUS Postal Inspection Service between 2023 and 2024. The prepared samples wereanalyzed using an Agilent 6495 LC–MS–MS for 16 illicit drugs. Twenty-five (21.2%) of the cannabis flower samples had detectable concentrations of illicit drugs. Only three of the 16 analyses tested were detected, including cocaine (20.3%), methamphetamine(MAMP; 3.4%), and 3,4-methylenedioxymethamphetamine(MDMA/Ecstasy; 0.9%) .The highest concentration of illicit drugs was cocaine at 12,000 ppm (or 1.2% byweight). This pilot study demonstrates the presence of illicit drugs in black- and gray-market cannabis largely due to the contamination in the unkempt environment where they are being assembled and distributed. Intentional spiking appears to be rare, but the level of spiked cocaine can pose a health risk to consumers of unregulated products. Further studies are needed to survey the chemical contaminants of black-and gray-market cannabis and better understand their public health risk nationwide.

By Manisha Shah

The illegal market for sex in the United States generates significant economic activity yet remains understudied due to its illegality and clandestine nature. This paper synthesizes existing empirical evidence
documenting aspects of market structure, impacts of regulation, and notable changes over time. Criminalization, while intended to suppress the market, often exacerbates harms by displacing activity
underground, increasing violence against sex workers, and elevating disease transmission risks. Natural experiments, including decriminalization episodes in Rhode Island and policy shifts in Europe, reveal that decriminalization can reduce sexually transmitted infections and violence against women. Additionally, technological shifts-particularly the rise of online platforms due to the internet-have reshaped market organization. These findings challenge conventional legal and moral frameworks and underscore the need for evidence-based policymaking to guide effective regulation of sex markets.

The illegal market for sex in the United States generates significant economic activity yet remains understudied due to its illegality and clandestine nature. This paper synthesizes existing empirical evidence documenting aspects of market structure, impacts of regulation, and notable changes over time. Criminalization, while intended to suppress the market, often exacerbates harms by displacing activity underground, increasing violence against sex workers, and elevating disease transmission risks. Natural experiments, including decriminalization episodes in Rhode Island and policy shifts in Europe, reveal that
decriminalization can reduce sexually transmitted infections and violence against women. Additionally, technological shifts-particularly the rise of online platforms due to the internet-have reshaped market organization. These findings challenge conventional legal and moral frameworks and underscore the need for evidence-based policymaking to guide effective regulation of sex markets.

By Beau Kilmer

This article provides a primer on illegal drug markets, with a focus on the structure and nature of these markets and the enterprises involved. The markets for illegal drugs are large, with annual retail expenditures likely exceeding $100 billion in the United States alone. Many drugs are easy to produce, and their high value- to-weight ratios make them attractive to smugglers. Some features of illegal drug markets have been quite stable, such as the small size of retail purchases, in part because most sales are to people who use frequently and typically do not buy in bulk. Between production and consumption, most of these substances cross multiple borders—and often continents—and the mark- ups along the supply chain continue to be substantial. But there have been major changes over the past 15 y. While illegally manufactured synthetic drugs are not new, the proliferation of fentanyl and other synthetic opioids created an overdose crisis in
North America and has other countries on high alert. The internet has also made producing and accessing a wide range of drugs and their precursor chemicals easier. The emergence of cryptocurrencies has created new opportunities to hide transactions and launder the proceeds. In addition to highlighting the stability and turbulence in these markets, this article offers ideas for future research and emphasizes the need for monitoring purity-adjusted drug prices, which is critical for understanding supply changes and evaluating
interventions in these markets.