So there will always a demand for illegal drugs.
Your conclusion doesn't follow from your premises. Illegal black-market alcohol is a negligible phenomenon, although it has no taxes and regulations and can be laced with other stuff. That's because the taxes and regs on alcohol are low enough to not overwhelm the economies of scale that only legal producers can enjoy - and because users of any drug are as a rule willing to pay at least a modest premium to get content-regulated product and stay on the right side of the law.
Marijuana is still illegal in most states - thus the illegal market.
I remember a similar story about cigarettes where the US citizens along the Canadian border were smuggling cigarettes into the Us to save money. The US governments (state and feds and local) were angry that they were losing out on the revenue.
Sorry — well regulated. Lol. I doubt that a user/buyer is concerned about “well regulated.” They just want the biggest bang for the buck — the biggest high.
However, you may be correct.... modern technology, growing and processing and manufacturing of the pot, all legal of course, produces massive amounts of THC.
After all the goal is to get the user high. The “health benefits” are secondary and were only a ruse to get people to accept pot as medicinal (a foot in the door). Back in the day, the percentage of THC was below 1% now it is 40%. A 40x increase. So, maybe legal pot is the “best value” if your goal is getting high. Yet, there is a demand for illegal pot.