The only problem I have with this idea is that the illegal market has been supporting itself for a long time and the people are comfortable with using an illegal market if it offers a cheaper alternative. To force illegal dealers out of the market, recreational alternatives will need to be competitive and the more they charge the better the alternative seems. Since MJ is such a high profit substance anyway ($10/g!) they could sell it for $8/g and charge $2 tax, and that would kill the illegal market but right now that doesn't seem to be happening and the illegal market doesn't need to change anything to remain a viable and competitive alternative. Just simple Capitalism.