The right (and wrong) way to legalize cannabis

How to build a legal marijuana system that’s convenient, protects public health and keeps commercial forces in check

A bag of marijuana is held up at a medical marijuana dispensary in Vancouver on Friday May 1, 2015. The City of Vancouver has become the first in Canada to regulate illegal marijuana dispensaries, despite strong warnings from the federal government. THE CANADIAN PRESS/Darryl Dyck

A bag of marijuana is held up at a medical marijuana dispensary in Vancouver on Friday May 1, 2015. The City of Vancouver has become the first in Canada to regulate illegal marijuana dispensaries, despite strong warnings from the federal government. THE CANADIAN PRESS/Darryl Dyck

The Trudeau government’s proposal to legalize cannabis will no doubt generate heated debate. The question of how to legalize is likely to receive less attention. But it is no less important; the consequences of legalization will depend strongly on details that neither side of the larger debate has given much attention.

The potential benefits of legalization include: increasing personal liberty; gains to consumers in convenience and in product variety and safety (via chemical testing and accurate labelling); and substantially shrinking a multi-billion-dollar illicit market and the associated enforcement efforts and punishments. (Statistics Canada reports more than 20,000 cannabis-related convictions per year; about one-third of those lead to custodial sentences, with a median length of 30 days.)

The primary risk of legalization is increased problematic use (“cannabis use disorder,” in medical terminology) and the resulting damage to consumers, and their families, friends and co-workers. Leakage from the adult market may also increase use among adolescents—especially if prices fall dramatically—creating risks to academic performance and psychological and emotional development.  The growing share of cannabis users who report smoking every day—now about one-quarter of Canadian past-month users—demonstrates the risk of developing problem use.

These can be thought of as the arguments for, and against, any legalization of cannabis. But they can also be thought of as design criteria for a new system of legal availability: how can we provide convenient access for adults who want to use in moderation while minimizing the harms from cannabis use disorder and from use by adolescents?

The commercial model of cannabis legalization adopted in Washington State, Colorado and Oregon performs well in terms of liberty, consumer satisfaction and shrinking the illicit trade, but is likely to be much less satisfactory when it comes to controlling problem use. After all, frequent high-dose users—those most at risk for cannabis use disorder—are the most valuable customers of the cannabis trade, whether licit or illicit.  The marketing (and lobbying) strategies of a cannabis industry will therefore focus on attracting such customers and inducing them to consume more and more of the product, and on converting moderate users into problem users. In this respect cannabis is like alcohol, tobacco and gambling: all of those industries have commercial motives for getting their customers hooked.

Over the past two decades, the cannabis market has shifted increasingly toward material with very high concentrations of THC, the primary intoxicating agent. That raises the risk of acute bad experiences, and may also increase the prevalence of problem use. Since per-gram prices have been steady over that period, the price of getting stoned has been falling.

Even at today’s illicit price, cannabis is a remarkably cheap intoxicant: something like a dollar per hour of intoxication, which makes it cheaper than beer. The price is too low to matter much to most casual users. But very heavy users, for whom cannabis is a significant personal budget item, and younger users, who tend to have less available cash, are likely to use more cannabis as the price falls.

When cannabis growers and dealers are no longer forced to hide their activities and pay their workers premium wages to induce them to accept legal risk, the price of cannabis drops dramatically. This is already evident in falling wholesale prices in Washington and Colorado. Once the market is mature, generic, unbranded legal cannabis may very well sell for one-tenth the current price of the illegal product, making commercialized legalization an unattractive policy from a public-health viewpoint.  Yes, there will be high-end product as well, but what matters is the price per hour of intoxication at the low end of the price spectrum.

A sensible cannabis-legalization plan would prevent the growth of substance use disorder as much as possible by: keeping prices high (through production controls, taxes, or public monopoly); banning persuasive advertising by restricting marketing communications to factual statements about the chemical content of the product; and offering consumers convenient ways of checking their own impulses when those impulses conflict with their judgment about their long-term interests, for example by allowing customers to set monthly purchase quotas for themselves.  Of course any policy that really put a dent in problem use would also put a dent in industry revenues, so we should expect the industry to oppose such policies, as we have already seen in the United States.

That struggle between commercial logic and the public interest will define the new politics of legal cannabis. As the new government proceeds to draft a new system of laws, it should keep in mind the need to prevent the cannabis industry from acquiring excessive political influence.

One approach would be to make the sale of cannabis a state monopoly rather than relying on private-sector retailers; as Premier Kathleen Wynne has proposed for Ontario. The stores could easily administer user-set quotas, and contracts with growers could include a ban on advertising.

It is when the regime is first being designed that the public health interest has the best chance. Later, public attention will shift, but industry lobbying efforts will remain focused on dismantling effective controls.

Cannabis legalization doesn’t have to be bad for the public health. But if we’re not careful, it will be.

Mark Kleiman is Professor of Public Policy at New York University’s Marron Institute. Jonathan Caulkins is the Stever Professor of Operations Research and Public Policy at Carnegie Mellon’s Heinz College. They are two of the authors of Marijuana Legalization: What Everyone Needs to Know (Oxford University Press).

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