11 July 2019

A practical plan for legalising cannabis

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Most Brits want to legalise recreational cannabis. Canada, ten US states and Uruguay have already taken this step, with other US states set to follow soon and New Zealand due to hold a referendum on the issue later this year.

Taking money out of the hands of criminals and reducing children’s access to cannabis are arguments that a majority of the UK find compelling — and they have been bolstered by emerging real world evidence too. Senior politicians from every party, law enforcement figures and health professionals have all emphasised the urgent need for reform. A wide cross-section of British society recognises that our approach to cannabis enforcement only serves to endanger young people, hand over billions of pounds to criminals, and undermines the rule of law. Change is in the air. You can almost smell it.

With high levels of support from all corners of society, legalisation seems like a real possibility in the next five to ten years. But how should we regulate a recreational cannabis market?

That’s what the Adam Smith Institute has set out to do in our new paper, The Green Light, with contributions from Volteface. While Volteface’s Liz McCulloch focused on the broader arguments in favour of legalisation, I set out to answer important questions about how Brits should produce, market, sell, tax, and consume legal cannabis when we take this step.

It’s vital to involve private enterprise in a legal cannabis market, allowing a variety of business models to compete against each other and drive up efficiency.

Uruguay got it wrong. Legal cannabis shortages lasted for years following their state-led approach to legalisation—and this led to a persistent criminal market. They lacked enough legal points of sale to compete with drug dealers and the UK must learn from this by allowing dedicated licensed outlets, behind-the-counter pharmacy sales, and online delivery platforms: all with tight age-checks.

One of the key benefits of legalisation is its ability to destroy the black market economy in cannabis and take back control from criminals. In order to maximise the immediate impact on the black market, lawmakers should offer those currently involved in illegal cannabis cultivation a grace period to move their activities into the legal sector: bringing their human capital, expertise and entrepreneurial spirit under regulation and control.

We should be careful how we tax legal cannabis too. Set taxes too high and the illegal market gains a significant price advantage. This is especially true for the early stages of legalisation, since a ubiquitous black market makes cannabis users far more responsive to price differences. But this doesn’t have to come at the expense of public health, since legalisation makes it possible to shift consumption away from high-potency (high THC, low CBD) cannabis by taxing it at a higher rate.

Allowing the sale of cannabis vaporizers and edibles would also provide a non-tobacco alternative to consumers who want to minimise health harms from their consumption. Canadian-style health information at point-of-sale—only possible in a regulated market—would give adult consumers the opportunity to make more informed choices and alert them to the potential risks of stronger products.

Then there’s the question of branding. While many cannabis reform advocates shy away from this area on the somewhat questionable grounds that it might increase use, there are strong arguments in favour of allowing some degree of advertising.

Just as plain packaging reduced the cost of counterfeiting tobacco, the same would be true for a legal cannabis market. That means  knock-offs without any quality checks or controls can permeate the market, undermining consumer confidence in cannabis products. But there’s a broader reason why branding matters and why many US states have opted to allow it — it provides an extra incentive for producers to ensure quality and consistency.

Put simply, businesses have good reasons to maintain the reputation of a valuable brand. In a legal cannabis market this is likely to translate into more accurate dosage estimates and less risk of contaminants. All of which lead to a more informed consumer and lower external health costs.

Legalisation also presents the opportunity to redress past injustices against those who have been harmed by criminalisation. There is ample evidence of the negative impacts a criminal record can have on life chances, especially for young people. The UK should follow Canada in allowing those with cannabis-related criminal records to apply for a pardon, or ideally total expungement.

The question of how we regulate matters greatly to the overall success of cannabis legalisation. Policymakers need to use every available tool to destroy as much of the criminal market as possible, prevent underage use and ensure that adults who choose to consume cannabis are well-informed about the risks.

We need legalisation to be guided by practical liberalism—recognising that cannabis should be treated primarily as a consumer product that informed adults should be allowed to enjoy. As always the old adages remain true: underlying most arguments against involving the free market in cannabis is a lack of belief in freedom itself.

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Daniel Pryor is Head of Programmes at the Adam Smith Institute