Around the world in five cannabis markets

Five experts, all from countries with varying levels of cannabis legality, came to Auckland funded by Massey University to speak on the benefits and costs of the drug before New Zealand’s cannabis referendum in 2020. Alice Webb-Liddall reports.

While New Zealanders wait for the cannabis referendum in 2020, the government is working hard to draft a policy that will outline how legalisation would be carried out here. To do this, they’ll need to look international, to see what’s happening in countries, states and cities where recreational cannabis use is already legal. There’s no perfect plan, and each country has a varied approach to the divisive issue.

Here’s some of the ways the US, Canada, Uruguay, the Netherlands and Australia have tackled cannabis reform.

US

The first US states to legalise recreational cannabis were Colorado and Washington in 2012. This was the beginning of the movement to legalise the drug nationwide, with 10 states currently allowing recreational use. 

One of the biggest problems with the cannabis market in the US is that technically the drug is still illegal under federal law. What this means is the regulation of cannabis products differs by state. Professor Beau Kilmer from the RAND Corporation Drug Policy research centre US says the lack of blanket nationwide regulations means the drug isn’t controlled consistently.

“Product testing is a bit of a patchwork. Because it’s prohibited at a federal level, the normal federal agencies that would take care of pesticides and a lot of the other regulations, they’re not involved, so there’s a lot of variation happening there.”

As of 2019, a quarter of the US population lives in states where recreational weed is legal, and in most of these places the model is commercial. In a lot of areas of the US, cannabis is taxed off its retail price. While this contributes to hundreds of millions of dollars each year in product taxes, it also means that when the price of cannabis decreases, so does tax profit. 

“We’re seeing these large price declines as we’re getting rid of the risk, there are industrial growers and more competition… when you hear people talking about the amount of money the state or country will make, you have to be skeptical, because a lot of models won’t build in the price drops,” explains Kilmer.

While the model has worked to lessen the contact between cannabis users and the black market, it hasn’t eliminated the illegal trade yet, and the people most negatively affected by prohibition laws are still losing out the most under legalisation.

“Illicit markets still exist in legal states. Since legalisation, at least 80% of cannabis products being purchased in Colorado are coming from legal sources. In Washington State it’s about 50%… The illicit market is largely going to be a function of the price of the legal market and the amount of money put into enforcement. It’s going to take time. 

“The legalisation of cannabis has not eliminated racial disparities in arrests. Yes, total arrests have gone down, but we haven’t seen an elimination in racial disparities. A new study out of Washington State showed that even though there was a total decrease in arrests, there was an increase in arrests for African Americans versus white Americans.”

That the commercial market was so early adopted by the US meant the sector grew fast, but Kilmer warns against setting up a completely commercial market in New Zealand, saying once the genie is out of the bottle, it’s impossible to put back in. 

“As they get more money, as their lobbies get more power, it makes it a lot harder to make changes. In 5 or 10 years when you want to make changes, and we saw this with the alcohol industry and with tobacco, some of these big businesses will fight against the changes. If you’re going to be cautious about this, going from prohibition to a commercial market may not be the best option.”

Professor Beau Kilmer speaks about the US cannabis model. Photo: Alice Webb-Liddall

CANADA

Canada was the first country in the world to legalise medical marijuana, in 2001, and current Prime Minister Justin Trudeau campaigned heavily on the legalisation of the drug for recreational use in 2015.

Before recreational use was legalised in 2018, there was growing concern about the rising levels of cannabis users, particularly youth. The Canadian reform had no referendum attached, but Trudeau was open about his plans to legalise when he was campaigning. 

The objective of the legislation was to improve public health and safety outcomes, undermine illicit markets and keep cannabis out of the hands of youth. Professor Benedikt Fischer, who worked in the Department of Psychiatry at the University of Toronto at the time says the problem of youth cannabis use can’t be addressed through legalisation. 

“We created legalisation partly to protect young people but in a place like Ontario, the first offence for youth under 19 years of age, if it’s a small amount [of cannabis] is a small civil fine of $200, if it’s a large amount over 5 grams there is a charge under the youth criminal justice act… This may be the way for ongoing criminalisation of young people for cannabis use.

“Criminalisation doesn’t go away, it just gets shifted to focus on young people, people who supposedly we’re trying to protect with this.”

Canada, much like the US, operates with a federal government and provinces, or states. Their cannabis model is largely commercial. In most provinces the purchase age of cannabis and its products is 19, aligning with alcohol laws. It’s allowed in private areas and some public areas, the same as with tobacco laws.

Cannabis users have three options for the legal purchasing of cannabis products: retail stores, mail order and home cultivation. There are over 200 licensed retail cultivators and over 200 tons of cannabis product was sold in the first year. 

Canadian cannabis law also has strict prohibitions on most advertising, but Fischer says there are ways to get around these.

“When the Canadian government sold the legalisation model they promised, as part of public health and safety, that they wouldn’t allow promotion advertising. There’s no advertising that shows young children and explicitly tells them to go out and smoke as much as they can – but a lot of lifestyle promotion, cannabis conferences, trade fairs, medical companies advertising themselves. 

“I have increasing doubts about whether it’s actually possible, especially within the internet age, to restrict promotion advertising in a regime that by design has a core that’s a commercial industry.”

Canadis. (image: MARK RALSTON/AFP/Getty Images)

URUGUAY

The first country in the world to legalise recreational cannabis was Uruguay, in 2012. It was a reaction to a growing panic about the rise of violent crime, to which then-President José Mujica responded by legalising and regulating the cannabis market. It is one of the most strictly-regulated markets in the world, with the government controlling almost every aspect of the trade.

For Mujica, the decision to legalise was in hopes of reducing the amount of power held by drug traffickers, increase public security, decriminalise users and increase public health.

To purchase legal cannabis users must sign up to a register, there’s a maximum amount of 40 grams per person per month, no advertising is allowed, no selling to tourists is allowed, and no cannabis products except for the flower are legal. 

Professor Rosario Queirolo is from the Latin American Marijuana Research Initiative in Uruguay and says one of the more popular ways to access legal cannabis in Uruguay is through a Cannabis Social Club. 

“Cannabis Social Clubs are non-profit organisations and we have 131 in the countries. They can grow up to 99 plants per club and clubs need to have between 15 and 45 members… the regulation says that clubs must yield their surplus to the government, but they’re pretty efficient at using it all. It’s a semi-regulated environment.”

The other way people can buy cannabis is through one of 17 licensed pharmacies. The problem with this model is meetinf the public’s appetite, as these pharmacies are only supplied by two government regulated cannabis farms. Queirolo says the government is in the process of giving out three more licenses for these larger-scale operations, but currently, demand far outweighs supply.

This is a problem in terms of eliminating the illegal cannabis trade. With shortages, many users still turn to illegal sources for the drug. The law banning the sale of cannabis to tourists also drives an elusive black market. “The regulation to not serve to tourists meant there was a frustration that kept the illegal market growing. Many tourists came to Uruguay thinking they could use cannabis but couldn’t get access to the legal flower, so the black market continued,” says Queirolo.

One thing she thinks the government should have focused on much sooner were the media campaigns and education around the harms of cannabis use. “The media campaign is very recent, it only started in 2018. That is something that is better late than never but it’s something that might have been good to start with.”

NETHERLANDS

Let’s start by clarifying: cannabis is not legal in the Netherlands. Recreational use of the drug was decriminalised in 1972, and it is widely tolerated for personal use.

The Dutch coffeeshop is a somewhat controversial model for cannabis sales in the Netherlands, which allows the sale of small quantities inside licensed premises, called coffeeshops. These shops often sell food and drinks, but are prohibited from selling any alcohol or other illicit substances. The issue with the coffeeshop method is that while it may be legal to sell within these premises, it’s still illegal to cultivate the plants, therefore the supply is still illegal.

Coffeeshops along the border of Belgium and Germany were also being patronised by tourists from these countries, until the government introduced a nationwide ban on tourists using coffeeshops in 2012. In Amsterdam many coffeeshops ignore this law.

Cannabis tin can sitting next to trimmed marijuana plants. Photo: Getty

AUSTRALIA

In 2019, the Australian Capital Territory (ACT) became the first Australian jurisdiction to pass laws legalising recreational cannabis use, cultivation and possession, which will come into effect from 2020.

Professor Simon Lenton from the National Drug Research Institute, Curtin University, Australia, says while this is an important first step, it’s a very small one. 

“It’s a modest proposal. It legalises less than 50 grams of dry cannabis, up to two plants per person, maximum of four per household. It’s in conflict with commonwealth laws and there’s a worry that it’ll be rolled over by the feds, it probably won’t but that’s a risk. They’ve banned artificial cultivation which is a bit of a problem because it’s pretty cold down there and they’ve used artificial light as a defining characteristic. They haven’t allowed gifting, so it’s got a lot of problems but it’s the first that’s got through legislation in Australia.” 

Lenton played a role in the reclassification of cannabis-related crime from criminal to civil in Western Australia that was passed under the Labour government of 2004, but overturned in 2007 when a conservative government was elected. 

“The cannabis infringement notice programme we had in place in WA was if you had under 30 grams you got a notice, up to two plants, you had 28 days to pay the fine or you could do an education session in lieu of paying a fine, which was intended to not criminalise people who couldn’t afford to pay the fines.”

He says under this system he did still notice a disproportionate amount of indigenous people getting these notices, and he says no cannabis law will change the state of racial inequity completely. 

“It’s the same with lots of aspects of the law, how it operates, it’s a huge problem in Australia and in so many other places around the world.”

The social costs of a criminal record was one thing Lenton says the WA legislation was wary of. In the three years the legislation was implemented, over 2,500 people who previously didn’t have a criminal record avoided getting their first on the basis of cannabis use or possession. 

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“Getting a criminal conviction has much greater impact on employment, relationships, education, further involvement in the criminal justice system and travel. Changing the law from a criminal penalty scheme to a civil penalty scheme didn’t result in greater numbers of regular cannabis users… but the social costs of getting a criminal conviction were far greater.”

New Zealand

So what will we do? With the referendum fast approaching, the government has some work to do to create a model for reform that takes all the international examples into account and finds path forward. The New Zealand Drug Foundation has recommended a model based on community, helping those who are the most disadvantaged under current prohibition laws, creating jobs and industries in small regions and putting profits back into helping people with substance abuse problems outside of prison.

Before we all go out and vote, New Zealanders need to look at these international examples and the data that’s come out of these countries, so as to avoid some of their mistakes, and take what has worked best for our own proposal.


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