Advice for cannabis regulators

Imagine – just hypothetically, of course – that you and a colleague were scheduled to spend an hour (as it might be, this coming Tuesday morning) with the people in charge of regulating the legal cannabis market in one of the states that voted to legalize last November.

You have to expect that most of the time will be taken up with the officials’ concerns rather than your own. You’ll be lucky if you get to make three points. What would they be?

My first-cut list is below. Comments welcome. But be mindful that adding a new point requires subtracting one of the existing points.

1. Regulatory compliance and tax revenue are fine things. But public health and public safety should be paramount. Cannabis is no ordinary commodity, but rather a sometimes-dangerous psychoactive drug: a much more complicated drug than alcohol, though in most respects a less dangerous one. Cannabis regulators will be held accountable for a much wider range of outcomes than are alcohol regulators.

[Note that this is an assertion about the actual politics of the situation. If I were King, rather than a mere Hemperor, alcohol regulators, too, would concern themselves primarily with public health and safety. But the booze industry won that battle long ago.]

2. The taxed and regulated market competes with the untaxed and unregulated illicit market. The power of the regulators depends on the market share of the enterprises they license. That suggests some restraint and cost-consciousness about regulations, and also aggressive moves to move consumers away from strictly illicit dealers into taxed and regulated stores. If you can’t raise the bridge, lower the river.

3. Some bad outcomes are inevitable. Some market participants will scheme to evade regulation. Take what action you can to prevent bad results and frustrate attempts at evasion. Warn the public that some bad results will, nevertheless, be coming.

Footnote This is meant to be a practical thread, not a polemical one. Anti-drug-war or anti-legalization rants will be ruthlessly deleted.

Comments

  1. klh says

    Nos. 1 and 2 must be coordinated. The price and taxation folks must see they keep the product cost low enough to shrink the black market in lg volume with a smaller profit margin. This will not be instantaneous and will likely take some fiddlng.

    We need serious, real consumer product safety testing, w/the %THC on every delivery system and explanation of how high that could get you and why (let’s ID some of these other compounds and what they do. One size does not fit and we need to inform people of what they’re doing.

    Dr. Kleiman, I tweeted you awhile back about urine screening. I know why you didn’t answer, but my intent was not to beat a test.

    I had to quit the best supplemental analgesic/anti-convulsant 7 mos ago becauese I’m regularly screened, as is everyone in my stat who sees a (legit) pain Dr. 38 surgeries(some weeks apart), an IT pump delivering morphine 24/7 – that doesn’t relieve my pain, I need a driver, and I can top it

  2. klh says

    …(Cont’d) with a Schedule II Q4H, but not cannabis. I had fewer SZ, didn’t nod off and drop my laptop, remotes, etc. Even my doc thinks the law is absurd, but his hands are tied.

  3. CoffeeJunkie says

    1. When money talks, I fear regulatory capture will occur, as it is with alcohol or perhaps, the lottery system (addictive gambling vs. state revenue).
    I would suggest cannabis task force made up legislators, public safety, health, regulators, etc to meet quarterly for the first five years to discuss
    and to tweak the system. Of course, lobbyists will be invited, but here’s hoping. Good example was changing the definition of cannabis/THC in Wa State.
    Please, please there must be some money for grants to study the harm profile of cannabis in the market place AND any substitution or complementary
    for alcohol. Please? Gates Foundation? Casey Foundation?

    2. The gray market medical marijuana dispensaries and distribution must be regulated or redefined, which appears to be in works.
    However, how does one convince the 20% of users who use 80% of the product to move away the untaxed and unregulated illicit markets and towards the taxed and regulated markets? Price point? Product safety? Safe and legal? Education? Difficult.

    3. Do you put the barriers of entry high enough, such as funding, criminal background checks, regulatory, believing that only the “good” people
    will apply and discourage the “bad” apples? The “more to lose” business participants. Harsher penalties.

    perhaps, modest barriers of entry, but draconian, one-strike and you’re out for life in the legal cannabis business.

    Or my favorite, a crime stoppers type of program where you pay informants if it leads to regulatory action.
    Machiavellian in nature, but can very effective to keep competitors and yourself clean.

  4. says

    I think the 3rd instruction is too vague and in combination with the sentiment of the 1st could promote an ultraconservative approach.

    It’d be helpful to enumerate the metrics and promote a few of them as variables of key interest, such as: DUIs with lethal injuries, heavy use among minors, average potency and diversity of potency among offerings, domestic marketshare of the licit product, treatment admissions by self-referral etc. My suggestion is to de-emphasize crude variables like total number of users or production tonnage.

  5. noseeum says

    Here’s one: we don’t know what we don’t know. We’re moving down uncharted waters. We will make mistakes. These regulations we create will need to be modified early and often, so let’s plan for that now.

  6. James Wimberley says

    The trick is to weave your points organically (not artifically) into your response to the officials’ concerns. They have been thinking and reading about this too. I would reduce the number of points you can raise independently to two, perhaps only one. So you may get anything from one to five usable thematic slots. Prepare, but stay flexible.

  7. SamChevre says

    I’d make two a sub-point of this one.

    Illicit markets are not equal. Concentrate on keeping the worst illicit markets from dominating the illicit market; help the grow-for-your-friends model kill off the import-it-from-Mexico model.

    • Mike says

      I’m glad Sam brought this point up. In the mistaken belief that a government-run market can just step into the shoes of the illegal market, some of those supporting regulation believe that it’s possible to do what prohibition has not — eliminate the fact that it’s just a plant. It grows from a seed, easily. In my experience, most consumers (90%) don’t want the hassle of growing for themselves, regardless of legality. But the 10% who do are dedicated and fearless. Legal sanctions will not stop them under a regulated system anymore than they do now.

      Here is my take on these three points.

      1. Don’t make a mountain out of a molehill. While marijuana can at times have negative effects, subjective experience and objective pharmacology indicate the negative impacts on the individual are far less likely to create negative effects for society than other intoxicating substances. Users already know this, non-users are generally aware of it, and public policy needs to accept it. Accountability also means accepting public input at face value, instead of miscasting the vote for prohibition as a vote for prohibition lite. Regulation succeeds when individual users are generally compliant because normative and objectively non-harmful behaviors are not sanctioned (consumption and cultivation for personal use), while those that violate the law are obviously distinct (DUID, illicit mass grows, and unregulated trafficking).

      2. The regulated market succeeds by achieving substantive displacement of the black market, not by assuming its monopolistic nature and ruthless efforts to suppress competition. A large part of this is simply done by supplying a diverse range of affordable, easily obtainable products. Respect those who grow their own as part of a regulatory structure that establishes a preference for small-scale, localized production. Keep the price of entry low to encourage most of those considering potential illegal operations that the legal route is the easy path. Allow those motivated enough to grow their own to do so, limiting sale from this to licensed operators or through use of a limited tax stamp that permits sale of no more than 500 ounces a year (similar to how beer and wine can be produced at home without significant regulatory oversight.)

      3. Bad outcomes happen all the time in public policy. It is difficult to imagine a worse or more ineffective system (OK, maybe Saudi Arabia and Singapore are even more inhumane, but those are outliers) than the current one. However, we should not let outliers dictate good public policy, but deal with them in the ways already available through legal sanction. No drug ever made anyone do anything. Let’s quit making excuses for bad public policy AND for those whose behavior is anti-social due to their consumption. Hold THEM accountable, instead of demonizing a substance and its mostly decent, hard-working, tax-paying users through bad public policy.

      • Mike says

        Obviously, I twisted things around in one sentence in Point 1. It should read:
        “Accountability also means accepting public input at face value, instead of miscasting the vote against prohibition as a vote for prohibition lite.”

  8. Brett Bellmore says

    1. Concern about public health and safety is a fine thing, but you have to take into account the extent to which the government’s own activities are a threat to both. Both midnight SWAT raids and encouraging the growth of criminal enterprises that sometimes fund terrorism are public safety problems. Large numbers of people rotting in prison for years, lack of quality control in an illegal market, are public health issues. You can’t do cost/benefit analysis if you assign the costs to the wrong column.

    2. True. Maybe even just drain it dry.

    3. Bad outcomes are inevitable, it’s the net outcome we’re striving to improve.

  9. Keith Humphreys says

    Mark

    Know your audience, they say. I think point 3 is not one you need to make with this audience. The concept of no-cost no-bad-outcome public policy is something the seasoned regulators you are dealing with in this meeting already know is ludicrous. And it might even come across as patronizing if you said to expect some bad outcomes, as if you thought they were dewy-eyed activists in tie-dye shirts and you had to break the news to them that adult life is complicated and challenging. You have little time, so don’t blow any of that precious commodity telling them things they already know.

    It might be more useful to talk a bit about the history of regulatory capture in alcohol and tobacco and how they should expect it and what they might do to try to ameliorate it, with the historical lesson that noble intentions of prioritizing health and safety were expressed when Prohibition ended, but capitalism soon took over (leading for example, to the selling off of state liquor monopolies in most of the country).

    Keith

    • Mark Kleiman says

      Yes, of course they know about bad outcomes in the abstract. But so far there hasn’t been much concrete discussion of what’s likely to go wrong. And there’s been no public statement by the Liquor Control Board warning of the risks attendant on creating a licit cannabis market from scratch.

      Jon Caulkins made the wise suggestion that the Board conduct a variety of “Red Team” exercises where some staff members are assigned to think like bad guys and devise ways around the rules, then rewrite the rules to make that harder, then try again.

      The other half of this idea is to say out loud which bad things are likely to happen, and what the Board is doing to reduce those risks (not to zero). That way when a five-year-old is rushed to the ED having eaten a batch of Mommy’s special brownies, the Board will be able to say, “Yes, we were aware of this risk, warned about it, and issued the following regulations requiring child-resistant and child-aversive packaging and labeling on edibles.”

  10. Brett Bellmore says

    Yeah, if you had to boil it down to one point, that would be it: Can’t do proper cost benefit analysis if you put the costs in the wrong column, or worse omit them, you have to be ruthless about admitting what the costs are, and where they need to be attributed.

    • navarro says

      you eloquently say to mr. kleiman what i’ve tried in various ways to say to you about firearms. well said.

  11. Wee-ee-eed to the Rescue says

    What’s the lowest hanging fruit? Here’s my attempt at an answer.

    We absolutely need content labeling. Cannabis users need to know the proportion of THC-to-CBD, at a minimum. I know that this ratio does not fully account for what happens with herbal cannabis. However, it’s a quick-and-dirty cut at the pharmaceutical effects.

    Currently, prospective consumers of cannabis have no idea what they’re ingesting. Unacceptable.

    Mark, you’re old enough to remember the days when there was no standardized labeling on food items. Some even made libertarian protestations about why such labels were unnecessary, e.g., “if the people demanded transparency, the market would provide.” Ridiculous!

    Every 21-year old is hypothetically a potential cannabis consumer. They deserve this basic “nutritional information.”

    ~

    P.S. – Keep prices low: it’s the only way to obliterate the Black Market.

    • Wee-ee-eed to the Rescue says

      Sorry, I forgot the rules. i would swap out the “nutritional content” comment for point #1 in the main post.

  12. Joe says

    Point #2 is the critical one. Put it first, since you may not get to all three. If you can reduce crime and policing costs, the politicians get public credit for success. That opens up room for all the other things you want to do.

  13. James Wimberley says

    Sticking to your ground rules, and following Keith, I’d replace 3 with the need for transparency all round: transparency towards consumers (labelling, standards, pricing, taxation), and towards the public through regulators and legislators (monitoring and reporting of outcomes as well as processes).

  14. says

    How about, because its a plant, with Nutritional capability, we treat it as a part of the Produce (Vegatable/fruits/Herbs) variety, or even Flowers. The main issue with the whole idea of ‘Regulation’ is the ability to produce your OWN. Just like a Home Brewer, or a ‘War Garden’ supporter, people ought to be able to produce their own plants, and if they choose to purchase more produce, they should have the ability to purchase and sell there own production.

  15. NCG says

    Are there going to be warning labels? I’m wondering about risks of smoking v. nebulizers. It seems like a good time to raise that issue, if it can help prevent some cancers. But I have no idea if smoking pot leads to lung cancer. I just worry about it.

    • NCG says

      The only other thing is, if you know of a place with a system that addresses one of these points particularly well, make sure they know about it. Don’t know about the rest of you, but I like examples, not just theories.

  16. says

    My 1 would be respect individual liberty. The fact that anyone thinks that someone shouldn’t get stoned, is being irresponsible in getting stoned, or might do harm to their own lives by getting stoned, should not be a part of the policy calculation. Indeed, the pleasure that people get from marijuana use should be viewed as a positive good that should be weighed AGAINST overregulation.

    Start there and then you can do your taxation and harm reduction, which is fine.