Pot prices plunge in Washington State

The harvest is in, and ounces of 10%-THC cannabis are selling for $200 at commercial retail outlets in Washington. (Figure roughly 70 joints to the ounce, and at least 3 stoned hours per joint, so the cost of intoxication is roughly $1 per hour.) That price is fully competitive  with both the illicit market and the medical market.

This was utterly predictable, as I know because my RAND colleagues predicted it. So much for the argument that Washington’s taxes were too high.

What is also predictable is that prices will continue to drop, both in Washington State and in Colorado, unless the authorities start to limit production volume. $200/oz. would be a fairly reasonable price target; anything much lower than that risks a big increase in heavy use and underage use. (Of course there’s no way to keep the stuff from leaking from adults, who are allowed to purchase, to minors, who aren’t.)

Falling prices are also bad news for all the folks who thought they were going to get rich selling a newly legal product at the old, illegal prices. No such luck.




Legal cannabis in Vermont? RAND lays out the options

Last year, the Vermont legislature asked the Vermont governor for a report on the options for legalizing cannabis. The governor’s office hired RAND to do the research. That report is now public. (I’m listed as the third author for alphabetical reasons, though I doubt I did as much as 2% of the enormous amount of work that went into it.)

The Vermont process holds out great promise, because the normal legislative process – ugly as it can be – has the possibility of producing a result much more nuanced and more carefully considered from multiple viewpoints than the initiative process, under which propositions are drawn up by advocates with the advice of pollsters, no one ever holds a hearing, and any idea that can’t be explained in a 30-second TV spot has to be dropped. The key point of the RAND report is that there are legalization options other than full commercialization.  Niraj Chokshi of the Washington Post “GovBeat” blog provides an excellent summary. 

The key design question – this is my view rather than the one expressed in the report, which is scrupulously neutral – is how to make cannabis legally available for use by adults and wipe out the illicit market while at the same time minimizing the growth in use by minors and in the number of people with diagnosable cannabis use disorders (currently about 4 million people nationwide, about 10% of past-year users, 20% of past-month users). There are many ways to skin that cat, but I doubt that commercialization is the best approach.

But however you come out in the end, the major contribution of the report is to break through the simple prohibit/legalize dichotomy and display the wide range of options we have to choose from.  

Those who fail to study history …

John Buntin at Governing looks to the development of alcohol policy after Prohibition for cautionary lessons about the future of the legal commercial cannabis industry, and some alternatives to that future. It’s the kind of solid, thoughtful reporting that is Buntin’s hallmark, and well worth a read.


Cannabis legalization in Oregon: Why Measure 91 is close enough for government work

Ballot initiatives are a terrible way to make policy changes when the technical details matter. Despite the simple-minded sloganeering on both sides, the question of creating a legal cannabis market is about as technical as they come, with equally valid public goals in sharp conflict, many unknowns, a variety of tricky design issues, and some big risks.

But sometimes initiatives are the only way to go, because legislators simply won’t do what a majority of voters want.

Cannabis legalization is that sort of issue, too: legislators are scared of cops and prosecutors, and most cops and prosecutors really hate legalization.

In Oregon, advocates went to the legislature and said, “We can and will put legalization on the ballot unless you handle the issue.” The legislature didn’t move. So the advocates acted on their threat, giving us Measure 91.

What they produced is noticeably less crazy than the measure that failed in 2012: for example, the quotation from the Book of Genesis about “herb bearing seed” is missing.  It seems to reflect a good-faith effort to craft a law that will allow adults to get cannabis, wipe out the illicit market, provide some revenue, and prevent a big increase in use by minors.

But Measure 91 does not reflect a sophisticated understanding of the problems of illicit markets or a nuanced view about substance use disorder. Focusing on the goal of eradicating the illicit cannabis market in Oregon, it doesn’t pay enough attention to the risk that Oregon might become a source of illicit supply to neighboring states. Focusing exclusively on preventing use by minors, it neglects the risk of increasing dependency among adults.

The basic fact about a legal cannabis market is that the product will be remarkably cheap to grow; once competition and industrial-style production have taken effect,  a legal joint would cost (before tax) about what a tea-bag costs, rather than the illegal or medical-dispensary price, which is 100 times as high. And the tax provided for in Measure 91 would add only about 50 cents to the price of a joint: not a high price to pay for two hours or more of being stoned.

Lower prices won’t much change the behavior of adult casual users; even at today’s illegal prices getting stoned is a bargain compared to getting drunk.  But lower prices would matter a lot to frequent users, and most of all to frequent underage users, simply because what they spend on pot represents significant element in their personal budgets: at current prices, the cost of a heavy cannabis habit can exceed $5000 per year.

Of course the claim that barring minors from buying in cannabis stores will keep them from having access to diverted supplies doesn’t pass the giggle test: just consider how easy it is for a minor to get alcohol from an older friend or relative or from the poor heavy drinker hanging around the liquor store, willing to buy a case for a teenager as long as he gets to keep a couple of bottles for himself. Cheap cannabis for grown-ups inevitably means cheap cannabis for kids.

Unless the legislature decided to raise it, the $35-per-ounce tax in Measure 91 would lead, within a couple of years, to prices way below current illicit prices and way below legal prices in Washington State. That in turn would mean big increases in use by minors and in the number of Oregonians with diagnosable cannabis problems. It would also mean substantial diversion of cannabis products legally sold under Oregon’s low taxes to Washington, where taxes are much higher. (Currently the flow goes the other way, with the two biggest-selling legal cannabis stores in Washington being the two closest to Portland.)

It wouldn’t be hard to draft a better-balanced measure than the one to be voted on in two weeks. For example, it might be wiser to limit legal production and sale to co-ops or non-profits, keeping the profit motive out of the business altogether.

But the choice Oregon voters face isn’t between what’s on the ballot and some perfectly designed cannabis policy; it’s between what’s on the ballot and continued prohibition at the state level, until and unless a better initiative can be crafted, put before the voters, and passed into law.

Measure 91 would enact an ordinary law, not a constitutional amendment. If it passes, the legislature will be free to amend it the next day by a simple majority vote; such moves are allowed not only by law but by the conventions of Oregon politics.

So the question facing Oregonians who want adults to be able to buy cannabis legally – without the nonsense of finding a “kush doctor” and faking an ailment – is whether to defeat the proposition and hope that the legislature will act on its own (or that a better-drafted bill will appear on the ballot in 2016) or whether instead to pass the current proposition and hope that the legislature will move to fix what’s wrong with it.

Given the balance of political forces, it seems more reasonable to trust the legislature to rein in a too-lax legalization scheme than to expect it to do what no legislature in the nation has been willing to do yet: pass a full cannabis-legalization law.

It’s not hard to identify the key points that need amendment, within the context set by the initiative: cannabis sold by a set of for-profit enterprises under state regulation. (That leaves aside such interesting ideas as just letting consumers grow their own, or requiring that growers and retailers be not-for-profit co-ops or public-benefit corporations, as well as the alternative of state-monopoly retailing, which has some attractive features but can’t be done while the federal Controlled Substances Act is in place, because the state can’t tell its officials to violate federal law.)

* Recognize preventing adult substance use disorder among the goals of the law.
* Assign some of the regulatory authority to the health department rather than giving it all to the revenue department.
* Give the regulators explicit authority to restrict the quantity of cannabis that can legally be grown. (Ideally, growing rights ought to be auctioned off rather than given away, giving the financial windfall to taxpayers instead of to the lucky few who end up with licenses.) * Increase the proposed taxes, and make them adjustable to keep legal prices at about the current illegal level as production costs fall. In the end, to prevent a big price decrease, the tax would have to be a very large fraction of the current illegal or quasi-medical price of about $10/gram.  Ideally, taxes would be based on the intoxicating power of the product – measured in milligrams of THC, the primary active chemical – rather than on the total weight of the plant material. (We tax whisky more heavily than beer or wine; why shouldn’t cannabis taxation work on the same principle?)
* Require that retail clerks have some serious training in pharmacology and substance use disorder, and make it part of their job to discourage excessive and dangerous consumption patterns, rather than letting their bosses just tell them to sell as much product as they can.
* Make sure there’s enough enforcement against illicit growing and dealing to make the legal market competitive.
* Rein in the medical-marijuana business. Once Oregonians with medical need can buy tested and labeled product at commercial outlets, there’s no need to have an entire parallel distribution system. It makes sense to offer tax exemptions for limited quantities to genuine patients, but the current practice of “patients” buying “medical” supplies for illicit resale has to stop.

There are lots of other good ideas around. (See the forthcoming RAND report on legalization options for Vermont.) But those will do for a start.

Would the legislature pass them all? Probably not. But Oregon’s chances of getting to a temperate cannabis policy will be better if the voters force the legislators to get off the dime.

It’s not an easy choice; as a Californian, I’m glad I don’t have to make one like it (yet). But if I had to vote in Oregon, I’d vote “Yes.”

Cannabis legalization: not whether, but how

The New York Times comes out for cannabis legalization.

David Frum is still against it.

Neither deals seriously with the balance of advantage and disadvantage; the Times simply blows off the question of substance use disorder and pretends that passing a law forbidding sales to minors takes care of the problem of increased use by minors, while Frum never mentions the damage done by the $40-billion-per-year illicit market created by cannabis prohibition and proposes nothing that would shrink that market.

And neither the Times editorial board nor David Frum seems interested in the question of how to legalize, as opposed to whether to legalize. The Times doesn’t notice that commercialization is only one approach to legal availability, and arguably not the best; Frum simply dismisses a temperate approach to legalization as politically unworkable, without explaining how to make his kinder, gentler prohibition a political winner.

Alas, I sometimes suspect they’re both right. As a matter of practical politics, our only choices may be a badly-implemented prohibition or a badly-implemented legalization.  (If so, I’m inclined to try the Devil I don’t know.)  So far, my attempts to put political and organizational muscle behind the idea of smart legalization have merely illustrated the wisdom of Ralph Yarborough’s maxim, “They ain’t nuthin’ in the middle of the road but yaller lines and dead armadillas.”  I don’t find life as political roadkill especially uncomfortable, but it does get frustrating. It’s not just that continued prohibition and commercial legalization are both bad ideas; it’s that the arguments for those two bad ideas leave no media space, or mindspace, for discussion of the good ideas that might lie between them.

Footnote Ann Althouse does a good demolition job on the Times editorial, though to the best of my knowledge there’s no evidence of intoxication or health damage from second-hand cannabis smoke or vapor.

Is cannabis addictive?

Ask this woman.

My dad will never stop smoking pot. Sometimes I wonder about the man he might have been, and the lives we all might have had, if he’d never started.

As I keep saying: the evils of prohibition do not disprove the evils of substance abuse. In the case of cannabis, it’s probable that we could get rid of the former without greatly increasing the latter. But it’s not automatic. And denying that cannabis abuse is a real problem doesn’t help.

Note how the mythology of “addiction” cultivated by the “drug-prevention” effort and the drug-treatment industry interferes with understanding. Most drug abuse is very unlike the horrible picture painted in the linked story: it’s relatively transient. And most people who use “addictive” drugs don’t get addicted to them; substance abuse happens to only a minority of users, and only a minority of abusers actually have the “chronic, relapsing disorder” touted as typical. Bad habits around drug-taking are like other bad habits: they lie along a spectrum, and not everyone who uses a drug that turns out to be habit-forming in others encounters a problem.

But if you have the problem, or your brother, or your son, or your mother, it’s a serious problem. And the risk can’t just be wished away. If you support making cannabis available from profit-seeking commercial vendors, heavily marketed, and cheap – which is the path Washington and Colorado are walking down right now – then the predictable result of your preferred policy will be more people with very bad cannabis habits. And there could be fewer such people if cannabis were kept expensive, if marketing were kept to a minimum, and if users were offered modest helps to their self-command, such as user-set periodic purchase quotas, or if we keep the commercial motive out of the business altogether with state stores or by limiting vendor licenses to consumer-owned co-ops and not-for-profit businesses with boards concerned with limiting drug abuse rather than maximizing revenue.

Of course you’re free to oppose all of that. But if you do so, you ought at least to acknowlege the inevitable human cost.

h/t Andrew Sullivan

Update Comments closed due to persistent trolling, using multipe IPAs. I may start to follow Keith’s lead. Alterantively, we could go to some sort of registered-commenter system. Sorry, folks, but I suppose if you have a picnic you have to expect some cockroaches.

How to legalize cannabis

With a little help (ok, actually quite a lot of help) from my friends Lowry Heussler, Jon Caulkins, Keith Humphreys, and Beau Kilmer, and my sister Kelly, I produced an op-ed for the Financial Times on the design of a post-prohibition cannabis control regime.

Here’s the punchline:

A large increase in problem use might be a price worth paying to rid ourselves of the many ills attendant on prohibition. But it is not a price we have to pay. Smarter policies could lead to better outcomes.

Many thanks to Kesewa Hennessy, Deputy Comment Editor at the FT, for a superb job of copy-editing.

One key point, omitted to save space: the system of user-set quotas proposed for cannabis could also apply – should, in my view, be applied – to alcohol and gambling.

Public opinion on cannabis: Is it “Game Over”?

Public opinion on cannabis legalization has been trending positive since sometime in the late 1990s. By a couple of years ago, it was just about break-even. But in the latest Gallup poll, the “pro” side has moved to an almost-20-point advantage, 58 to 39.

Of course this calls for some caveats.

1. The question, as asked, was about legalizing use, not production and sale.

2. With a sample size of only 1000, some of the movement might be noise rather than signal. The Galston-Dionne analysis of Pew Center data from earlier in the year shows a more closely divided country; again, it’s an open question whether that difference is measurement error or real change over a few months.

3. Bad outcomes in Washington or Colorado might reverse the trend.

All of that said, the new numbers are enough to move my probability distribution. For a while now, I’ve been predicting national legalization sometime in Hillary Clinton’s second term, but without much conviction and with the caveat that the trend in public opinion would have to continue in order to make that prediction come true. Now I’d have to say it will come true unless the trend were somehow to reverse.

Note also that at some point positive feedback takes over. Being for pot legalization has a different social meaning when it’s the clear majority view. The polling results will therefore influence the behavior of some survey respondents and voters directly. Moreover, politicians and other opinion leaders shift their announced (and perhaps actual) views in response to perceived shifts in voter attitudes, that in turn will shift the beliefs of some voters.

If the question of whether to legalize now seems largely settled, that makes the much-less-debated question of how to legalize even more topical. Some of the smarter opponents of cannabis have figured this out, and are now looking for ways of limiting the increase in drug abuse likely to follow legal availability. However, career and ideological interests and group ties are likely to lead the majority of the active drug warriors to keep fighting what now seems like an unwinnable battle, telling one another that legalization is sure to be such a disaster that the public will demand re-prohibition. By doing so, the warriors will help to ensure that the legal system that eventually arises will be over-commercialized, under-regulated, and under-taxed.

This would simply repeat the mistake they made in opposing the medical use of cannabis. While the warriors kept chanting “Cheech and Chong medicine,” the pot advocates rolled right over them. Rien appris, rien oublié.

Update Andrew Sullivan strikes a triumphal note. Hard to fault him for that. But goddammit, “less harmful than alcohol” and “not harmful to most of its users” do not add up to “harmless.” Adolescents spin out on cannabis and wreck their academic careers. People of all ages do stupid things while stoned, including driving their cars into trees and other cars. Cannabis now follows only alcohol as the primary drug of abuse reported by people voluntarily entering drug treatment.

Why take the perfectly reasonable case that cannabis should not be illegal and ruin it with the silly claim that the stuff is harmless?

Cannabis and alcohol (reprise)

David Frum and I agree that “But something else is even worse than X!” is not a good reason to ignore the X problem: autos kill more people than guns, but we should still try to reduce the number of people killed with guns. And the fact that alcohol is a much nastier drug than cannabis, both physiologically and behaviorally, doesn’t make cannabis abuse either rare or benign.

But Point #13 in the post Frum links to wasn’t about the comparison between cannabis and alcohol; it was about the causal connection between cannabis policy and alcohol abuse. As Frum notes, alcohol use and cannabis use are now positively correlated. But that doesn’t tell you anything conclusive about whether making cannabis legally available would increase or decrease heavy drinking.

In my view, an increase of as little as 10% in heavy drinking would wipe out any benefits from cannabis legalization, including the benefit in the form of fewer arrests because of the additional crime that would go along with the additional heavy drinking. Frum is aware of that possibility.

But he ignores the opposite possibility, equally plausible in terms of both logic and evidence. Continue Reading…