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.

 

 

 

Mexico’s Missing Marijuana Mystery

Every year, soldiers roam Mexico’s hinterland in search of illegal marijuana plots. Massive eradication campaigns have been part of Mexican life since the 1940’s. No other country on Earth has impounded so much cannabis for so many years.

That could be changing. According to recent official numbers (p. 51), marijuana seizures and eradication declined steeply in 2013, to lows unseen since the early 1990’s. Does this signal a major policy shift? Maybe. Here are the facts:

  1. Between 1995 and 2012, marijuana seizures averaged 1631 metric tons per year. In 2013, the total haul was 972 tons, 40% below the historical average. Even more surprising, less than half of the impounded volume was captured in the second semester (Note: I estimated second semester numbers by looking at this, p. 34). Traditionally, marijuana seizures are heavily concentrated in the months of October and November, right after the crop. Somehow, that did not happen in 2013.
  2. Eradication numbers are even more striking. From 1995 to 2012, Mexican authorities destroyed an average of 24,120 hectares (59,601 acres) of marijuana plots per year. In 2013, only 5,364 hectares (13,254 acres) were eradicated, almost 80% below the historical norm. And again, not much seems to have happened in the second half of the year, i.e., the prime months for marijuana eradication.

So what explains those less than impressive results? There are three distinct possibilities: Continue Reading…

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.  

The medical value of cannabis and the fraud of “medical marijuana”

Of course cannabis has medical value; the FDA has approved pure THC as a pharmaceutical, and the cannabidiol in whole cannabis has its own therapeutic applications and also protects against some side effects of THC. So denying that natural cannabis has medical value is nonsensical.

But equally of course, the variation in natural cannabis means that “marijuana” isn’t the name of a medicine; a medicine is a material of known chemical composition that has been shown in clinical trials to be safe and effective in the management of some condition in some group of patients.

Some sick people get relief from whole cannabis, but “medical marijuana” is a political fraud, and the “medical marijuana” business is mostly a sham, with most of the volume going to non-medical users – many of them with diagnosable cannabis use disorder – and resellers.

Footnote In a Twitter exchange, MPP lobbyist Dan Riffle doesn’t deny the facts, but seems to prefer that I use some euphemism for “fraud.”

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.”

Legalizing pot carries risks. So does prohibition.

As predicted, the Wall Street Journal refused to correct the Bennett/White op-ed that strongly implied (without quite stating explicitly) that I believe cannabis legalization would sextuple the rate of cannabis dependence to 16.2 million. (My previous whining about that here.) However, the Journal did publish my letter, with only helpful edits and an accurate headline that’s a pretty good haiku-length statement of the case.

Like the original article, the letter is behind a paywall, so – on the off chance that some RBC readers don’t pay tribute to the Murdoch empire – I’ve pasted it in below.

 

Legalizing Pot Carries Risks, but So Does Prohibition

To the Editor:

William Bennett and Robert White (“Legal Pot Is a Public Health Menace,” op-ed, Aug. 14) cite my research as support for their claim that the legalization of cannabis would mean creating 16.2 million “marijuana addicts.”

Not only is the attribution false; the claim it purports to buttress is absurd. I made no such prediction, and the idea that legal cannabis could create more addicts than legal alcohol doesn’t pass the giggle test. It would be astounding if the actual number were one-third as high as Messrs. Bennett and White project

Cannabis legalization on the current alcohol model—low taxes and loose regulations—would indeed risk a large increase in the extent of cannabis abuse. That is why some of us are working hard for high taxes and sensible regulations on cannabis, as well as stronger controls on alcohol, which is after all a much more personally and socially dangerous drug.

Cannabis legalization in any form will create some harm; every drug policy has disadvantages. But against that must be set the enormous harms from cannabis prohibition: $40 billion a year in illicit revenue, some of it going to violent criminal organizations in Mexico; tens of thousands of people in prison; and more than half a million users arrested each year.

Our goal should be to eliminate as much as possible of the damage from prohibition while minimizing the harms that would result from a badly designed legalization.

Mark Kleiman

Los Angeles

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.

HRC talks to CNN about MJ

A CNN interviewer asked Hillary Clinton about cannabis policy.

On medical use, she replied that we need more research, including research about drug interactions, but in the meantime people with serious medical conditions where there’s “anecdotal evidence” of efficacy ought to have access.

On non-medical (“recreational”) use, she said that the states are the laboratories of democracy, that two states are trying legalization, and that we should wait and see how that goes.

Perfectly reasonable answers, as far as they went, and perhaps a little bit more pro-cannabis than I might have expected from such a cautious candidate.

But they cried out for follow-up questions:

1. As President, what would you do to promote medical research on cannabis and cannabinoids? Would you tear down the barriers to research now created by federal policy: in particular, the UMiss monopoly on cannabis for research purposes and the requirement that every study receive a “grant” of cannabis from a special committee within HHS?

2. While the states are doing their experiments, to what extent should the federal government help, or at least get out of the way? Colorado and Washington are now issuing state licenses to commit federal felonies. Current banking regulations make it difficult-to-impossible for cannabis stores to have bank accounts or to take credit cards, creating a huge all-cash business that is therefore an attractive robbery target. A state that wanted to experiment with state-monopoly retailing (arguably the best approach) would currently be barred from doing so by federal law. As President, would you propose changes in the Controlled Substances Act to make state-level experiments legal?

Instead, of course, the CNN interviewer asked her whether she intended to inhale. Arrrgggghhhhhh!

How long is it going to take for the press corps to stop giggling about cannabis policy and start reporting on it?