How to legalize cannabis: the case of Maine

One reason I distrust the state-by-state process of legalizing cannabis and prefer a national approach is that the people drafting the laws and writing the regulations tend to reason more or less along these lines:

“Cannabis and alcohol are both intoxicants. We know how to regulate alcohol, so we should handle cannabis the same way.”

There are two things wrong with that.

First, cannabis is like alcohol in some ways but unlike it in others, so it needs a different control regime. (E.g., it’s not clear that we should criminalize cannabis use in public, use by minors, or stoned driving; doing so risks a kind of “backdoor re-criminalization.” In each case the link to aggression and violence that is so marked with alcohol is weaker, or may not even exist, with cannabis.)

Second, the current alcohol control regime leads to an estimated 88,000 excess deaths per year, and incredible amounts of disease and misery. That doesn’t look like a successful policy to me, and applying that policy to cannabis would be a clear case of “Doing the same thing and expecting a different result.” If you were to ask a state alcohol regulator about the prevalence of Alcohol Use Disorder among high-school students, or the number of alcohol-involved murders or suicides, you’d mostly get a blank look. A liquor board usually understands its job as making sure the taxes are paid, that the premises are orderly, and that licensees don’t sell directly to minors. The impact of alcohol on public health is the province of the health department, while its impact on public safety is a problem for the police and the prosecutors.

So with cannabis. Most state regulators are more interested in creating an orderly legal market that can displace the illicit market than in serving a broader policy vision that includes minimizing the predictable bad side-effects of commercial legalization.

BOTEC Analysis was hired by Maine’s Office of Marijuana Policy to review a draft set of regulations, which were pretty much as we expected. 

The introduction to our comments, explaining what we were trying to do, is pasted in below the fold.  While the comments are linked to specific sections of the Maine regulations, some of the ideas might be of interest to regulators elsewhere, and to legislators and advocates drafting new legalization statutes. 

COMMENTS ON MAINE DRAFT CANNABIS REGULATIONS

Designing a set of rules presupposes some purpose or purposes those rules are intended to serve, and the rules should be evaluated in terms of how well they are likely to serve those purposes, or reconcile them when they conflict. Neither the initiative nor the legislation contained a preamble or a statement of purposes, so the designers might be well served by making their own list, perhaps in consultation with other executive-branch officials and with legislators. A candidate version of such a list would be:

• Reduce arrests, convictions, and incarceration related to cannabis
• Shrink/ eliminate the illicit market as rapidly as possible.
• Provide convenient access to cannabis of high quality and purity and known chemical composition for responsible adult use.
• Minimize any growth in underage use
• Minimize any growth in Cannabis Use Disorder
• Provide treatment to those who suffer from CUD.
• Reduce the problem use of other drugs, including alcohol.
• Minimize diversion for out-of-state sale.
• Minimize any growth in dangerous behavior under the influence (e.g., driving).
• Create economic opportunity, especially in disadvantaged communities.
• Promote employment that pays a living wage.
• Protect the environment from the impacts of cannabis cultivation: power and water utilization, pesticide runoff, obnoxious odors.
• Generate tax revenue.

A central intermediate variable in several of these is the price of cannabis products (perhaps best thought of in terms of price milligram of THC). Too high a price will sustain an illicit market; too low a price will encourage problem use by adults and use by minors, facilitate diversion for out-of-state sale, make it harder for industry participants to sustain themselves, and reduce revenue to the state.

The statute does not give the state authority to regulate prices directly or to limit production, and taxation is set by statute. That eliminates all the best options for sustaining prices above their very low free-market level: ounces in Oregon are now going for $40, or about $1.50/gm., compared to illicit-market prices of around $10/gm. The Legislature may want to revisit some of those policy choices.

Still, decisions about market architecture can influence price, as will any regulation that imposes costs on the industry. For example, an industry-specific minimum wage higher than the statewide minimum wage would promote living-wage employment while also helping to sustain prices. Again, that appears to be outside the current range of administrative authority, but it bears thinking about for the future, since it serves both the living-wage goal and the public-health goal.

In other states, licit-market prices started out well above illicit prices due to shortages of licit cannabis, then plunged to levels well below the old illicit prices. The ideal pattern would be the reverse: starting out low until the illicit market has been driven out by licit competition, then rising to prevent increases in problem and juvenile use, to keep the industry solvent, and to generate tax revenue. That was more or less the pattern of post-Prohibition alcohol policy. No state to date has invented a set of policies to bring about that desirable pattern of prices.