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Issues in the implementation and evolution of the commercial recreational cannabis market in Colorado

https://doi.org/10.1016/j.drugpo.2015.12.001Get rights and content

Highlights

  • We examine Colorado's regulatory process of legalised cannabis for adults.

  • Sourced from peer reviewed academic papers, grey literature, mass and niche media.

  • Public health, industry investment, methods of consumption and testing are relevant.

  • The scheme includes features to mitigate adverse impacts but faces major challenges.

Abstract

Background

For almost a century, the cultivation, sale and use of recreational cannabis has been prohibited by law in most countries. Recently, however, under ballot initiatives four states in the US have legalised commercial, non-medical (recreational) cannabis markets. Several other states will initiate similar ballot measures attached to the 2016 election that will also appoint a new President. As the first state to implement the legislation in 2014, Colorado is an important example to begin investigating early consequences of specific policy choices while other jurisdictions consider their own legislation although the empirical evidence base is only beginning to accrue.

Method

This paper brings together material sourced from peer reviewed academic papers, grey literature publications, reports in mass media and niche media outlets, and government publications to outline the regulatory model and process in Colorado and to describe some of the issues that have emerged in the first 20 months of its operation.

Results

These issues include tension between public health and profit, industry and investment, new methods of consumption, the black market and product testing.

Conclusion

The paper concludes that, while it is too early to determine the impact of the scheme, and noting that it includes some features designed to mitigate adverse impacts, it faces major challenges. Not least of these are the lack of an effective overarching federal regulatory structure, as a consequence of the federal prohibition on cannabis, combined with a rapidly growing cannabis industry which, like other industries, will seek to exploit loopholes to maximise profit.

Section snippets

Background

Existing literature has necessarily been limited to speculation and modelling the implementation and potential implications of a commercial cannabis market (Caulkins et al., 2015, MacCoun and Reuter, 2001, Rolles and Murkin, 2013, Room et al., 2010). A major concern for public health commentators has been that given the widespread use of cannabis (Kilmer and Pacula, 2009, UNODC, 2014), small increases in consumption could result in large-scale increases in harm (Lenton, 2013). This is primarily

Regulatory process

The legal status of the Colorado commercial cannabis market is complex. Labelled “quasi-legal” by Hawken, Caulkins, Kilmer, and Kleiman (2013), there is variance in and crossover between international, federal, state, local and tribal jurisdictions. Federally, botanical cannabis remains a prohibited schedule I substance that according to the Drug Enforcement Administration (2015) legally has “… no currently accepted medical use and a high potential for abuse”. On the other hand a number of

Commercialism and public health tension

The commercialised regulatory model of the Colorado cannabis market crystallises tension between industry profit and public health. Researchers have identified high frequency users and youth as most vulnerable to the negative consequences of legal cannabis (Caulkins, Hawken, Kilmer, & Kleiman, 2012). A public health approach would aim to reduce cannabis consumption and as far as possible prevent youth from early initiation to cannabis user careers. This is at odds with a profit centric model of

Industry and investment

Cannabis is a profitable commodity, with estimates setting expenditure at €40–120 billion globally per annum (Kilmer & Pacula, 2009). The legal U.S. cannabis market, including medical and recreational, was estimated at $2.7 billion in 2014 (Marijuana Index, 2015). Media sources reported that close to US$700 million was spent in the licensed medicinal and recreational markets in Colorado in 2014 (Wyatt, 2015d, February 10), and official statistics showed it brought in almost $70 million in state

A cash business

Cannabis transactions have traditionally taken place on a cash-only basis and this aspect is yet to evolve in legalised markets. Banking is an issue that illustrates the operational difficulties of the contradictions between federal and state law in the US. Federally licensed banks are unable to take on clients in the cannabis industry. Industry press reported that in 2014, 1292 relationships were terminated by banks who apparently feared federal charges of money laundering (Olson, 2015, April

Politics and public opinion

For at least 2 years, surveys have shown that the majority of people in the US favour the legalisation of cannabis use (Galston and Dionne, 2013, Motel, 2015, April 14). Public opinion plays a crucial role in the political process (Lenton, 2004), and politicians and law makers now see cannabis as an issue that must be addressed in election campaigns. Most notably the issue has a clear role in the 2016 presidential election (Hudak, 2015, March 22). For example, it is claimed that potential

Methods of consumption

The way cannabis is consumed is evolving. The traditional method of smoking via joints, pipes or bongs is being replaced by eating, using a vapouriser for smokeless inhalation or “dabbing” a concentrated form of the flower material. Outcomes including levels of intoxication and long-term health issues such as lung disease and dependency can vary according to how cannabis is consumed.

Testing

Cannabis testing is a complicated process both in terms of scientific methodology and within complex and confusing intersecting frameworks of federal and state laws. In essence, there are two broad areas of relevance to testing: product quality and consumer testing.

Defining the black market

In an excellent summation of possibilities associated with legalised cannabis markets, Caulkins et al. (2015) described how specific choices by policy makers may determine the extent to which legal cannabis replaces the black market. Under this framework, price is seen as a major factor contributing to black market activity encouraged by excessively high taxation, expensive regulatory compliance, variation between medical and recreational costs and lack of ability to deduct legitimate business

School funding, drug education programs and staff training

In specific regard to schools, under the Colorado model a 15% excise tax is earmarked for “Public School Capital Construction Assistance Fund Transfer” (Cannabis Public Media, 2015, August 18) for new school buildings. In the first 5 months of 2015, $13.6 million was reported to have been collected via this tax (Baca, 2015b, July 13). As of August 2015, 26 projects were funded across Colorado, and competition among schools for construction funding is said to be fierce (Kelley, 2015, August 31).

Additional issues

A number of other issues are relevant and require more research. Firstly, price is seen as a critical element and has been described in detail elsewhere (e.g. Caulkins et al., 2012). If prices are too high, black market activity may expand, while extremely low-cost cannabis is predicted to increase consumption rates among the most vulnerable (i.e. youth and dependent users) (Kleiman, 2015). Secondly, the relationship between medical and recreational markets is complex and evolving. Medical

Conclusions

Colorado implemented legislation that legalises cannabis for recreational purposes for those over the age of 21 almost two years ago. It would seem an appropriate time to attempt to describe some of the issues that have emerged during its operation. In a general sense the intention of the legislation was to establish a legal scheme for the production and distribution of cannabis for non-medical use in a way that mitigated certain problems. From the perspectives of both regulators and public

Acknowledgements

This paper was based on an earlier draft prepared for the first author's MPhil thesis proposal. Simon Lenton and Simone Pettigrew are the thesis supervisors. Simon Lenton is supported by funding from the Australian Government under the Substance Misuse Prevention and Service Improvement Grants Fund through its core funding of the National Drug Research Institute at Curtin University. The authors would like to thank the anonymous reviewers for their insights, tips and suggestions to improve this

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