Research paper
Legal high industry business and lobbying strategies under a legal market for new psychoactive substances (NPS, ‘legal highs’) in New Zealand

https://doi.org/10.1016/j.drugpo.2016.08.011Get rights and content

Abstract

Background

The establishment of a regulated legal market for new psychoactive substances (NPS, ‘legal highs’) under New Zealand's Psychoactive Substances Act (PSA) 2013 created a new commercial sector for psychoactive products, previously limited to alcohol and tobacco.

Aim

To explore how the newly-recognised ‘legal high’ industry (LHI) viewed and responded to the changing regulatory and market environment.

Methods

In-depth interviews with six key informants (KI) from the LHI: a leading entrepreneur, chemist, industry spokesperson, retailer, product buyer and a researcher commissioned by the LHI – were conducted, transcribed and analysed thematically. Formative work for the study included review of official LHI documents (websites, public submissions, self-regulation documents).

Results

The LHI stakeholders espoused an idealistic mission of shifting recreational users of alcohol, tobacco and illegal drugs towards “safer alternatives”. Passage of the PSA was viewed as a success after years of lobbying led by pioneering LHI actors. The growth and professionalisation of the LHI resulted in an increasingly commercial market which challenged idealistic views of the original operators. LHI KI reported the targeting of young and low income customers, price cutting and increasing the strength of products as business strategies. Attempts by the LHI to self-regulate did not prevent escalation in the strength of products and fall in retail prices. The LHI reported outsourcing of manufacturing and exporting of their products to other countries, demonstrating an international business model.

Conclusion

There was a tension between profit and idealistic motivations within the LHI and this increased as the sector became more commercialised. While the LHI distanced itself from both alcohol and tobacco, they reported the use of similar marketing, business and political lobbying strategies. Rules for engagement with new ‘addictive consumption industries’ are required to clarify the role they are permitted to play in the development of regulatory regimes for new psychoactive substances.

Introduction

Until recently, legal markets for recreational psychoactive products were limited to alcohol and tobacco products. Recent drug law reforms in a number of countries have created new sectors for recreational psychoactive products, including a regulated market for cannabis in a number of US states (Roffman, 2016, Room, 2014) and in Uruguay (Walsh & Ramsey, 2015) and a regulated market for new psychoactive substances (NPS) (‘legal highs’) in New Zealand (Wilkins et al., 2013).

There is an extensive literature examining the tensions between the commercial interests of the alcohol and tobacco industries and public health goals (Adams, 2013, Adams et al., 2010, Babor et al., 2010, Casswell, 2013, Moodie et al., 2013, West and Marteau, 2013). A number of academics have attempted to translate the lessons learnt from regulating the alcohol and tobacco sectors to the new recreational psychoactive industries, particularly in the case of legal recreational cannabis (Caulkins, 2016, Caulkins et al., 2016, Pacula et al., 2014, Room, 2014). This emerging literature has focused on how to regulate the new commercial drug markets from the legislative and regulatory perspective, including how to design regulations to mitigate public health harms (Ghosh et al., 2015). Little research has been completed on how the new ‘addictive consumption industries’ view and respond to this changing market and regulatory environment.

New Zealand has been at the forefront of the legal high phenomena with a large scale legal high industry (LHI) operating since the early 2000s (Sheridan and Butler, 2007, Wilkins and Sweetsur, 2010). However, it was only in 2013, following the passage of the Psychoactive Substances Act (PSA) 2013, that the industry received full official legal recognition and became subject to licensing, auditing and reporting requirements (New Zealand Parliament, 2013a). This paper explores how the LHI actors in New Zealand viewed and responded to the changing market environment in which they were operating, with a particular focus on their attempts to self-regulate, lobby the political system and develop profitable business strategies. Understanding industry motivations and business strategies can help inform effective implementation and enforcement of new regulatory regimes.

Section snippets

Historical background: the evolution of LHI in New Zealand

In the early 2000s New Zealand experienced an emerging market for so called ‘party pills’ containing mixtures of benzylpiperazine (BZP) and trifluoromethylphenylpiperazine (TFMPP) (Wilkins & Sweetsur, 2010). Initially unregulated (i.e. with no legal limits on age of purchase, promotion or place of sale), BZP/TFMPP ‘party pills’ varied in strength and quality, and were sold from counter culture stores and increasingly from local convenience stores (Sheridan & Butler, 2007). By 2004,

Methods

A range of industry reports and documents were reviewed as formative work for the study, including industry association websites (www.legalhighs.co.nz, www.stargateinternational.org, www.thestartrust.org), public submissions to the PSA from the industry associations and LHI manufacturing and retail businesses (“Submissions to the Psychoactive Substances Bill 2013,” 2013), self-regulation resources (i.e. STANZ and PITA codes of conducts and manufacturing practice), an industry funded research

LHI motivations

LHI key informants emphasised drug law reform as a motivation for their involvement in the legal high market. A couple of participants stressed their “involvement in cannabis law reform” (KI-1) and that they personally aimed to achieve “some movement on the cannabis law” (KI-3). Some focused on health-centred aims, i.e. to provide users of recreational drugs, including alcohol, tobacco and illegal drugs, access to lower risk, safer alternatives. They commented that the LHI aimed to change

Discussion and conclusions

Interviews with LHI actors highlighted tensions between the idealistic health promotion motivations as espoused by pioneering operators and the commercial demands of the regulated market, and this tension increased as the market became more competitive. It is by no means clear that the LHI industry was achieving its goal of providing “safer drug alternatives”. A number of New Zealand studies identified serious health problems and issues of dependency related to the use of approved synthetic

Acknowledgements

We would like to thank all the legal high industry key informants who agreed to be interviewed for this study.
Conflict of interest

No funding has been accepted for this research from the legal high, alcohol, tobacco, or pharmaceutical industries.

References (68)

  • T. Babor et al.

    Alcohol: No ordinary commodity – Research and public policy

    (2010)
  • S. Casswell

    Vested interests in addiction research and policy. Why do we not see the corporate interests of the alcohol industry as clearly as we see those of the tobacco industry?

    Addiction

    (2013)
  • J. Caulkins

    Legalising drugs prudently: The importance of incentives and values

    (2016)
  • J. Caulkins et al.

    Marijuana legalization. What everyone needs to Know®

    (2016)
  • T. Ghosh et al.

    The public health framework of legalized marijuana in Colorado

    American Journal of Public Health

    (2015)
  • P. Glue et al.

    Influence of law changes affecting synthetic cannabinoid availability and frequency of hospital presentations: 4-Year national survey

    New Zealand Medical Journal

    (2016)
  • P. Glue et al.

    Implementation of the 2013 Psychoactive Substances Act and mental health harms from synthetic cannabinoids

    New Zealand Medical Journal

    (2015)
  • G. Hastings et al.

    Failure of self regulation of UK alcohol advertising

    British Medical Journal

    (2010)
  • B. Hawkins et al.

    Reassessing policy paradigms: A comparison of the global tobacco and alcohol industries

    Global Public Health

    (2016)
  • K. Humphreys

    So, something interesting happens to weed after it's legal

    The Washington Post

    (2016, 4 May)
  • J. Ingold

    One attempt at Colorado marijuana potency limit fails

    The Denver Post

    (2016, 8 April)
  • M.C. Jackson et al.

    Marketing alcohol to young people: Implications for industry regulation and research policy

    Addiction

    (2000)
  • E.L. Jensen et al.

    Field observations of the developing legal recreational cannabis economy in Washington State

    International Journal of Drug Policy

    (2016)
  • S. Kamin

    The Work of the Task Force to implement Amendment 64: A case study

    (2015)
  • V. Macfarlane et al.

    Synthetic cannabinoid withdrawal: A new demand on detoxification services

    Drug and Alcohol Review

    (2015)
  • Ministry of Health

    Psychoactive Substances Regulations 2014

    (2014)
  • Ministry of Justice

    Alcohol license listing (all alcohol license types)

    (2013, September)
  • MOH

    Government response to the Law Commission's Report “Controlling and regulating drugs – A review of the Misuse of Drugs Act 1975”

    (2011)
  • MOH

    Temporary class drug notice

    (2011)
  • MOH

    Regulatory Impact Statement – New regulatory regime for psychoactive substances

    (2012)
  • MOH

    Regulatory Impact Statement: Amendment to the Psychoactive Substance Act 2013

    (2014)
  • MOH

    Regulatory Impact Statement: Psychoactive Substances Regulations

    (2014)
  • New Zealand Parliament

    Psychoactive Substances Act 2013. Public Act 2013 No. 53

    (2013)
  • New Zealand Parliament

    Psychoactive Substances Bill 2013 – First reading, second reading, in committee, third reading

    (2013)
  • Cited by (11)

    • A critical analysis of the implementation of a legal regulated market for new psychoactive substances (“legal highs”) in New Zealand

      2018, International Journal of Drug Policy
      Citation Excerpt :

      It would also appear that buyers could easily circumvent them by enlisting others to purchase on their behalf, or buy products from different outlets. Stakeholders from the legal high industry noted that targeting young and low income customers was among the business strategies adopted by some retailers and manufacturers in response to increasing competition in the market (Rychert & Wilkins, 2016a). Key informants also said some retailers used price cutting as a strategy to attract customers (Rychert & Wilkins, 2016a) and offered to sell products on credit to customers awaiting social welfare payments (Rychert et al., 2017b).

    • A “not-for-profit” regulatory model for legal recreational cannabis: Insights from the regulation of gaming machine gambling in New Zealand

      2018, International Journal of Drug Policy
      Citation Excerpt :

      The advertising regulations for the cannabis market in Colorado have been modelled on the voluntary code of conduct developed by the alcohol industry, and the Colorado cannabis industry has attempted to weaken pesticide regulations for cannabis cultivation (Lenton, 2014; Subritzky, et al., 2016a). Similarly, in New Zealand, the “legal high” industry formed the Social Tonics Association of New Zealand (STANZ) to promote their interests in the media and among the public, and mounted judicial challenges against decisions to withdraw products with adverse effects, and against attempts by local councils to restrict the location of retail outlets (Rychert & Wilkins, 2016, 2017; Wilkins et al., 2013; Wilkins, 2014). For their part, drug policy researchers have pointed out that there are actually many more regulatory options for legal cannabis markets than alcohol style regulation, including “social clubs”, “grow-your-own”, “not-for-profit” and government monopoly (Caulkins & Kilmer, 2016; Caulkins et al., 2015; Decorte et al., 2017; Decorte, 2015; Kilmer, 2014; Room, 2014; Room, Fischer, Hall, Lenton, & Reuter, 2010).

    View all citing articles on Scopus
    View full text