Table of Contents
James Farmer QC
jamesfarmerqc.co.nz
LEGALISATION OF CANNABIS SUPPLY AND USE WILL ELIMINATE THE BLACK MARKET
The short answer to this proposition, based on North American experience, is no. The longer answer, however, is that there are two effects of legalisation, both of which make the present effects of the Black Market considerably worse.
The first is described by Patrick Cockburn. In the same article referred to above, he makes the point that “the legalization of cannabis legitimizes it and [sends] a message that the government views it as relatively harmless”. He then makes the obvious point that those who are licensed to manufacture and supply a product to the market will be motivated to increase the number of their customers and hence to increase their profits. Increased use will of itself lead to increased harm.
It is reasonable to predict also that lawfulness is likely to remove the barrier to cannabis use that exposure of unlawful use and possible conviction, and its effects on travel, employment and reputation, has as a deterrent to many adults. It has been suggested that the very fact of unlawfulness is an incentive to teenagers to be “cool” by partaking in an illegal activity. If so, nothing changes because supply to and use of cannabis by teenagers remains unlawful in an otherwise legalised regime.
The second consequence from legalisation is that faced with competition in the form of licensed operators, the illegal market will not quietly retire but will develop innovative ways of competing with the regulated product. That is very much the North American experience to date.
A journalist, Mike Power, who had followed the implementation of Canada’s Cannabis Act of 2018 legalising cannabis use, reported recently that the black market in Canada was “still vibrant”: Stoners cheered when Canada legalised cannabis. How did it go so wrong?, The Guardian, 5 April 2020. More than that, stocks in firms (described as “vulture capitalists”) that were licensed to grow and supply cannabis at the end of 2019 crashed with substantial staff redundancies. This was true also in the United States with share prices dropping by up to 80%.
The Black Market, it seemed, was very much up to the competitive challenge that the new regulated producers presented. Power’s account was as follows:
“… the price [of legal cannabis] was almost double that of the illegal market… That was caused by tax burdens and overheads: the legal market has to comply with regulations on fungicide and pesticide residue levels, and draconian security requirements for grow sites, such as huge vaults in which to store the cannabis and record-keeping for every person who enters these vaults. The illegal market, meanwhile, is completely unregulated – and thriving because of this. Statistics Canada, a state agency, reports that just 29% of cannabis users buy all of their product from a legal source.”
Another problem identified in Power’s article was that the new, regulated, commercial growers, it seems, lacked the experience to produce good quality product as a result of faulty growth and harvesting techniques. A further problem was the delays in establishing lawful retail outlets which left the new growers with a glut of the product (assessed by Government inventory figures as being “a stockpile of grass weighing in at 400 tonnes”). This leads him to say that drug laws “generate countless unintended consequences – in fact, drugs laws often create the exact opposite outcomes to those desired … ironically, and with a beautifully stoned logic, it turns out that legalizing cannabis in Canada has generated just as many challenges as it solved”.
IT IS WRONG THAT PEOPLE USING CANNABIS SHOULD BE CONVICTED UNDER THE CRIMINAL LAW
Following on the theme just discussed, there is justified concern that, if the regulated cannabis market does indeed dint the Black Market’s present dominance in cannabis supply this may serve to encourage further the efforts of the Black Market to compensate for lost revenues by stimulating demand for methamphetamine and marketing it as a cheaper and more potent drug. That may be true also of heroin and cocaine, though these drugs are less prevalent in New Zealand because they face import difficulties.
There can be no sensible opposition to the proposition that methamphetamine and heroin are highly addictive and known to lead to paranoia and violent and criminal behaviour by users.
There are also the economic costs to society, for example, to name just two, from the costs of treating people who develop psychosis of one form or another, and from the need to decontaminate and even destroy houses rented to tenants (including State-owned houses) who use them to manufacture methamphetamine. There are also the social and personal costs from the effects of drug addiction – for example, those suffered by young women-led into prostitution to fund that addiction. The high number of deaths that result in countries where heroin is freely available is a real cost to society: for example, 953 deaths in a 5 year period in New South Wales.
One does not hear a case being made for the legalisation of the manufacture, supply and use of heroin and methamphetamine (or cocaine and other hallucinatory so-called “hard” drugs), not even by libertarians who argue that the individual should have a free choice as to what he or she puts into his or her body. It is not seriously challenged that the criminal law in particular does have a legitimate role to play for these drugs, certainly in relation to manufacture and supply.
The case for decriminalisation of drugs, in relation to the hard drugs and for cannabis, is more complex. There is no dispute that it is legitimate for Society to be concerned about adverse health effects of the kind identified in relation to cannabis – various forms and levels of psychosis in particular. The proposed Cannabis Bill says as much. The claim however that legalisation will reduce harm and “improve access to health and other relevant support services” is more dubious. Portugal is often cited as a country that has successfully decriminalised the use of marijuana – which it has. However, the use of cannabis still has legal consequences. Persons apprehended with even small amounts of drugs (including cannabis) can be ordered to appear before a “dissuasion panel or commission” consisting of legal, social and psychological professionals and repeat offenders may be ordered to undergo treatment.
A health-focused solution, but via the deterrence and incentivisation (to seek assistance) of the criminal law, is, in fact, available now in New Zealand, a fact that scarcely rates a mention in the current public debate leading up to the referendum.
In August of last year the Misuse of Drugs Amendment Act was passed, inserting section 7(5) and (6) into the principal (1975) Act. This directs the Police not to prosecute drug users (of all kinds) where a prosecution is not in the public interest. In determining that question, regard must be given to whether a health-centred or therapeutic approach would be more beneficial to the public interest in the particular case than criminal punishment. Interestingly, the proposed Cannabis Bill adopts a similar concept in the case of persons under the age of 20 years who will be prohibited from growing, possessing or using cannabis. A youth who breaches that provision will be issued with an infringement notice and ordered to pay an infringement fee of $100 or a fine of up to $200 (presumably for repeat offenders). However, the infringement notice may include a requirement to attend a support service and if that is done within the prescribed period the fee is waived and the notice is revoked.
That provision surely provides a surer incentive to a health-centred outcome for those who are using and in danger of harm from cannabis use. The Police are already taking a hard line on the enforcement of existing laws against the manufacture, growth and supply of harmful drugs (including cannabis). If they need more resources to be more effective, they should be given to them. The exercise of their discretionary powers under the 2019 Amendment should be encouraged and their effectiveness monitored. That is a sounder and safer way forward than the radical proposal of the draft Cannabis Legislation and Control Bill (if enacted), with its risks and undesirable consequences that overseas experience reveals.
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