Will the Tide Effect overwhelm cannabis opposition?

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In 1950s geopolitics, Cold War politicians predicted that if North and South Vietnam were reunited under a communist government, other nearby nations would likewise become communist, probably by hostile takeover aided or orchestrated by the Soviet Union or China. This was referred to as the Domino Theory.

Historians disagree about the validity of this theory, however, since few of Vietnam’s southeast Asian neighbours “fell”, the theory was modified to include faraway influencers as well, as was the case in Latin American countries. The Domino Theory was used to justify United States involvement in and interference with governments and revolutionaries in Chile, El Salvador, and Nicaragua.

The Tide Effect

Today, there exists a similar theory about cannabis legalisation dubbed the Tide Effect. As more states and nations make cannabis legal, others are expected to follow. The difference, in this case, is that proponents of the Tide Effect don’t want to prevent the wave but rather help it. Specifically, London’s Adam Smith Institute (ASI) wants the United Kingdom to follow suit and legalise cannabis.

Its argument isn’t just that prohibition has failed or is too costly, but that it is harming British citizens. The illegality of cannabis means that the “quality and purity” of product sold is in question. Furthermore, long-term studies of its health benefits and deficits—such as those to which alcohol and tobacco have long been subjected—are difficult or impossible to conduct.

Some observers don’t think the Tide Effect will have much effect on Europe. The reality is that while cannabis may be popular amongst the citizenry, it still isn’t with politicians. In the US, almost every state that has made marijuana legal has done it by popular referendum, often in the face of strong opposition of their elected representatives. In Europe, such direct democracy is often merely advisory, even when the vast majority approves.

North America

The driving force of this tide seems to be coming from America, where the United States and Canada are increasingly pot-friendly.

The entire nation of Canada will likely have legal recreational marijuana on sale before summer’s end (medical marijuana has been available since 2001), following another legislative vote last weekEstimates already place the value of the Canadian market at $5.5bn.

The US has taken a more scatter-shot, state-by-state approach. Twenty-nine states have approved medical use, including nine that allow recreational use. Seven states legalised marijuana in November 2016—four recreational— as part of the same election won by US President Donald Trump.

The dominoes are still falling. As many as six states may have marijuana measures on the ballot this year. Overall, more than 60 % of US citizens now reside in states where some form of marijuana use is allowed, and about as many agree that it should be. Despite this fact and predicted tax revenues of up to $25bn by 2020, all uses of marijuana are still illegal under US federal law.

World Health Organisation to Weigh In

Widespread, or even universal, cannabis legalisation in North America seems to be only a matter of time. South America will likely follow next. The question is whether the tide will sweep up the rest of the world as well. That could depend on the actions of the United Nations’ World Health Organisation.

In the face of blatant violation of its treaties on marijuana by Canada, the US, Uruguay, Portugal and other governments, the WHO has decided to re-examine the reason for the existence of those treaties rather than attempt to enforce them.

Nevertheless, in March the UN’s International Narcotics Control Board warned that Canada’s upcoming legalisation was in “contravention” of their treaties.

EU and Elsewhere

Europe seems primed for change, either in the form of decriminalisation or legalisation. According to Entrepreneur, 12 European nations now punish cannabis possession and usage with a mere fine instead of prosecution. One cannabis website listed the 10 nations it thought most likely to follow Canada into the legalising ranks, and half are in Europe: The Czech Republic, The Netherlands, Portugal, Spain, Iceland, and France.

Though the UK didn’t make the cut, ASI estimates that by 2020 the UK could realise £7bn annually from legal and regulated cannabis, as well as save £291m on police, court, prison, and probation services in England and Wales. Even some conservatives have argued that change is overdue.

An alliance of political parties in New Zealand—which according to the NZ Drug Foundation ranks as one of the highest nations for drug use—has called for a referendum on legalising recreational cannabis.

Elsewhere in Oceania, the Australian government still opposes recreational use, and medical marijuana – despite it being legal — is difficult to find. Still, with one in 10 claiming to have used marijuana in the past year, enough Australians seem to be getting their hands on the illegal variety to make it the country’s most used illicit drug.

Marijuana Law Enforcement

In practice, marijuana use often has been decriminalised by the local Australian constabulary. Such shifts in the attitude of law enforcement are apparent elsewhere too.

In 2016, Italian police groups supported a bill to allow the growing of marijuana by individuals, as well as keeping up to 15 grams at home, carry five grams on their person, plus allowing marijuana social clubs where privately grown cannabis could be swapped.

The anti-Mafia agency DNA believed that making cannabis legal would free up police resources and hurt gangsters and foreign terrorists who profit off the black market.

The German police association BDK argues that prohibition promotes “criminal careers” and stigmatises otherwise law-abiding citizens.

The Promise of Kush Cash

While citizens may be more interested in legal access to a medicinal or medical product, the promise of tax revenue seems more likely to persuade politicians to set aside their objections. That dynamic, however, requires more careful consideration. In the estimation of the Motley Fool, “Marijuana stocks are overhyped.” As more states and nations permit marijuana cultivation and sale, prices could fall – and maybe do so precipitously.

Oregon provides a good example. According to the Associated Press, the overriding motivation for the US state to legalise marijuana was to eliminate the black market and the criminals it enriched — not the growers, but the violent gangs. Oregon wanted to push its growers — known for “top-drawer pot” — into the legal market.

Since money wasn’t the main objective, Oregon put little regulation or controls on who could grow and sell kush. There were no caps on licences, low fees, and allowing majority ownership by out-of-state interests, which resulted in a glut of marijuana on the Oregon market. Nearly 1m lb entered and caused a 50% reduction in price, from $14 in 2015 to $7 in 2017.

Even though this could have just been a market correction, cannabis opponents as far away as India are using Oregon as a cautionary tale and a reason not to rush into legalisation.

An analysis by Stifel Financial Corp. finds that US legalisation might lead to “price compression”, however, if the US used the Canadian model with a 10% ad valorem tax and allowing cities and states to add local taxes, the Treasury would net about $12bn per year. The figures are based on a wholesale price of $2 per gram with $3.50 in retail.

Legitimate Health Concerns

The current lack of rigorous scientific studies means that reports of marijuana having palliative effects on chronic pain and post-traumatic stress sufferers remain mostly anecdotal. The intriguing claim that cannabis may help alleviate the opioid epidemic is likewise unproven. Others proclaim that it can cure cancer, though even advocates give that no credence.

Opponents, too, can get away with the most outlandish disinformation. A 2013 commentary in the Guardian suggested that cannabis legalisation could cost as many lives as alcohol, tobacco, and other drugs, implying that the number was at the time already substantial. The actual number of cannabis overdose deaths, then as now, is nought.

So-called marijuana-related deaths, such as in automobile accidents, almost always involve at least one additional substance, such as alcohol. Alcohol abuse, on the other hand, causes more deaths than opioids and may be on the rise.

The US tried alcohol prohibition from 1920 to 1933, and the result was more deaths from poisoned alcohol and the creation of a well-financed criminal network. Bans weren’t the answer then—better alcohol abuse rehab would have been of more help—and they aren’t the answer now.

Change is coming. Rather than beat their hands against the wave, politicians need to get ahead of it and prepare for it, so that they can minimise the damages and maximise the benefits.

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