Regulated legal cannabis markets could lead to the end of the war on drugs

A global cannabis industry has been quietly created while governments bury their heads in the sand

By Steve Moore

Last week, on the same day that Britain’s best loved drug smuggler died, I received an invitation to a cannabis ‘industry forum’ in Portland, Oregon. There’ll be sessions on “product industry trends”, “national regional market sizing” and “market growth projections”, all informed by “rigorous analytics” delivered by the leading “big data” provider in the industry.

Cannabis is growing up. Howard Marks spent three decades as a fugitive, operating across three continents under dozens of aliases, to provide weed to millions of people. But in 2016, US investment companies set up in Park Lane hotels for three days, hosted dozens of meetings and left with millions of pounds to invest in a new legally regulated industry.

In November, California will legalise cannabis in a long overdue state ballot, forty years after possession was first decriminalised. The state has seven times the population of Colorado, which legalised recreational cannabis two years ago. Last year operators there generated $1 billion in legal sales and $140 million in state tax revenues. Meanwhile in Canada, prime minister Trudeau is the process of implementing his manifesto commitment to create the world’s first nationally regulated cannabis market. Within months, Angela Merkel will announce that Germany will be launching the largest national medicinal cannabis programme in history. Italy and a centre-right government in Australia are on the same trajectory.

Today in New York, diplomats from around the world are gathered for UNGASS, a special session of the UN, initiated by Mexico and Colombia to address the ‘war on drugs’. Forty-five years since Richard Nixon coined the term, more illicit drugs are being consumed than ever.

Despite repeated attempts to ‘create a drug free world’ the sheer scale of global policy failure is breathtaking. The declaration that emerges this week can safely be added to the stockpile of desultory statements that have had almost no discernible impact on the drug cartels and small time gangsters. They can plan on continuing to count their revenues in billions, supplying countless millions with cannabis and other much more damaging narcotics.

In the immediate aftermath of this latest UN failure the only game in town right now is cannabis – by far the most popular illicit drug in the world . Its near-ubiquitous use has not gone unnoticed by the business world. As legal enforcement agencies focus increasingly on Class A drugs and public health authorities attend to alcohol and opiate abuse, investors have seized their chance. They are investing in state-of-the-art grow facilities, technology, branding and political advocacy. They have bet the house that national governments are not going to police cannabis out of existence and that the demand to consume is not going to wane.

Their trajectory is set. They are preparing to build a multi-billion dollar regulated consumer market. I spent the past two days at a $600 a day convention in Midtown Manhattan on the future of the industry. I left in no doubt that regulation in various forms is going to happen right across the US within the next five years. The next president will have little choice but to enact changes to federal law that are currently curtailing investment and market growth.

Back in the UK, policy makers are wholly oblivious to all this. British governments have long been trepidatious when it comes to drug policy. Only last month the implementation of the absurd Psychoactive Substances Act had to be abandoned.

But things are changing. Last week the BBC reported that arrests for cannabis related offences plummeted 50% since 2010 and directly elected police commissioners in Durham, Derbyshire, Dorset and Surrey have acknowledged that they will not arrest anyone who grows or possesses small amounts of cannabis. It is widely acknowledged that this is commonplace across the country. No one envisages it becoming a priority to bust people for smoking a joint any time soon.

Against this backdrop of government ambivalence and changing market forces, the Liberal Democrats last month became the first UK political party to promote a model for regulating cannabis. It envisaged a market place comprised of small growers, cannabis ‘social clubs’ and licensed high street vendors all overseen by a new regulator that might have come straight out of a Magnus Mills novel: The Cannabis Regulation Authority. Their report weighs heavily on harm reduction, which given the ongoing conjecture about the health effects of excessive use is understandable, but it is light on economic analysis and shorn of any business input, investor insights or acuity that someone who had actually regulated something may have contributed.

Most critically it has almost nothing to say about the internet. If there is to be role for business in this ‘new market’?then it is almost certain to be built online. The market valuations of companies such as Meadow, the so-called ‘Uber of weed’, is eye watering even before they have ever delivered a capsule of the stuff.

Cannabis Laws

In his illuminating new book Drugs Unlimited Mike Power sets out how market forces and the internet have combined to bypass laws and move way ahead of governments to build a hugely sophisticated, agile, international sub culture and marketplace. If any modern government is truly serious about facilitating the creation of a ‘regulated market’ in cannabis to eradicate black markets — and they ought to be — they must start by exploring how it can be regulated in the public interest and on the internet. The capital cost of building a national network of licensed dispensaries would require us to create something equivalent to two new national lotteries. It is not going to happen.

Civil society will make its contribution but in all likelihood it will produce the ‘craft brewers’ in a legal market. The government will, in time, be faced with a new and straight choice. To continue to countenance the existence of thousands of bands of thieves serving up to three million people with cannabis and driving 13,000 teenagers per year into rehab, or to engage with sophisticated, albeit nascent, new industry players. The existence of the internet and the emergence of new regulated markets in North America will make this decision difficult to dodge. Imagine trying to prevent Viagra coming to the UK. That’s basically the situation the authorities will find themselves in.

The latest failure of the UN is entirely predictable. The war on drugs will still be pursued. But perhaps the green shoots of alternatives lie in regulating a legal cannabis market. Ultimately Governments, including our own, will have to decide whetherto back the free market. After all, it’s the market which is backing itself to sort out a problem governments could not, or would not, do themselves.

We will now never know what Howard Marks would have made of this new world, but its contours are becoming clear.

Steve Moore is a social entrepreneur at @SomersetHouse and a campaigner for drug law reform.

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