How much does the war on drugs cost you?

Jason Reed, Law Enforcement Against Prohibition March 26, 2014

Vienna recently played host to the Commission on Narcotic Drugs (CND), but the tone of this year’s event was noticeably different to previous sessions.

For many years the dialogue of ‘to legalise or not to legalise’ has been wholly hypothetical and taboo, but this year saw Uruguay nail its colours firmly to the mast by being the first state to fully regulate their cannabis market. This is in breach of the 1961 Single Convention, which is often viewed upon as set in stone, unremitting in its gospel rule over global drug policies.

Uruguay held fast to their rudder and steered their ship through choppy waters; the metaphor seems all the more applicable as it was more than suggested that Uruguay are now pirates in the hostile seas of the UN single convention.

In contrast to the Latin American state’s emboldened position on cannabis, the US was more notable in its silence. Usually one of the more dictatorial participants, the US seemingly handed the baton over to Russia to assert the enforcement tone of the CND. It doesn’t take much to see why the US took more of a backseat when Colorado and Washington, two states that have also fully commercially legalised cannabis, act as very large elephants in the UN’s designated room of conformity.

As delegates attended Vienna, a more domestic issue became ripe for debate, with the emergence of a cannabis café proposal for Thanet in Kent. A tale of a few cities presents itself.

As the smoke clears, what can we learn from the polarised models of cannabis regulation? And what can this imply for the UK’s necessary debate on cannabis reforms?
If we compare the antipodal cannabis models of Uruguay and Colorado, we soon see a picture emerge.

Uruguay reformed, somewhat unpopularly, based on their need to hinder and restrict trafficking routes given their geographic turbulence in being situated in a narco-region. Polls showed that the electorate were not in favour of legalising cannabis, but with the strong leadership of Nobel Peace Prize nominee, President José Mujica, the country embarked on the regulation of their cannabis supply to roadblock cartels and traffickers.

The state-run cannabis model will undercut the illicit trade’s price: the street market sells cannabis at $1.40 (85p) a gram, with the government proposing to sell at $1 (60p). This is intelligent taxation in action and only possible through regulatory methods.

Uruguay plans to sell five commercial cannabis strains, each with ‘genetic fingerprints’ so as to allow the ability to trace the product. Only a handful of commercial companies will be allowed to produce cannabis, which will then, essentially, be handed back to the state for distribution.

If we now look at Colorado, we see that the US has taken a more liberal stance and allowed commercialisation to play a part. Critics do worry that aggressive marketing could play a detrimental role in Colorado’s model, and this may have an effect as more states begin to fully regulate their cannabis supply.

What does spring out of Colorado’s model is that of the numbers: in the first month of commercial sales, the state collected $2 million (£1.21 million) in ‘recreational’ sales alone, with the tally rising to $3.2 million (£1.93 million) with existing medical marijuana dispensaries factored in.

What we have to be clear on is that Colorado remains a moving target, subject to copious amounts of caveats, but we can look at some forecasts to spot an interesting fiscal picture that’s now emerging. It’s estimated that cannabis outlets will take in around $750 million (£453 million) to $1 billion (£600 million) in the coming fiscal year, with tax adding $65 million (£39 million) – $125 million (£75 million) to the state’s coffers.

The proposal is that the tax revenue goes towards building schools, and more notably, investment into teen rehab and addiction programmes. Colorado’s crop forecasts also tell an interesting tale, with cannabis projected to be the third most valuable crop for the fiscal year of 2014-15: corn $947 million (£572 million), hay $863 million (£521 million), cannabis $777 million (£469 million).

Opponents of reform are hailing the tax projections as insignificant compared to previous promises; this cynical angle is simply no-win spin. If revenue streams came in at more than original estimates, then it would have been a certainty that an increase in usage would have been cited as a detrimental effect and then used as leverage by those that still wish for cannabis to remain a prohibited substance.

Turning attention towards our domestic picture, let’s assess how the UK fares on the numbers. Well, it’s not pretty, and anyone with a keenness for prudence should brace themselves. Each UK taxpayer spends £400 a year on maintaining our current drug policy; we can perhaps liken this number to a UK drug policy tax.

If we break things down further then we see that the costs to the police – on cannabis laws alone – stand at around £500 million. With the onset of ever more sophisticated methods and techniques in domestic cultivation, we could conceivably see this half a billion price tag inflate over the coming years. If we allow ourselves to explore our own regulatory models then recent research from the Institute for Social and Economic Research indicates that a reformed and regulated cannabis market in England and Wales could cut the deficit by £1.2 billion – and this is a conservative estimate.

It has been trumpeted that the use of cannabis is on the decline in the UK. This is a slightly disingenuous point given that an influx of ‘legal highs’, or New Psychoactive Substances (NPS), have taken a foothold in the UK consumer market and distorts accuracy.

With suitable scepticism over the use of cannabis falling we must also look at the Association of Chief Police Officers (ACPO) figures for cannabis farms which has seen a 15% increase in domestic farms with 3,032 in 2008 compared to 7,865 in 2011. This is by no means a metric of success that our drug laws are working by way of enforcement.

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Jason Reed is executive director Law Enforcement Against Prohibition UK (Leap UK). Leap is a global, UN-accredited organization of senior police and enforcement personnel who advocate health and regulatory alternatives to punitive drug laws.