Regulating Marijuana As a Temptation Good

Jonathan P. CaulkinsCarnegie Mellon University Heinz College

RAND, Drug Policy Research Center

• These things are not legalization

– Eliminating mandatory minimum sentences

– Decriminalization (as in many US states since 1970s)

– Legalizing medical use within the CSA (as with cocaine)

– Legalizing personal possession and use (as in AK)

• These things are legalization, but they are not alike

– Legalizing own-growing & gifting (as in AK & DC)

– Legalizing co-ops or cannabis clubs (as in Spain)

– Government monopoly (as with lotteries)

Legalization Defined

https://en.wikipedia.org/wiki/Cannabis_in_the_United_States

Dry, Wet, & Mixed Counties

Beer Tax per 6-Pack

-20

0

20

40

60

80

100

0 20 40 60 80 100Use,

Add

ictin

on, H

arm

s, Et

c.

Degree of Legalization

Dutch coffee shops

-20

0

20

40

60

80

100

0 20 40 60 80 100Use,

Add

ictin

on, H

arm

s, Et

c.

Degree to which Legalization Has Matured

Dutch coffee shops

Colorado & Washington

Price Declines of Marijuana in WA State

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

May-14 Sep-14 Dec-14 Mar-15 Jul-15 Oct-15 Jan-16 Apr-16

Dolla

rs p

er G

ram

Ratio of Sales Value to Weight, WA State Marijuana

Retail ($/gm)

Wholesale ($/gm)

Legalization Reduces Production Costs

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

Prod

uctio

n Co

st/P

rice

per P

ound

<-- Projected cost with light regs & no taxes -->

<-Quasi-legalization ->

Legalization with onerous regulations & no scale economies

<--- Prohibition

Marijuana legalization may be like invention of machine rolled cigarettes

… or desalination by reverse osmosmis

Or RR deregulation

Simple Stats on MJ Market Today

Americans Now Spend About 40 Billion Hours a Year “Under the Influence” of MJ

Duration of Impairment: 16.5 vs. 45.7 mg (Ménétrey et al. studying 8 Adult Male Occasional Users)

Americans Now Spend About 40 Billion Hours a Year “Under the Influence” of MJ

The change in the # of hours “under the influence” will be the most important MJ-specific

outcome of legalization.

What Proportion of U.S. Marijuana Market Is Associated with Adults Who Report:

(1) No abuse or dependence problems & (2) Using fewer than 10 times per month?

The Answer Depends Enormously on the Measure of Use Employed

0%

5%

10%

15%

20%

25%

30%

35%

PY Users PM Users Days of Use Purchases MT Used

Market Share of Adults Who Report No ABOD Problems & Using < 10 Times per Month

The Relatively Small Number of Daily Users Dominates Use & Use-Related Harm

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

PY Users PM Users Days of Use Consumption

PY not PM

1-3

4-10

11-20

21-29

30

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000

1975 1980 1985 1990 1995 2000 2005 2010 2015

Number of Daily & Near Daily Users from NHSDA/NSDUH

ALCOHOL

MARIJUANA

In 1992, 10X as many people used alcohol DND

as used MJ DND.

By 2014 that ratio had fallen to 1.9 to 1.

Between 1992 and 2014 the # of DND MJ users

grew by 770%.

About Half of MJ Use is Problem-Use

Past or present drug

or alcohol ABOD/TX,

46%

No ABOD/TX, but under age 21, 8%

Adult with no

ABOD/TX, 46%

Detailed Market Segmentation

PY Users MT Used

#1: Abuse or dependent on marijuana 12% 21%

#2: Abuse or dependent on another intoxicant 18% 16%

#3: No ABOD but has received treatment 7% 9%

#4: No ABOD/TX, but under age 21 14% 8%

#5: Adult, no ABOD/TX, use 21+ days in PM 10% 35%

#6: Adult, no ABOD/TX, use 10-20 days in PM 6% 8%

#7: Adult, no ABOD/TX, use 1 - 9 days in PM 32% 2%

About Half of MJ Use is Problem-Use;Most of the Rest is High-Frequency

Past or present drug

or alcohol ABOD/TX,

46%

No ABOD/TX, but under age 21, 8%

Adult DND, no ABOD/TX,

35%

Adult 10-20X PM, no

ABOD/TX, 8%

Adult < 10X PM, no ABOD/TX, 2%

Confusion Lasts as Long as Intoxication for Occasional Users

… But not for Experienced Users

Harms of Frequent, Heavy Drug Use (Grossly Simplified)

• Alcohol: Both externalities and internalities• Cocaine/crack/meth: Both, with many

internalities being “behavioral toxicity”• Heroin: Mostly internalities but they are dramatic

(sudden death)• Tobacco: Mostly internalities, and they are

“medical” (death, albeit delayed death)• Marijuana: Mostly internalities

– No death– Few medical harms

Non-Drug Analogs of Marijuana

• Morally laden

– Prostitution, gambling, lottery tickets

• Time sinks

– Video games, pornography, reality TV

• Consumables

– Soda, Krispy Kreme donuts, death by chocolate cake