ourEconomy: Opinion

The War on Drugs has failed. But a profit-driven legal market is not the answer

With big business eyeing up cannabis as a future market, it is essential that legalisation supports racial and economic justice.

Kojo Koram
29 April 2020
Image: Jakub Porzycki/NurPhoto/PA Images

The idea that certain drugs should be prohibited by law is often viewed as simple common sense, but it is actually a recent social phenomenon. The first international laws prohibiting drugs only appeared at the start of the twentieth century, and it wasn’t until the United Nations Single Convention on Narcotic Drugs in 1961 that banning the non-medicinal trade in drugs like cannabis, cocaine and opiates was accepted across the world.

Since then, the War on Drugs has become a huge driver of the world’s ever-growing prison population. In the UK, more than 1 in 8 of all prisoners currently incarcerated in British prisons are serving their sentences for drug offences. Furthermore, in the UK black people are over-represented in cannabis prosecutions, with over 20% of those convicted for cannabis offences being black, even though they comprise less than 4% of the UK’s total population.

However, the 21st century seems to be showing signs of a change in direction. In December 2013, Uruguay became the first nation-sate to legalise cannabis. Uruguay was soon followed by Canada in 2018, with countries such as New Zealand and Mexico currently working on legislation to allow a recreational market to be implemented over the coming year. Furthermore, in the USA, the country that drove the War on Drugs for most of the twentieth century, a host of states from California and Alaska have also legalised recreational cannabis markets.

However, Britain is still yet to have a serious national conversation about what is being referred to as the ‘green rush’– the 21st century growth of a legal cannabis trade. The creation of a legal regulated market for cannabis in North America has become big business in a short space of time. According to marijuana business daily, the legal cannabis industry is estimated to generate between $8 billion to $10 billion in annual retail sales already, and is projected to rise to $22 billion annually by 2022. In the American states that have legalised the drug, California has generated the largest revenues with over $2.75 billion in cannabis sales. Smaller states such as Oregon and Washington have also produced large markets, with Oregon registering $500 million in recreational sales and Washington over $975 million through its recreational market. Some of the biggest cannabis corporations to emerge in this new marketplace include Canada based companies Aurora Cannabis (market cap of over $7billion) and Canopy Growth (market cap of over $12 billion). However, on its current trajectory, it appears that the emergence of a profitable cannabis market may not necessarily challenge economic and racial inequality across society.

In North America, those who have suffered the most under the War on Drugs are also being excluded from the wealth that is being generated in its transition to a legal market. Across many of the states that have legalised cannabis, people with Federal convictions (which includes most drugs crimes) are excluded from gaining cannabis business licences. With the drug war criminalising racial minorities disproportionately, those communities find themselves being punished twice-over – once by prohibition and again by being banned from the legal market.

As well as the legal blocks, there are also significant financial barriers to entry. The major banks are reluctant to lend to this new industry, meaning that many of the people able to enter this new industry are independently wealthy already. Furthermore, cannabis companies in North America have often been reliant on seed cash and private capital investment, not only bank loans. Therefore, individuals with the knowledge of how to raise private financing and who are already embedded in networks of wealthy individuals and institutions are often highly present within these cannabis companies. This helps explain why companies and individuals from industries such as tech, pharmaceuticals and mining have been drawn to cannabis.

Recently there have been some exciting new initiatives launched in North America. This includes proposals such as Real Action for Cannabis Equity, or RACE, launched in Boston in September 2019. RACE is a coalition of actors that seeks to promote the interests of entrepreneurs and workers of colour as they try to gain entry into the legal cannabis marketplace. Another organisation aiming at similar changes is the Minority Cannabis Business Association (MCBA). Founded in late 2015, MCBA understands itself as aiming to ‘serve the specific needs of minority cannabis entrepreneurs, workers, and patients/ consumers.’

The work of these organisation and other advocates, lawyers and politicians has resulted in more innovative and exciting plans for greater economic equity being included in some cannabis legalisation laws over recent years. For instance, in 2017, the city of Oakland launched its equity programme, through which cannabis business permits would give priority to ‘equity applicants’, a category that was defined as either someone whose annual income is less than 80% of the city’s average income, someone who is from one of the 21 areas where drug arrests were most prevalent, or someone who has been convicted for a cannabis-related crime after November 5 1996.

In addition, even ‘non-equity’ applicants that do not fit within this criteria can improve their own chances of gaining permits if they commit to helping equity applicants with free rent or real estate. In 2018, the neighbouring city of San Francisco followed suit with a similar equity programme established through a city ordinance, which included amnesty for weed-related crimes, wiping out or reducing the sentencings for all cannabis-related crime convictions dating back to 1975. This helps empower people who might have been convicted decades ago but are still barred from certain jobs or housing. Most recently, California’s biggest city, Los Angles, has also adopted a social equity program which offers priority application processing and business support to individuals who can show they were disproportionately impacted by the previous laws prohibiting cannabis during the War on Drugs.

As well as initiatives to try to diversify ownership in the cannabis industry, there are also moves towards exploring cooperative forms of ownership of dispensaries. Massachusetts has considered co-op models where people in the city can pool resources and enter into a competitive market. Currently the law allows co-ops to cultivate and deliver cannabis to high-street dispensers, but not to own or operate them.

In terms of consumption, the co-ops have a collection of members who are able to use cannabis together and pool resources in terms of cultivation. In Washington State, it is only legal to set up a co-op for medical marijuana, with each co-op allowed a total of four members. Members must be over 21 and not give away or sell any cannabis they grow to non-members.

However, there has also been a backlash against cannabis co-ops. Colorado, for instance, recently pushed back against the co-op form. Until 2017, recreational cannabis users could group their maximum personal allowance of six cannabis plants into large co-ops, but in April 2017 the state criminalised the practice of individuals growing cannabis for other people as these large co-ops could not be adequately supervised.

If overly marketized, there is a real danger that a legal cannabis market could just create new processes of exclusion and inequality. A profit-driven legal cannabis market could easily be accompanied by even more punitive controls on the black market. This could lead to the worsening of social and racial inequalities in wealth, economic opportunities and criminal justice that emerged during the twentieth century drug war.

On the other hand, cannabis legalisation may offer a rare opportunity to introduce policies that could rebalance some of those inequalities that have plagued society for too long. This opportunity should not be overlooked.

This article is a shortened version of a report that was published by Common Wealth.

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