Go easy on marijuana regulation
Ontario consumer advocate says overregulation will only encourage a black market
The marijuana boom is going to hit Canada in 2018, but our country’s regulators are going to stifle potential growth. Canada already has medical marijuana and it’s been beneficial to the economy and more importantly, to patients. As a nation, we can’t let regulators stifle the prosperity that could be generated with a legal recreational market. With legal marijuana on the horizon, it is important that regulators embrace the lessons we have learned from tobacco regulations. By lessons, I mean not repeating the same mistakes, and by mistakes, I mean branding bans and exorbitant excise/sin taxes. That’s what regulators have mistakenly done with tobacco and it’s what they want to do with marijuana.
We can look at plenty of countries — including Canada — for lessons from failed tobacco policy. In some countries, the government has eliminated branding from all tobacco products by enacting plain packing, while also adding excessive levels of taxation. Not only have these policies f ailed in their mission, they’ve created a prime opportunity for criminal actors to flood the black market.
Take Australia, for example, that has in recent years enacted strong regulation against tobacco. The Australian government mandates plain packaging for tobacco products in the name of public health. However, the country didn’t see a significant decline in smoking because of this policy. In fact, Australia has for the first time in over two decades stabilized their smoking rates, which certainly isn’t something to celebrate.
Along with not accomplishing its goal, plain packaging came with the significant externality of emboldening the black market. The reason why a policy like plain packaging enables the black market is simple. When the government eliminates branding from packaging, it becomes easier and more profitable for criminals to pass off their contraband goods. Because of plain packaging, criminal actors have raced to the emerging black market in cigarettes. When government regulation establishes a prohibition of a good as common as cigarettes, a black market naturally rises. And in some cases, the black market is so lucrative that even government officials buy in. At least that’s what happened in Australia, where customs and other officials with security clearance were caught smuggling illicit tobacco products.
But that shouldn’t come as a surprise. After all, government can’t stop human action and that reality has manifested in the black markets that have risen due to prohibitions on alcohol, tobacco, and marijuana.
Regulating the branding on tobacco packaging hasn’t reduced smoking, and has ultimately done more harm than good. If Canadians are serious about keeping marijuana out of the reach of children or even to limit its sale at all, they best focus on limiting the growth of the marijuana black market. When regulators want to mandate plain packaging, and dictate who, when, and where can sell limited amounts of marijuana, a black market is bound to exist. Canadians will be able to find the products they want for cheaper and without the hassle of government.
What we do know, is that Canadians want legal marijuana. They want to be able to know what they’re purchasing and they will purchase products where it’s affordable. At the end of the day, price is a huge determining factor on whether or not the black market for marijuana will continue to thrive. If the government over taxes legal marijuana, consumers will naturally remain in the black market. We’ve seen this first hand with tobacco policy in the province of Ontario. From 2010-2013, contraband cigarette purchases began to soar, largely in response to increased taxes. In fact, the Ontario Pro- vincial Police reported that highway patrols had confiscated over 100,000 cartons of illegal cigarettes. Regulators should keep this very basic economic principle in mind when determining the tax rate on legal marijuana.
What these regulators don’t realize, is that they’re at odds with the desires of their constituents. Canadians favour legal marijuana — that’s why they voted for it in the first place. According to a recent study by Nanos Research, a majority of Canadians support the sale of marijuana by private companies instead of the government stores. The data also illustrates that more Canadians support private marijuana lounges to licensed businesses. This isn’t a surprise to the average Canadian. After all, they want the option to choose. And when Canadians choose their marijuana products, they should be able to see what it is they’re buying similar to their experience with buying beer.
However, that notion hasn’t stopped prohibitionists from pushing anti-Consumer choice measures. They still want to mandate plain packaging and implement excessive taxes for marijuana, policies that will surely inhibit the black market. Don’t let regulators control your life. Let your representatives know that you support consumer choice.
David Clement of Oakville is the North American Affairs manager of the Consumer Choice Center in Virginia.