Kushing The Boundaries: Uruguay and Cannabis Legalisation

Uruguay’s position on a map of South America. Source: Wikimedia Commons

Most people reading this blog will be aware of the legalisation of marijuana for recreational purposes in two American states last year – Washington and Colorado.  For those indifferent or even against the plant’s legalisation, it hardly seemed a victory. “Just two states?”, they would have chimed in unison. The bigger picture, however, is that a domino effect was started. If two states legalise the drug in a sensible fashion, the seeds of doubt will be sewn into other states legislation, causing them to question the war on drugs and look into how their local communities could be economically benefiting from the change. In the U.S, this debate within states rages on, and it looks as though the country’s capital are seriously considering legalisation or decriminalization to reduce strain on regulatory bodies and the prison systems. Meanwhile, further down in South America, Uruguay has announced after a Senate vote in November they will be not only be legalizing cannabis in 2014, but also organising and regulating the sale of it for $1 a gram, perhaps the cheapest in the world. I wanted to take a closer look at see how this is going to work, perhaps to see if such a template could be pulled off realistically Down Under.

So how does Uruguay’s tactic differ to that of Colorado and Washington in the U.S, you may ask? Through this legislation and regulation, cannabis will not be available in an open market of differing strains and quality, but will have a fixed price of $1 a gram. An attempt to explore other avenues for the war on drugs, this tactic will more than likely end the blackmarket altogether, given that quality will be consistent and the price that is simply unbeatable. This fixing of price will be similar to how food, such as milk and bread for example,  are regulated in countries all over the world.

I believe this is a great idea and definitely a step in the right direction, however I also think it may be limiting from an economic point of view. Sure, demand will rise and there will be more jobs in industries of cultivation, distribution and sales (which are all remaining privatised, for obvious reasons), but when you look at other legal drugs like alcohol, this strategy is not allowing marijuana’s full economic potential. Uruguay has ruled that the drug will only be available in pharmacies, which rules out small business growth. They also will be enforcing and regulating the THC levels of the marijuana sold between 5 and 12%, relatively weak compared to medical-grade marijuana that sits comfortably between 20-25%. Furthermore, users will have to enrol in a national database (it is anonymous, however) so the government can enforce a 40g (around an ounce and a half) limit per month for each registered user. Although this is plenty of bud, with lower THC levels, more weed will be smoked for the average consumer, which is not ideal given the more smoked, the more carcinogens involved. Admittedly, the Uruguayan government has advised that they will combat this by educating the public at large as to the best ways to consume the drug, and this may drive down the price of vaporizers – arguably the most effective method of consumption (see our earlier blog post on that below).

While this plan has its flaws, the old saying goes that ‘beggars can’t be choosers’. Any scenario in which cannabis is legally available is preferable to a rampant blackmarket where average users can become a criminal for possessing small amounts of the drug. Given the Australia has never experienced a completely legal or decriminalized market akin to parts of Europe and the U.S States, we haven’t really known many differing strains, and will generally take what we can can get (normally hydroponically grown) on the blackmaket. This means that users would probably not be adverse to having government controlled strain available in limited (but sufficient) amounts. I find it more likely that step like this would be taken first before expanding into an open market where the economic potential on cannabis can be fully realised. Uruguay will be a great trial for the rest of the world to observe and take notes on, and the next in the continuing domino effect of marijuana legalisation worldwide. What do you think about this news? Do you believe Uruguay’s tactics will work? Please comment your thoughts below, and if you like our blog, don’t forget to follow us!