Search

• The Taliban opium ban of 2000–2001 disrupted European heroin supplies. • Effects differed across the seven Nordic and Baltic countries in systematic ways. • Some heroin markets bounced back, although perhaps with less vibrancy. • Other markets substituted to another opioid, either more or less harmful. • Market responses to the 2000–2001 ban may be informative for the new, current ban. The 2000–2001 and the 2022–2023 Taliban opium bans were and could be two of the largest ever disruptions to a major illegal drug market. To help understand potential implications of the current ban for Europe, this paper analyzes how opioid markets in seven Baltic and Nordic countries responded to the earlier ban, using literature review, key informant interviews, and secondary data analysis. The seven nations' markets responded in diverse ways, including rebounding with the same drug (heroin in Norway), substitution to a more potent opioid (fentanyl replacing heroin in Estonia), and substitution to one with lower risk of overdose (buprenorphine replacing heroin in Finland). The responses were not instantaneous, but rather evolved, sometimes over several years. This variety suggests that it can be hard to predict how drug markets will respond to disruptions, but two extreme views can be challenged. It would be naive to imagine that drug markets will not adapt to shocks, but also unduly nihilistic to presume that they will always just bounce back with no lasting effects. Substitution to another way of meeting demand is possible, but that does not always negate fully the benefits of disrupting the original market. Nonetheless, there is historical precedent for a European country's opioid market switching to synthetic opioids when heroin supplies were disrupted. Given how much that switch has increased overdose rates in Canada and the United States, that is a serious concern for Europe at present. A period of reduced opioid supply may be a particularly propitious time to expand treatment services (as Norway did in the early 2000s). [ABSTRACT FROM AUTHOR]

U.S. drug policy has sometimes implicitly — and incorrectly — assumed that all drug-related harm is caused by drug use, so reducing drug use necessarily reduces drug harm proportionately. Instead, drug policy should try to reduce the sum of both harms incident to drug consumption — including harms to users as well as harms to others — and policy-generated harm in the form of illicit markets, enforcement costs, and increased harmfulness of drug-taking due to controls. A strict prohibition can meet these criteria when it succeeds in keeping illicit markets “thin” and consumption very low. However, promulgating wise policies toward “thick” markets with widespread consumption necessarily involves trade-offs among competing objectives. Recent U.S. history illustrates both the futility of trying to control already “thick” markets using very long prison sentences for dealers (as in the cocaine market) and the risks of allowing “thin” markets to “thicken” by neglecting regulatory and enforcement efforts as prevalence starts to rise (as in the market for prescription opioids). [ABSTRACT FROM AUTHOR]

Aims To (1) assess trends and variation in the market share of product types and potency sold in a legal cannabis retail market and (2) estimate how potency and purchase quantity influence price variation for cannabis flower. Design Secondary analysis of publicly available data from Washington State's cannabis traceability system spanning 7 July 2014 to 30 September 2016. Descriptive statistics and linear regressions assessed variation and trends in cannabis product variety and potency. Hedonic regressions estimated how purchase quantity and potency influence cannabis flower price variation. Setting Washington State, USA. Participants (1) A total of 44 482 176 million cannabis purchases, including (2) 31 052 123 cannabis flower purchases after trimming price and quantity outliers. Measurements Primary outcome measures were (1) monthly expenditures on cannabis, total delta-9-tetrahydrocannabinol (THC) concentration and cannabidiol (CBD) concentration by product type and (2) excise tax-inclusive price per gram of cannabis flower. Key covariates for the hedonic price regressions included quantity purchased, THC and CBD. Findings Traditional cannabis flowers still account for the majority of spending (66.6%), but the market share of extracts for inhalation increased by 145.8% between October 2014 and September 2016, now comprising 21.2% of sales. The average THC-level for cannabis extracts is more than triple that for cannabis flowers (68.7% compared to 20.6%). For flower products, there is a statistically significant relationship between price per gram and both THC [coefficient = 0.012; 95% confidence interval (CI) = 0.011-0.013] and CBD (coefficient = 0.017; CI = 0.015-0.019). The estimated discount elasticity is −0.06 (CI = −0.07 to −0.05). Conclusions In the state of Washington, USA, the legal cannabis market is currently dominated by high-THC cannabis flower, and features growing expenditures on extracts. For cannabis flower, both THC and CBD are associated with higher per-gram prices, and there are small but significant quantity discounts. [ABSTRACT FROM AUTHOR]

The U.S. appears to be on a path toward legalizing cannabis on the alcohol model, which is to say allowing for-profit corporations to produce, sell, and promote its use. Even after national legalization, it will take decades to observe the full effects on industry structure and behavior, or on use and misuse. However, we should not be surprised if after markets have matured and consumption patterns stabilized, legalization increases acute cannabis intoxication in the U.S. by 40 billion hours per year. This increase in use will be the most important cannabis-specific effect of legalization. The bulk of it will be consumption by daily and near-daily users, and it is possible that roughly half will be by people who meet the medical criteria for substance use disorder. Much resulting harms will be borne by the users, and their families, and the harms are not primarily "medical", at least not in the narrow sense. Hence, legalization replaces the current problems of crime and black markets not so much with a medical or public health problem, but rather with a problem of potentially excessive consumption of a "temptation good" whose acute effects are performance degrading, not performance-enhancing. As legalization removes formal social controls, it might be prudent for society to develop stronger informal social norms - akin to "friends don't let friends drive drunk" - to protect the public and more importantly the users themselves from the performance degradation of bouts of nearly perpetual intoxication. [ABSTRACT FROM AUTHOR]

Background and Aims In 2014 the legislature of Vermont, USA passed a law requiring the Secretary of Administration to report on the consequences of legalizing marijuana. The RAND Corporation was commissioned to write that report. This paper summarizes insights from that analysis that are germane to other jurisdictions. Method Translation of key findings from the RAND Corporation report to the broader policy debate. Results Marijuana legalization encompasses a wide range of possible regimes, distinguished along at least four dimensions: which organizations are allowed to produce and supply the drug, the regulations under which they operate, the nature of the products that can be distributed and taxes and prices. Vermont's decriminalization had already cut its costs of enforcing marijuana prohibition against adults to about $1 per resident per year. That is probably less than the cost of regulating a legal market. Revenues from taxing residents' purchases after legalization could be many times that amount, so the main fiscal cost of prohibition after decriminalization relative to outright legalization may be foregone tax revenues, not enforcement costs. Approximately 40 times as many users live within 200 miles of Vermont's borders as live within the state; drug tourism and associated tax revenues will be important considerations, as will be the response of other states. Indeed, if another state legalized with lower taxes, that could undermine the ability to collect taxes on even Vermont residents' purchases. Conclusions Analysis of possible outcomes if Vermont, USA, legalized marijuana reveal that choices about how, and not just whether, to legalize a drug can have profound consequences for the effects on health and social wellbeing, and the choices of one jurisdiction can affect the options and incentives available to other jurisdictions. [ABSTRACT FROM AUTHOR]

The past decade has seen a remarkable liberalization of marijuana policies in many parts of the United States. We analyze data from the National Survey on Drug Use and Health (NSDUH) for coinciding changes in the marijuana market from 2002 to 2013, including market size, number and demographics of customers, and varying means of acquiring the drug. Results suggests that (a) the national market has grown, especially in terms of the number of daily users; (b) marijuana users remained economically “downscale” over this period, and in many ways resemble cigarette users; (c) distribution networks appear to be professionalizing in a sense, as fewer users obtain marijuana socially; (d) the typical purchase has gotten smaller by weight but not price paid, suggestive of a trend toward higher potencies; (e) marijuana expenditures vary by user group; and (f) respondents with medical marijuana recommendations differ from other users in systematic ways. [ABSTRACT FROM AUTHOR]

Multiple layers of dealers connect international drug traffickers to users. The fundamental activity of these dealers is buying from higher-level dealers and re-selling in smaller quantities at the next lower market level. Each instance of this can be viewed as completing a drug dealing "cycle". This paper introduces an approach for combining isolated accounts of such cycles into a coherent model of the structure, span, and profitability of the various layers of the domestic supply chain for illegal drugs. The approach is illustrated by synthesizing data from interviews with 116 incarcerated dealers to elucidate the structure and operation of distribution networks for cocaine and heroin in Italy and Slovenia. Inmates' descriptions of cycles in the Italian cocaine market suggest fairly orderly networks, with reasonably well-defined market levels. The Italian heroin market appears to have more "level-jumpers" who skip a market level by making a larger number of sales per cycle, with each sale being of a considerably smaller weight. Slovenian data are sparser, but broadly consistent. Incorporating prices allows calculation of how much of the revenue from retail sales is retained by dealers at each market level. In the Italian cocaine market, both retail sellers and the international supply chain outside of Italy each appear to receive about 30-40% of what users spend, with the remaining 30% going to higher-level dealers operating in Italy (roughly 10% to those at the multi-kilo level and 20% to lower level wholesale dealers). Factoring in cycle frequencies permits rough estimation of the number of organizations at each market level per billion euros in retail sales, and of annual net revenues for organizations at each level. These analyses provide an approach to gaining insight into the structure and operation of the supply chain for illegal drugs. They also illustrate the value of two new graphical tools for describing illicit drug supply chains and hint at possible biases in how respondents describe their drug dealing activities. [ABSTRACT FROM AUTHOR]

An editorial is presented which addresses the author's views about advertising restrictions on cannabis products that are used for nonmedical purposes, and it mentions another article which appears in the same issue of the journal and deals with the legal aspects of cannabis and advertising in the U.S. America's Food and Drug Administration (FDA), the nation's Controlled Substances Act (CSA), and marijuana laws in places such as Oregon are assessed.

Most proposals for legalizing cannabis production and sale ban sales to minors. But such bans are not self-executing. There is at least the risk--if not the overwhelming probability--that legal availability for adults will change price and availability for minors in a way that will increase the prevalence of underage use. This is especially problematic with respect to use by younger adolescents and to heavy use. It might be possible, with vigorous enforcement, to reduce the impact of legalization on use by minors, but the costs and unwanted side effects of such efforts may make them, on balance, inadvisable. The example of alcohol shows that it is possible to make it difficult for minors to buy directly from licensed stores and that doing so reduces alcohol consumption and alcohol-related harms in the target population. But strong efforts to prevent minors from buying cannabis illegally from adults, who in turn buy it from licensed stores, may not be advisable. With minors now accounting for approximately 25 percent of the volume in the cannabis markets, giving strictly illicit producers and vendors a firmer grip on the underage market would undermine the goal of reducing illicit-market harms, including violence, the need for enforcement, and the supply of products of uncertain potency, perhaps containing harmful contaminants. If this is so, then the harms associated with increased juvenile use are not entirely separable from the decision to make cannabis lawfully available to adults. [ABSTRACT FROM AUTHOR]

Background: The illegal drug trade is often, and plausibly, asserted to be the largest illegal market, globally and in many individual countries. It is also claimed that a large share of its revenues is laundered, though there are no estimates of that volume. We provide rough estimates of that proportion and its primary determinants.Methods and Data: This paper presents a model of a multi-tiered drug distribution network that is parameterized with data based on one typical, well-studied case, namely British Colombia's market for illegal opioids, supplemented by a corresponding economic interpretation of what determines the share of drug trade revenues that need to be laundered. Sensitivity with respect to key parameters is analyzed.Findings: We suggest that less than half and perhaps no more than a quarter of revenues from established drug markets need laundering. Key parameters governing this proportion include the price mark-up across distribution levels, transaction volumes at each market level, and the capacity of market participants to spend cash on daily living expenses.Conclusion: This model permits estimation of the scale of money laundering associated with a particular drug market. It suggests that there are limits on money laundering controls as a way of reducing drug supply - although money laundering investigations may still be an effective way to identify and investigate high-level drug traffickers. [ABSTRACT FROM AUTHOR]

Until November 2012, no modern jurisdiction had removed the prohibition on the commercial production, distribution, and sale of marijuana for nonmedical purposes—not even the Netherlands. Government agencies in Colorado and Washington are now charged with granting production and processing licenses and developing regulations for legal marijuana, and other states and countries may follow. Our goal is not to address whether marijuana legalization is a good or bad idea but, rather, to help policymakers understand the decisions they face and some lessons learned from research on public health approaches to regulating alcohol and tobacco over the past century. [ABSTRACT FROM AUTHOR]

ABSTRACT Aims No modern jurisdiction has ever legalized commercial production, distribution and possession of cannabis for recreational purposes. This paper presents insights about the effect of legalization on production costs and consumption and highlights important design choices. Methods Insights were uncovered through our analysis of recent legalization proposals in California. The effect on the cost of producing cannabis is largely based on existing estimates of current wholesale prices, current costs of producing cannabis and other legal agricultural goods, and the type(s) of production that will be permitted. The effect on consumption is based on production costs, regulatory regime, tax rate, price elasticity of demand, shape of the demand curve and non-price effects (e.g. change in stigma). Results Removing prohibitions on producing and distributing cannabis will dramatically reduce wholesale prices. The effect on consumption and tax revenues will depend on many design choices, including: the tax level, whether there is an incentive for a continued black market, whether to tax and/or regulate cannabinoid levels, whether there are allowances for home cultivation, whether advertising is restricted, and how the regulatory system is designed and adjusted. Conclusions The legal production costs of cannabis will be dramatically below current wholesale prices, enough so that taxes and regulation will be insufficient to raise retail price to prohibition levels. We expect legalization will increase consumption substantially, but the size of the increase is uncertain since it depends on design choices and the unknown shape of the cannabis demand curve. [ABSTRACT FROM AUTHOR]

Abstract: Extreme price dispersion is a hallmark of illegal drug markets, and this apparent contradiction to the law of one price has long puzzled drug market economists. We propose a novel explanation for this dispersion: the coupling of dealers’ unwillingness to hold inventory with dealers’ imperfect foresight concerning future prices and/or random lead times when “ordering” drugs from higher-level suppliers. Unwillingness to hold inventory means drug markets might operate consistent with a cobweb model. The classic cobweb model was inspired by the observation of cyclic (typically annual) fluctuations in commodity prices. However, with minor changes that make the model more realistic the resulting price trajectories can be highly variable or even chaotic, not just periodic. Cobweb dynamics can also amplify the variability created by supply chain disruptions. [Copyright &y& Elsevier]

Aims The addiction sciences are intrinsically multi-disciplinary, and economics is among the disciplines that offer useful perspectives on the complex behaviors surrounding substance abuse. This paper summarizes contributions economics has made in the past and could make in the future towards understanding how illegal markets operate, how prices affect use, how use generates various consequences, and how policy shapes all three. Methods Review of literature, concentrating on illegal drugs as insights concerning markets are particularly salient, although we also mention relevant studies from the alcohol and tobacco fields. Findings and Conclusions Economics offers tools and topical expertise that usefully complement other disciplines associated traditionally with the addiction sciences. Its value goes far beyond the ability to monetize non-monetary outcomes or to calculate a cost-benefit ratio. [ABSTRACT FROM AUTHOR]

An empirically-derived model of national drug initiation is combined with a compartment model of trends in illicit drug use parameterized for Australia. Numbers of initiates seem to oscillate over time but with fluctuations whose aplitude diminishes over time. Lags and interpersonal variation in drug use careers smooth those oscillations for measures of problem use and total drug-related social cost, so even abrupt changes in initiation barely ripple the trajectory of drug-related social cost. Hence, the benefits of interventions that successfully disrupt initiation may be "hidden in plain sight" by being spread broadly over time so that they leave only the faintest finger-print detectable by before-and-after comparison. Thus, the absence of clear drops in drug-related problems does not imply that an upstream ntervention such as prevention or supply disruption did not produce substantial social benefits. More generally, drug use and related problems are often perceived of as stubborn, even intractable. Some of that perception stems from real limitations in the effectiveness of drug-control interventions. However, inertia inherent in the evolution of drug use can make even cost-effective interventions appear weak (and detrimental interventions appear benign). [ABSTRACT FROM AUTHOR]

This article raises the question of how drug policy should respond to take advantage of market disruptions. A simple mathematical model of the spread of drug use is adapted to a two-stage problem in which drug prices are abnormally low or high in the first stage, and the policy planner is allowed to adjust the level of drug control funding continuously over time. Optimal policies for this model are derived using the methods of optimal control theory. They suggest that whether it is better to increase or decrease drug control efforts in response to a market disruption can depend on the initial number of users and, hence, on the stage of the epidemic, as well as the length and intensity of the drought or glut. Although simple prescriptions are not possible, the potential for adaptive policies to improve outcomes is illustrated. [ABSTRACT FROM AUTHOR]

A five-state compartment model of trends in illicit drug use in Australia is parameterized using data from multiple sources. The model reproduces historical prevalence and supports what-if analyses under the assumption that past trajectories of drug escalation and desistance persist. For fixed initiation, the system has a unique stable equilibrium. The chief qualitative finding is that even though some users escalate rapidly, regular injection drug use still adjusts to changes in incidence with considerable inertia and delay. This has important policy implications, e.g., concerning the timing of reductions in drug-related social cost generated by interventions that reduce the social cost per injection user versus those that cut drug initiation. [ABSTRACT FROM AUTHOR]

Drug markets have been targeted for increasingly tough enforcement, yet retail prices for cocaine and heroin have fallen by 70-80%. No research has explained adequately why prices have fallen. This paper explores the possibility that part of the explanation may lie in the failure of drug dealers to respond to risks the way the simplest rational actor models might predict. [ABSTRACT FROM AUTHOR]

Background: Cannabis legalization and the arrival of nonmedical fentanyl are fundamentally altering North American drug markets. An essential part of that change is the ability to produce large quantities of these drugs at low costs, which is like a technological breakthrough in their production technology. This essay explores possible future consequences of these trends.Methods: Descriptive statistics, historical analogy and economic reasoning.Results: In North America, wholesale prices for cannabis and opioids - in the form of illegally manufactured fentanyl and other new synthetic opioids - are radically lower than they were a decade ago. Retail prices for cannabis have fallen commensurately, but not yet for opioids. Historical analogies suggest that very large declines in price can have effects on use that go beyond just an expansion of traditional patterns of consumption.Conclusion: For cannabis and opioids in North America, conditions are ripe for significant changes in not only quantities consumed, and associated harms, but also in the roles these drugs and their control play in society. The overall situation with these drugs may look more different in 2040 compared to today, than today looks different from 2000. There are no obvious reasons why these trends will not spread to other continents. [ABSTRACT FROM AUTHOR]

Background: Many nations place drugs into various "schedules" according to their risk of abuse and/or recognized medical value that vary in terms of their restrictions. To mitigate diversion or abuse, drugs sometimes get rescheduled or are scheduled for the first time. Until now, there have not been efforts to integrate lessons from across the range of such past events.Methods and Data: We searched for peer-reviewed evaluations of instances of (re-)scheduling drugs in the United States after 1969 and a comparably large set of instances from other countries. Those 109 articles were supplemented by 30 others found in other ways but not meeting those search criteria (e.g., because the information on rescheduling was a minor part of a more general article).Findings: Findings are reported for many outcomes and with diverse measures over different timelines, making standardization of outcomes difficult. For more than half of the events for which quantitative outcomes were reported, there were declines in use-related measures by at least 40 percent. It is common for there to be reports of increases in indicators pertaining to other substances, sometimes more dangerous but sometimes less dangerous; overall, substitution appears to occur, but be partial.Conclusion: Scheduling and up-scheduling can - though does not always - have substantial effects on a range of outcomes. Substitution to other substances is a possibility and so should be anticipated. [ABSTRACT FROM AUTHOR]

This paper presents a simple economic model of a drug dealer's decision about how many customers to supply. The model relates the number of customers (i.e., the branching factor of the distribution network) to a quantity discount factor describing the extent to which prices are marked up from one distribution level to the next and the ratio of selling costs to product costs. Solving the model allows one to infer characteristics of the domestic distribution network from more readily observable characteristics of the markets and, thereby, to gain insight into how drug control interventions might work. [ABSTRACT FROM AUTHOR]

Some have suggested fighting the drug problem with so-called "zero-tolerance" policies that impose stiff sanctions for possession of even trace amounts of illicit drugs. Such policies can swamp the criminal justice system and violate the principle that the punishment should fit the crime, but these objections have often been suppressed by an overriding desire to minimize consumption. This paper argues to the contrary that under plausible conditions zero-tolerance policies may actually encourage controlled users to consume more, not less, than they would if the punishment increased in proportion to the quantity possessed at the time of arrest. This result holds even if for every quantity the punishment under the proportional policy is less than or equal to that under the zero-tolerance policy. The argument relies on a mathematical model that describes how a typical controlled user's purchasing habits are affected by the punishment anticipated as a function of the quantity possessed. A variety of possible punishment policies are evaluated. The consumption minimizing policy for a given individual user is obtained, as well as the consumption minimizing policy that belongs to a restricted class of policies that are more likely to be politically feasible. [ABSTRACT FROM AUTHOR]

A response is provided to articles in the same issue of the journal which address additional data sources for cannabis markets, the legalization of the cannabis industry, and changes in cannabis policies as of 2017. The economic profitability of marijuana as a commodity is examined, along with the structure, performance, and conduct of an industrial organization. Company loyalty and frequent buyer programs are assessed, along with data mining and smart vaporizer pens.

Commentary to: Considering marijuana legalization carefully: insights for other jurisdictions from analysis for Vermont [ABSTRACT FROM AUTHOR]

The author discusses the article by Peter Reuter and Harold Pollack on the relationship between drug prices and enforcement intensity. He mentions that the empirical evidence speaks just to the failures of the past practice of enforcement, and enforcement has not optimized in producing the maximal effect on prices. He states that law enforcement does not frequently think in terms of maximization of social welfare or efficient production with respect to prices or objective function.

A correction is presented to the article "Dealing More Effectively and Humanely with Illegal Drugs."

In this article, researcher Johnathan P. Caulkins responses to the commentatries made on his study related to the issue of legalizating cannabis. He mentions that his study focused on design choices for implementing legalization of cannabis. He also mentions that the production costs after legalization process can drop below the current wholesale prices. Further he mentions the Kettil Bruun Society has reveals the difficuties in regulation right for drugs as they have been conforting the nuances of alcohol control for 25 years.

The author reflects on the publication bias which is concerned with the drug prevention or the entire drug control literature. He argues that James McCambridge's second argument on drug prevention is particularly vulnerable. An overview of McCambridge's study on drug prevention is offered. The author suggests that the article should expect prevention in solving drug addiction problems.

Background: Cannabis policy is developing faster than empirical evidence about policy effects. With a panel of experts in substance use policy development and research, we identified key cannabis policies and their provisions enacted by U.S. states; rated their theoretical efficacy in a restrictive form for reducing problematic use and impaired driving in the context of a recreational cannabis market as judged by experts; and rated the strength of evidence for each policy.Methods: Using a modified Delphi approach, 9 panelists rated the comparative efficacy of 18 state cannabis policies for reducing youth use of cannabis, excessive cannabis use among the general population, and cannabis-impaired driving. Each outcome was rated separately using a Likert scale, and panelists also rated the strength of evidence supporting each efficacy rating. Investigators provided descriptions of each policy so that the nine panelists had similar conceptions of each policy.Results: State monopoly (state owns all production, manufacturing, wholesale, and retail operations) was rated as the most effective policy for all three outcome areas. Restrictions on retail physical availability, taxes, retail price restrictions, and retail operations restrictions were also highly rated for all three outcomes. Policies regulating cannabis businesses and products were judged more effective than policies targeting consumer use and behavior. Panelists reported there was little or no direct evidence from the cannabis policy literature for most of the included policies.Conclusion: These ratings can facilitate research as well as policy-making decisions. A relatively small number of policies were judged to be highly effective across all three domains, indicating that for the most part adult excessive use, youth use, and impaired driving can all be reduced with the same set of policies; these policies tended to target the behaviors of businesses rather than consumers. The low levels of direct evidence available to inform policy ratings, as reported by the policy panelists, makes clear the need for ongoing and sustained cannabis policy research. [ABSTRACT FROM AUTHOR]