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Drugs in Colorado; the way forward?

Denver is the mile-high city and they came in their hundreds to get high. The first legal cannabis shops in America, opened on January 1st and the world is looking to see what the upshot will be.

It is obviously It is too early to tell whether the experiment is working, but the early signs are positive. The first American state to allow ‘smoking’ for fun has not been taken over by reefer madness. Its pot shops are more orderly than most English pubs and the report that said 37 Coloradans had died of overdoses on the first day of legalisations, was in the Daily Currant, a spoof newspaper. No-one was fooled; the reason Americans are voting to relax marijuana laws is that they have decided dope is less hazardous than alcohol.

Those who oppose drug prohibition might like to celebrate, because the tide is flowing in a definitive  direction; most Americans want marijuana to be legalised, taxed and regulated; twenty states, and Washington DC, now permit the consumption of dope for medicinal reasons.

Washington state will soon join Colorado in licensing sales to those who simply want to enjoy a spliff. If legalisation works in America (and Uruguay, which legalised pot last month), it will surely spread. But there’s the conundrum: if the first-movers mess up the details, public opinion may shift and the campaign against prohibition could stall.

Legalisation is simply the first step. Pot also has to be regulated because it is more dangerous than fizzy drinks or crisps; it needs to be subject to more stringent safety than food. As with alcohol, anybody who wants to produce it for sale, or sell it, should be licensed, as they are in Colorado. It should carry clear labels showing its tetrahydrocannabinol (THC) content, just as cans of beer display their alcoholic strength—consumers should know what they are smoking. Colorado seems to be handling this well: labels are clear, safety rules are tight.

But how to tax the stuff? This requires some basic questioning; if governments want to raise money without distorting markets, they tend to charge a flat fee (like a taxi licence) and firms are incentivised to do as much business as they can; but if they want to discourage consumption (Eg. cigarettes and alcohol), they tax each unit sold.

Dope does not regularly do as much harm as cigarettes or booze, nor does it incite citizens to violence or crime, but it is also probably not that good for you. Marijuana is thought to increase the risk of schizophrenia and tends to lower motivation, which would seem to predicate a consumption tax.

However, there are two counter-arguments; marijuana may have a decent side-effect, pot smoking could displace heavy drinking and be good for overall public health. If taxes are set too high, the black market will flourish, depriving the state of revenue and forcing people into unregulated and potentially more dangerous drugs.

Colorado has set the tax on dope at over 25%, whereas total tax on a pack of beer is around eight percent; perhaps drug taxes should be lower than drink, and drink taxes higher than they are currently.

A major obstacle to the experiment in Colorado, is good old Uncle Sam. Under federal law marijuana is illegal; president Obama’s Justice Department has said it probably will not prosecute pot shops that are legal under state law, but they are shunned by banks afraid of contravening money-laundering laws, making the business essentially cash-only and, therefore, difficult to tax.

This seems wrong and banks and credit-card companies should probably be allowed to facilitate any transactions that are legal in the state in which they occur.

Advocates of legalisation have long said it would do less harm than prohibition and their opponents have vehemently disagreed; it seems that the ways in which Colorado regulates the trade will have huge, possibly global  ramifications on this long-running argument.

Nigel Phillips


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