3 minutes on... Legalisation of cannabis: challenges and results

• What are the aims of legalisation?
• What are the challenges of legalising cannabis?
• What are the results of legalisation in North America?

What are the aims of legalisation?

All the States that have legalised cannabis claim to have two common objectives. Firstly, a public health objective, which is to prevent use among minors and reduce the risks associated with adult use and controlling the products they use. Secondly, a public safety objective, which it to regain control of the market by neutralising trafficking and associated criminal networks.

These two central objectives must also coexist with the objectives of economic development and profit, which are not always made explicit but are very much present, particularly in the United States.

Finally, more recently, legalisation reforms in some American states have emphasised a so-called social equity objective, which consists of organising the transition from yesterday's black market players to the new legal market.

What are the challenges of legalising cannabis?

The main challenge of legalisation is to hold together all these objectives, which in practice can be contradictory. The taxation of cannabis is a good illustration of the difficulties of regulation, which is torn between the objective of developing a profitable legal cannabis market and that of safeguarding public health.

To put it plainly, taxing cannabis too high, which means a high price for the consumer, risks turning some consumers away from the legal market and thus fuelling the black market. Conversely, taxing cannabis too low, while guaranteeing a lower price for consumers, risks encouraging consumption by making cannabis more accessible.

One of the challenges of regulation is the constant search for the right balance between the level of taxation, and more generally in the degree of control over consumption and in the regulatory constraints applied to producers. In the study we carried out in North America (ASTRACAN), we were able to describe the rulings made by public authorities, which evolve along the way. We were able to show that cannabis regulation is a highly dynamic process, involving constant adjustments to taxation, distribution methods, traceability procedures and so on.

What are the results of legalisation in North America?

We now have 10 years’ experience of the very first experiments in legalisation, in Uruguay and the United States. In the United States, the pace of legalisation has accelerated since the first reform initiatives in Colorado and Washington State, with at least one new State taking the plunge each year since 2018.

There are three main points to be made here.

Firstly, the wide variety of regulatory models, ranging from a public monopoly in Uruguay or Quebec, with a total ban on advertising and all promotion of cannabis products, to the liberal model generally practised in the United States, where an abundant and diversified commercial offering has emerged. Between these two poles, we have a range of other models that are seeking to strike a balance, like the Canadian provinces, each with its own distribution and sales model.

The second observation concerns the scale of economic development in the cannabis sector and the tax revenues generated by legalisation. In Colorado, for example, the legal cannabis market represents annual sales of $1.5 billion, or more than $274 million in tax revenue by 2023. That is more than alcohol and cigarettes combined. However, the cannabis sector has been experiencing a general downturn since 2022 in the US and Canadian markets. With regard to the promise of legalisation to dry up the black market, we are indeed seeing a gradual decline in the illicit market, which is particularly clear in Canada, as the proportion of consumers who obtain their supplies on the legal market has risen from 37% in 2019 to 73% in 2023. But, paradoxically, in some States, legalisation has contributed to a rebound in the black market. This is the case in California and Uruguay, for example.

The third point to consider is the trend in cannabis use following legalisation. Among minors, it has remained stable, and even declined in some States. However, it cannot be said that this is a direct effect of legalisation, as the decline can be seen in many states that have not legalised. On the other hand, among adults, cannabis use is tending to increase, particularly in the United States, where we are seeing a diversification of customers and methods of consumption, with vaping in particular gaining ground.