Does The Criminalisation Of Cannabis Impact The UK Economy?

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Cannabis & The UK Economy

When it comes to assessing the UK’s black market economy it’s obviously quite tricky to avoid sheer speculation.

Depending on which public or unofficial body of ‘experts’ you listen to, it’s estimated that the potential value of legalising cannabis is between £750m – £10bn.

Such a differential is not due to the value of the approximately 255 tonnes of marijuana taken in the UK last year. Anyone who smokes knows that if anything, black market prices change at most once a decade, and the actual figure consumed is likely way higher.

Either way, the cost of criminalising cannabis is now broadly regarded as being counterproductive to the UK economy.

The Institute of Economic Affairs – perhaps one of the most Thatcherite ‘think tanks’ going – has suggested quite simply that if performed correctly, decriminalising is a win-win-win scenario.

The economy would receive around a £2.6bn boost, taxable jobs created, and public health will improve long-term compared to being an island of just drinkers and tobacco users.

So What Is A Realistic Figure Of The UK Cannabis Trade?

The aforementioned IEA study is likely in a sensible ballpark. If anything, they tend to undervalue products and commodities in order to provide a cushion to sudden shifts in the global market.

Many pro-cannabis campaigns will treble or more that valuation, but you need to consider the impact that it will have on spending.

Let’s think hypothetically. For example, instead of going out for a few drinks at maybe £20 or so – people may chill out at home and instead settle into some recreational marijuana use.

Doing so will take the money from the alcohol industry and instead place it into the marijuana one.

Ambiguous as those figures may well be, the fact remains that the same amount of money is still circulating. Just in different ways.

An alternative scenario may be people who still drink just start to use cannabis as well.

The money still has to come from somewhere, so while they may be more buzzed or whatever the cash that could have been spent on a new TV is instead being splashed on drugs.

The knock-on effect for that on the economy is impossible to gauge – but let’s hold fire before declaring doom and gloom.

Let’s Look At The Evidence

Plenty of countries very similar to the UK in regards to spending habits have recently experienced a relaxation of marijuana laws. Canada being a prime example recently.

Initial changes are barely perceivable. Society has not collapsed, and if anything it has provided a means for more entrepreneurial thinking.

The west coast of the USA saw an explosion in the number of outlets the moment those states made access to marijuana far easier. A good number have folded, and those that thrive have tended to diversify. So instead of a ‘weed store’ you instead find a busy cafe that may sell marijuana as well.

In an ideal world, that’s exactly the model that proponents of decriminalising cannabis in the UK are wishing for.

It will boost economies by providing jobs across a wide range of sectors, while also providing a means to access better quality and cheaper strains.

Early indications suggest that the use of other – and rightly highly illegal and dangerous drugs – is falling, as well as related pressures on legal and healthcare services.

So for the overall economy, it’s very difficult to see much of a downside at all.

So What’s Stopping Us?

The UK doesn’t quite fit the USA or – very soon – the Canadian model.

Our legislature has been ferocious (on paper) against marijuana for decades.

Despite around 3m people regularly taking it for personal enjoyment, and untold others for medicinal use, it can still land you in prison for possessing what is considered above ‘personal use’.

So, you could have a personal grow to harvest once a year, and still be sharing a cell with a major drug trafficker – if busted at the wrong time.

The criminal element also plays a major role. It costs over £50m a year to incarcerate the small proportion of people (around 1200) held for cannabis related crimes. Seizure of untaxable assets and income is staggeringly low. To put it bluntly, there’s no reason why career criminals cannot make hay and hide it away at risk of a short spell in lockup.

Instead of seizing those assets, why not just make them taxable? Sure, there’s a good proportion of growers/dealers who wouldn’t fancy being propelled into a 50% tax bracket.

Examples from overseas have demonstrated that going ‘legit’ can be done successfully, boosting revenue from income tax and national insurance by a huge amount.

Quite how to manage that is a headache – but no worse than when prohibition laws were lifted in the States 80 years ago.

The IEA estimates that decriminalisation would lead to just a 5% residual of cannabis being sold on the black market. Most of that will be personal home grows.

At just a 20% tax – way below what alcohol and tobacco are set at – that would bring in £690m a year. While also saving approximately half that amount due to less pressure on public services.

So, all in all, it would potentially save the country a billion pounds per year, and also add an untold amount of additional income through taxation.

What’s The UK Government’s Current Position On Cannabis? – October 2018

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Current UK Position On Cannabis

The UK government has maintained a hard line on the use of cannabis for several decades and under varying political parties.

Even though there are countless advisory bodies who make a strong case for decriminalisation, cannabis remains a Class B drug. In theory, even possessing a small amount clearly for just personal use can land anyone with up to 14 years imprisonment and an unlimited fine.

In reality, of course, such legislation is only used against those caught with enormous operations, and typically a considerable amount of assets that cannot be accounted for by conventional paper trails.

More often than not, someone caught with a few joints worth of marijuana will face a statutory fine (usually less than £100) unless they are a ‘repeat offender’. It’s not unheard of for more “open-minded” police officers to just issue a warning while they throw a stash down a drainpipe.

So this leaves the current UK governmental view on cannabis very tricky to ascertain.

There’s never been a wider body of people calling for a much more relaxed take, especially given the thousands of otherwise law-abiding citizens who take marijuana for therapeutic reasons.

Taxation Is Key

Cannabis Tax UK

Is the UK Treasury potentially missing out on billions?

A common argument made against tobacco and alcohol manufacturers is that they are overwhelmingly more dangerous drugs than marijuana. This is a documented fact, and one of the reasons why they are so heavily taxed.

Even the cost of a bottle of wine is accounted for by around a 57% tax excise – with tobacco being not far shy of 85%. All of that contributes a staggering amount of tax revenue, with booze raking in well over £10bn a year (2016-17 figures). In layperson’s terms, that’s just one year to pay for the nuclear deterrent outright!

If marijuana were taxed on similar levels, conservative estimates suggest it’d be worth between £1bn to £3.2bn per year in tax revenues. That needs a little adjusting because obviously, people would use less booze and cigarettes for recreational purposes.

Yet it would represent a huge boost to the public coffers on sales that are currently untaxed due to being restricted to the black market.

This has been the case for decades – so why hasn’t it been legalised?

Organised Crime

As much as we’d like to think how wonderful it would be if your local allotment had a friendly old fella cultivating beautiful organic marijuana, that’s simply not the case.

Cannabis Farm UK

Cannabis farms such as this one are being uncovered by British police on a weekly basis.

Organised crime plays a very large role in the underground marijuana market, and if there’s one absolute fact about drug dealers it’s that they are always looking to diversify.

A good proportion will also trade/import far more harmful drugs, as well as be expert money launderers.

Combine this with the shadier aspects of dealing in an illegal commodity, and this presents a very tricky problem.

Back in the early 2000’s, there was serious optimism that cannabis could be rescheduled or even decriminalised.

This led to a flurry of massive alcohol companies buying hundreds of defunct community cafes on the belief that it would happen, and the UK would have a Dutch-style approach to cannabis culture. One that they could invest in right away.

It never happened because while there are legal cannabis farms operating across Europe for medicinal purposes, there simply would be issues with supply and demand.

So who has enormous UK grow operations that could flood the UK market instantly? Organised crime, and there’s no chance that even the most progressive government could allow that to happen.

It would legitimise their wealth and basically say that it’s fine to break the laws of the land and profit.

Combine that with assuming existing growers/dealers would be happy to forgo a huge amount of taxation on their current income, and that’s why decriminalisation simply has not yet happened.

Are There Signs Of Progress?

Billy Caldwell

The Billy Caldwell case instigated a review into the medical use of cannabis.

Yes, there are!

Just this year (2018) the Home Office allocated funding to the biggest evaluation of the medical use of marijuana the UK has ever seen.

Supported by the All Party Parliamentary Group on Drug Policy Reform, their initial findings have already started to bear some fruit.

In a recent landmark case, an epileptic boy was finally allowed to be prescribed medicinal cannabis oil to help reduce his proneness to seizures.

Despite being initially refused by the medical authorities, it took the influence of the Home Secretary to over-rule the decision.

Whilst this does not set a formal legal precedent, it will most certainly be referred to for potentially tens of thousands of similar cases in the very near future. Recreational users may still be waiting a fair while though.

Besides there being some motions regarding the use of marijuana for medical purposes, don’t expect to see it stocked at Sainsbury’s any time soon.

On 11 October 2018, the Home Secretary Sajid Javid announced that doctors in England, Wales and Scotland will be able to prescribe cannabis-derived medicine from 1 November 2018. This announcement has been widely welcomed.

Why Is Cannabis Illegal In The UK?

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Why Is Cannabis Illegal In The UK?

Every so often a nationwide poll will suggest that a good proportion of the UK populace would back the decriminalisation or even full legalisation of cannabis.

Despite being a Class B drug – the same as the likes of amphetamines and barbiturates – it’s widely used and considered almost universally to be less risky to health than legal drugs such as alcohol and tobacco.

So what gives? Why is a comparatively benign drug increasingly believed to carry inherent health benefits so maligned by the national legislature?

There are many contrasting theories as to why this is the case, but at heart, it comes down to social and political forces/changes over the last couple of hundred years.

How Cannabis Criminalisation Came To Be

Queen Victoria

It’s claimed that even Queen Victoria enjoyed a bit of SMJ.

Quite famously, old Queen Victoria enjoyed a regular pipe of marijuana – prescribed by her doctor no less – and it wasn’t until 1928 that marijuana was banned via an addendum to the 1920 Dangerous Drugs Act that made addiction illegal.

Somehow that excluded alcohol and tobacco – but this is a debate for another time. The strange thing is how a ban on a commodity that was widely used for medicinal purposes was so readily accepted by society?

A strong argument for why cannabis use – for any purpose – was outlawed is the presence of a misguided yet popular association with opium, which was considered to be social menace despite limited importation to ‘licensed persons’ still being legal in 1920.

Culturally, opium was associated predominantly with the Chinese immigrant populations who were considered untrustworthy, devious and corrupt (despite keeping the nation’s mines running!).

This theory certainly works in a more modern context of drug enforcement being aimed in a racial context (1980’s USA with black inner-city kids and crack cocaine).

Even after the drug was banned, the law not vigorously enforced until the arrival of black Caribbean immigrants in the 1950’s/60’s.

To put this into context, in 1960 there were 235 arrests in relation to cannabis, a figure which was closer to 5000 by the late 60’s.

What makes this interesting is that you’d assume the arrival of immigrants with a long history of marijuana use would result in them being proportionally over-represented in these figures. Nope – most were actually middle-class white hippy kids.

Wootton Report

An extract from the Wootton Report in 1968.

Perhaps wondering why the figures didn’t fit in their racial stereotypes, the Wootton Report commissioned in 1968 came to a conclusion still vocally expressed by legislation campaigners today.

It found that (probably against their best efforts) there was no evidence that marijuana use caused people to be violent, anti-social, criminalised, addicted or psychotic.

Despite this, it was still classified as a B level drug where, despite a brief downgrading in the mid-2000’s, it has remained ever since.

Attempts At Decriminalising Cannabis In The UK

For decades there have been movements for both decriminalising marijuana for medicinal purposes and also for just making the drug entirely legal.

The former system has already been seen in numerous other western countries without society collapsing, while the latter press for simple regulation such as that used enforced upon alcohol and tobacco.

Only a very few people are arguing that the plant should be considered a garden grown herb.

Key to the campaigns in favour of a more sympathetic approach to cannabis has been also promoting not just the many potential benefits it may offer, but also in educating people as to why it’s widely believed to be ‘safer’ for recreational use than alcohol or tobacco.

These multi-billion pound industries have lobbied heavily against any lowering of the legal status of cannabis, for one simple reason.

In 2016, the Adam Smith Institute reported that not was the UK’s approach towards cannabis pointless and ridiculously ill-informed, but that legalisation could add around £1bn annually in tax revenues.

Much of that money will come from the demise in the huge black market trade in cannabis, but a large amount would also come from people switching from alcohol (around 7,000 deaths/year) and tobacco (80,000 deaths/year).

So What’s Holding Back Reform?

Despite a growing number of politicians across all parties coming out in support for reform, there is still a large proportion of MP’s who consider the issue an unnecessary minefield to cross.

Overall, it is a low priority issue for the current government, who frequently roll out very suspect claims that cannabis use would result in an even greater national mental health crisis.

CLEAR Cannabis Law Reform

“CLEAR Cannabis Law Reform is the UK lobby group for cannabis law reform”

Another factor is that while there are large organisations – perhaps most prominently CLEAR – the overall movement for reform is too fractured.

If there were a unified movement focused upon decriminalisation for medical purposes, then perhaps under a different – and let’s face it more politically left-wing government – progress could be made.

Much depends on how other countries progress, and so far the signs are that a more relaxed approach to cannabis has had no negative impact whatsoever.

Make no mistake – sooner or later reform will happen. The only question concerning that is when.

As more and more people begin to become aware of the likes of cannabidiol (CBD) as a health/food supplement then it’s likely attitudes towards cannabis will continue to soften.