Reason.com

Free Minds & Free Markets

5 Things Canada Got Right When It Legalized Pot

Our northern neighbors are handling the transition from prohibition to regulation better than the U.S. in several ways.

It turns out that when you legalize marijuana, a lot of people show up to buy it. That development seemed to surprise cannabis controllers in Canada, where shortages were reported almost immediately after legal recreational sales began last week.

In several other respects, however, Canada is handling the transition from prohibition to regulation better than the United States. Canadians seem to have learned a few things from American mistakes, and we in turn can learn from their successes.

The most significant difference between the approaches taken by the two countries is that Canada has legalized marijuana at the national level. It is only the second country in the world (after Uruguay) to do so.

In the United States, by contrast, marijuana is still prohibited by federal law. As a result, marijuana merchants in the eight states that license them operate under a legal cloud, committing federal felonies every day. Aside from exposing cannabusinesses to the risk of prosecution and forfeiture, the federal ban complicates financing, leasing, contracting, insurance, banking, and income taxes.

There is an easy fix for this problem: Congress can show its respect for the 10th Amendment by repealing the federal ban as it pertains to conduct that is permitted under state law. Even former New Jersey Gov. Chris Christie, who promised to crack down on state-legal marijuana when he ran for the 2016 Republican presidential nomination, recently conceded that "states have the right to do what they want" with cannabis.

Another important advantage of the Canadian approach is modest marijuana taxes, which help displace the black market. The national government is imposing an excise tax of 10 percent or one dollar per gram, whichever is greater, and giving the provinces 75 percent of the revenue.

That's in addition to standard sales taxes, which range from 5 percent to 15 percent. Still, the effective tax rates are substantially lower than in jurisdictions such as California and Washington, where steep taxes have made it hard for licensed merchants to compete with illegal dealers. An industry analyst recently told The New York Times that heavy taxes and burdensome regulation in California make legal marijuana something like 77 percent more expensive than marijuana sold by unlicensed dealers.

High purchase ages, like high taxes, help sustain the black market. In the U.S., all nine states that have legalized recreational use have set the minimum age for purchase or possession at 21, corresponding to the drinking age. The upshot is that most college-age adults, two-fifths of whom use marijuana, cannot do so legally.

Canada also used the rule for alcohol as a benchmark, but it has a lower drinking age. The national minimum for both alcohol and marijuana is 18, and most provinces have added a year to that cutoff.

In both Canada and the United States, local governments generally have the authority to ban marijuana businesses within their borders. But Canada gives consumers a reliable and discreet way around local bans by letting them buy marijuana online and have it delivered by mail throughout the country. In the U.S., most states with legal pot do not allow direct deliveries to consumers, and the continuing federal ban makes sending marijuana by mail, UPS, or FedEx a risky proposition.

The Canadian government not only has decided to stop treating cannabis consumers as criminals. It also plans to help cannabis consumers who continue to suffer from that label by eliminating fees and waiting periods for sealing conviction records related to possession of 30 grams or less of marijuana, which is now legal.

The plan is far from perfect, but it goes further than the policies of most U.S. states with legal pot, and it invites a serious discussion of a key moral issue raised by the repeal of marijuana prohibition: When a government decides to stop punishing people for peaceful activities that violate no one's rights, what does it owe to the victims of that oppressive policy?

© Copyright 2018 by Creators Syndicate Inc.

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Conchfritters||

    Another important advantage of the Canadian approach is modest marijuana taxes, which help displace the black market.

    No shit - I was in San Diego this spring, and went to the dispensary by the beaches - shit was more expensive than it was in college in the early 90s. Just ask mayor Dumbass-io of New York how great those $10 pack cigarette taxes are working.

  • Outside the Box||

    Give it time: prices in Washington State have come down by a huge amount. California's will come down as things even themselves out and you get more growers/distributors/retail shops set up.

  • THCorCBDthatistheQuestion||

    There is a lot of really expensive cannabis in CA. I won't spend $60+ for an eighth, but there is also a lot of really good stuff for $10/gram. $10/g isn't a bad price, and is a lot cheaper per effectiveness than a good IPA.

  • vek||

    So I don't even smoke, but plenty of friends do. In Washington there is plenty of crazy expensive weed like you mention... But some of the "special of the week" stuff here can get DIRT cheap.

    A friend of mind goes to one shop that ALWAYS has $100 ounces. Sometimes they even have $80 ounces. That is to say $3.57 a gram, or $2.85 a gram. STUPID CHEAP.

    That is the best deal they've ever seen in the entire Seattle area mind you, but STILL.

  • Outside the Box||

    I paid $13 for 3.5 grams this weekend at a Seattle area shop. That's

  • Rich||

    When a government decides to stop punishing people for peaceful activities that violate no one's rights, what does it owe to the victims of that oppressive policy?

    30 grams of cannabis?

  • Robert||

    The main thing is that Canada's governance has worked out in practice as more federal than that of the US. The provinces have no incentive to try to reap temporary windfalls via taxes on cannabis while neighboring ones. haven't legalized. The national gov't never imposed a penalty on provinces for having ages below 18 buy liquor.

  • Fist of Etiquette||

    ...shortages were reported almost immediately after legal recreational sales began last week.

    MARKET FAIL

  • D-Pizzle||

    You are truly an enigma. You hate free markets, but also expect them to react to an immediate and substantial demand increase for a product with a four to six month production cycle.

  • Juice||

    whoosh

  • Aresen||

    "The most significant difference between the approaches taken by the two countries is that Canada has legalized marijuana at the national level. It is only the second country in the world (after Uruguay) to do so.

    In the United States, by contrast, marijuana is still prohibited by federal law.

    Criminal law in Canada is exclusively in the jurisdiction of the Federal Government. The provinces couldn't legalize it if they wanted to.

  • ||

    Just to clarify, for those that might not know, while Criminal law in Canada is exclusively in the jurisdiction of the Federal Government, those laws are enforced by local and provincial police and cases are tried in provincial courts.

    Provinces have a great deal of prosecutorial discretion so laws are not uniformly enforced. This was especially true of drug laws for some years before legalization.

  • ||

    Also, just to complicate matters, only three provinces have provincial police forces, the rest pay the federal government to have the Mounties perform the same functions in areas not served by city or other local police forces.

  • Austen Heller||

    The govt of Canada led by the failed son of the most divisive PM in Canadian history got it all wrong on pot. Yes, it is a national law but each and every little fiefdom, town, burg and ville gets to put its stamp of stupidity on their interpretation of the national law. There is no uniformity of the law across the country. And for extra points, the taxes are too high which will result in the continuation of the 'black' market. The taxes are too high per gm and the flotation of dope growing companies are tanking. The only winners in this are the same 8% who smoked dope before legalization; the rest of us, the majority that don't smoke don't care. As for the expunging of the convictions for minor dope charges: ha. I say ha. This is a govt that can't even get a civil service software payment system to work after four years.

    The new dope law will be the big win that the Liberals will use in their campaign next year given that everything else they have touched has turned to shit.

  • commentguy||

    For someone that doesn't care, you seem pretty worked up about it.

  • Outside the Box||

    We have much larger taxes in Washington State than Canada will have and it is still way cheaper than the black market.

  • jello.beyonce||

    I've no real problem with decriminalization of marijuana....but as the saying goes, you've got to be careful what you ask for.

    Marijuana will be the new tobacco.

    Tobacco was used for centuries as a medicine.
    With big tobacco business came plant modifications, additives, more pesticide use, increased potencies, and such, seeking ever-greater profit from that natural plant.

    Of all the studies linking tobacco use to cancer, none have focused exclusively on pure tobacco itself, only the highly-processed, additive-full garbage.
    Thus there's a good possibility the cancer is caused by the over 300 chemical additives approved for processed tobacco.

    Now that the multi-national monster Coca-Cola (which along with the other corporate giants is owned by the same largest institutional shareholders, like Vanguard, BlackRock, State Street, Fidelity, JP Morgan, etc., that own most everything else) is looking to get into the game, marijuana will become the new tobacco.
    It's possible beneficial effects will be countered with greater, growing negative consequences, via greater processing & manipulations.

    It fascinates me to see how big business can create trends, guised as grass-roots movements, suckering people into providing ever greater profits for the corporate machine.

    Is that really "freedom"?
    Freedom to do as the corporate Lords say you can do....for greater profit for them?

    You have been warned, suckers.

  • emkcams||

    It is likely that these issues will happen. But there is one difference between pot and tobacco that jello.beyonce (love that name! doesn't mention): pot has a history of being grown by individuals. Folks growing 4 plants in their basement. And there is an infrastructure of stores that sell equipment to these people. Also, many of the states wherein medicinal pot is legal, individuals have the right to grow for their own medicinal use.

    Yes, "Big Pot" can come in and control the market, but they have a steep slope to climb; steeper than that of tobacco.

  • commentguy||

    "used for centuries as a medicine" proves nothing since there are dozens of things used as medicine that have no therapeutic vale, e.g. half of the wacky pharmacopeia of Chinese traditional medicine.

  • Outside the Box||

    "corporate lords": I do not think the word "lord" thinks what you think it means.

  • jello.beyonce||

    Now, let's hear from another side & see what they got wrong....

    CMP's are raiding numerous LEGAL dispensaries across the country.
    The reason?
    The state failed to approve ANY private licenses on time. Thus even formerly licensed stores, were now unlicensed, and thus deemed illegal.
    The stores were expected to close shop, waiting the slow moving bureaucratic machine.

    Only nationally owned stores (and the government e-tailer) have been able to operate and sell since nationwide legalization.

    Good for the corrupt politicians and bureaucrats, bad for everyone else.

    Shortages are occurring because the government run dispensaries can't meet demand.

    Plus, individuals are mostly NOT allowed to grow their own.
    Quebec and Manitoba (among others), for example, have chosen to prohibit home cultivation of weed altogether.

    Yep, "legalization" apparently means it's legal only when you give the government a piece of the action.
    Isn't that how the Mob works?

    So, despite the rosy picture painted by this "article", it's not all unicorns & rainbows.

  • nbv87@hotmail.com||

    "Plus, individuals are mostly NOT allowed to grow their own."

    Reading the linked article, I count 10 of the 13 jurisdictions as allowing home cultivation. The only ones that specifically prohibit it are Quebec and Manitoba (note: not among others). And Quebec and Manitoba are not exactly the MOST populous provinces.

    Maybe it's not all unicorns & rainbows, but it's way more rational than the eff-ed up mess we have here in Washington State.

  • No Yards Penalty||

    Quebec is No. 2 by population. Nearly as many residents as the next two (Alberta and BC combined) and bigger than the remaining 6 provinces put together (by a wide margin). So yah, kind of a big deal.

  • vek||

    Well, even Canadians are allowed to screw up and do something right once in awhile!

    With that idiot Trudy running the country, this will probably be the only decent thing that gets done during his entire tenure.

  • Nuwanda||

    Modest taxes? Give them time. Witness the national sales taxes employed in various countries. They start out low and rise, rise, rise. It's the perfect way to grab with almost zero avoidance possible. Witness tobacco and alcohol taxes around the world. Most US readers wouldn't have a clue. Cigarettes $25-$30 pack. Gas $8-10 gallon, tax the bulk of the price.

    Marijuana is now now just differently regulated. Has there been a reduction of the bureaucracy associated with the drug? Imagine the growth in "education" programs. Administration. Tax gathering. All new functions.

  • General Ripper||

    From the Frozen North:

    I live in Ottawa, the illustrious capital city of the Frozen Dominion. The other day, a few days after the 17th, I was strolling through the Byward Market downtown, a stone's throw from the Parliament Buildings, and encountered the Hemp Factory pot shop. Naturally, I waltzed in to greet the new entrepreneurs of pleasure.

    Were there hundreds of people crushed in to buy their first legal mind-bender? No. The place was empty. After exchanging some business chat with the charming lady behind the counter, and making a few purchases, I went on my merry way.

    My observation, for what it's worth, is that legalization has made no difference whatever to people's behavior generally. All the hysterical claims of impending doom appear to be so much hot air.

    Oh, and the prices were quite reasonable too.

  • Outside the Box||

    In Washington, cannabis is far cheaper through the legal stores than it was in the black market, despite the 75% tax. I don't like the tax but they need to stop saying this falsehood. I bought 3.5 ounces the other day (a "quarter" in stoner speak) for $13. That was a $50 purchase in the black market if you were lucky.

  • Outside the Box||

    Hah, 3.5gs is actually an 8th. Good lord.

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online