NZMJ 1515.Indd

EDITORIAL

The Government’s proposal to legalise cannabis in New Zealand: 10 key questions Chris Wilkins, Marta Rychert

national referendum on the legal information (eg, price, product range) and status of recreational cannabis use “advice and recommendations” about A and supply in New Zealand will be products from within retail outlets. There held at the next general election in Sep- will be a home cultivation limit of two tember 2020.1 The referendum will involve cannabis plants per person or four plants voting to support or oppose the Coalition per household. Social sharing of up to 14 Government’s recently released fi nal draft grams of cannabis will be permitted. The of the Cannabis Legalisation and Control Bill CLCB will prohibit the public consumption (CLCB).2,3 The Government has indicated that of cannabis; the sale of cannabis products they will conduct a public education cam- with alcohol and tobacco; and any impor- paign in the months leading up to the refer- tation of cannabis. endum to inform voters about the details of 1. What will be the price of legal the proposal.2,3 The aim of this editorial is to highlight a number of key questions arising cannabis? Alcohol and tobacco research has shown from the fi nal CLCB release, and to raise that price is a particularly strong infl uence wider issues relating to the regulation and on level of consumption and related harm, enforcement of the proposed legal cannabis and, contrary to popular belief, heavy and market that go beyond the Bill. Our purpose younger users are particularly sensitive is to stimulate public discussion and inform to price.4–6 Cannabis is essentially a basic the upcoming public education campaign. agricultural crop, and drug policy analysts We believe the questions raised will be of have suggested that under legal production interest to readers regardless of whether conditions its price could conceivably fall they currently support or oppose cannabis to a fraction of the current black market legalisation. price.7 The price of legal cannabis in US Overview of the Cannabis states has declined by as much as 50% Legalisation and Control Bill since legalisation, refl ecting economies As proposed by the CLCB, the purchase of scale of legal production and growing and use of cannabis will be restricted to market competition.7–9 The CLCB includes those 20 years or older (two years older a provision to set an excise tax on different than the alcohol purchase age). There will cannabis products based on weight and THC be a daily purchase and possession limit content, but no indication of the level of the of 14 grams of cannabis per user. Sales respective product excise rate (cl269(2)). of cannabis will be restricted to licensed The key question is will the cannabis excise physical stores only (ie, no mail order be similar to beer (approx. 10% retail price) or internet sales), and there will also be and wine (15%), or more like the excise rate separate licensed public consumption on spirits (38%) or tobacco (76%)? A high premises for those who cannot consume at legal price for cannabis will reduce legal home (eg, people in shared living arrange- consumption and harm, and may make ments or renters). Advertising will be non-commercial legal home growing more banned except for the provision of objective attractive. Conversely, high legal prices

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may encourage purchasing from the black types. Furthermore, given the evidence of market. Yet, the legal cannabis market cannabis concentrates overseas, are these will provide a range of advantages beyond products consistent with the harm reduction strictly price, including convenience, safety objectives of the CLCB? and the absence of legal risk. Legal cannabis 3. How strictly will retail outlets be regimes that place too high a priority on reducing the black market will encourage regulated? Alcohol and tobacco research has shown weak regulatory regimes that generate high that higher outlet density and longer health costs.10 opening hours are associated with higher One way to address declining prices in levels of consumption and harm.5,15,16 Similar legal cannabis markets is to mandate a set results have been found for proximity to minimum price per unit, as has been imple- medicinal cannabis dispensaries.15,17,18 New mented in some countries for alcohol. The Zealand’s recent attempt to establish a CLCB includes a provision to raise the excise regulated commercial market for so-called for cannabis for a maximum period of 12 “legal highs” under the Psychoactive months if the price falls too much (cl263(2)). Substances Act 2013 (PSA) highlighted a However, the power is discretionary, time number of issues with retail outlets.19 The limited, and has no set minimum price for PSA required the development of Local when it would be activated. Approved Products Policies (LAPP) that set 2. What will be the maximum minimum physical distances between stores potency of products? and sensitive sites such as schools (often Historically, the THC level of cannabis 500 metres), but the PSA did not include any plant material from the black market has limits on the number of outlets or opening 19 been around 5–10%, but enhanced hydro- hours. As a consequence, some central ponic cultivation techniques have produced Auckland legal high stores operated on a 20 potencies as high as 15–20%.11,12 In US legal near 24-hour basis. cannabis markets, new cannabis concentrate Under the CLCB, the central government products with THC levels of over 50–60% Cannabis Regulatory Authority is tasked with have become increasingly popular.9,14 developing local license premise policies for Studies of higher potency cannabis, every district and city council in the country including concentrates, have found higher (ie, 67 territorial authorities in total). These risk of psychosis, psychosis relapse and policies will provide guidance with respect dependency.13,14 The CLCB includes a to the location and opening hours of retail maximum THC potency of cannabis plant of outlets (cl16(2)) and must take into account 15% THC (Schedule 8). This cap appears to the characteristics of the territory, location of be at the higher end of the levels currently sensitive sites (eg, schools, churches, sports found in the black market. The CLCB also facilities) and whether a retail outlet will includes provision for the sale of cannabis reduce the “amenity and good order” of the edibles and extracts (concentrates), but territory (cl16(3)). The Authority is required indicates these products will initially not be to “consult” with “local persons and groups approved (Schedule 7). The CLCB includes who may be affected” and local government potency levels for these products (Schedule authorities (cl16(6)(7)), but it is not clear 8), but they are expressed as milligrams “per what role local government will play and unit” and “per package”, and these terms the inﬂ uence these local groups will have. are not deﬁ ned. Furthermore, the potency During the PSA, there were a number of caps outlined in the CLCB do not appear to instances where there was a clear disconnect apply to home grown cannabis, creating between central government licensing of the potential for social sharing of higher legal high outlets and local government and potency products and leakage to the black community concerns about these outlets, market. The possibility of future concentrate indicating the need for early engagement and edible sales raises the question of what and communication of policy aims between will be the cap on potency on these product central and local government.19,21,22

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4. Which government agency will to issue an infringement notice than administer the new sector? proceed with an arrest under the previous approach.25 Cannabis users were also The CLCB establishes the Cannabis Regu- continued to be convicted and imprisoned latory Authority to regulate the new regime for non-payment of infringement notices.26,27 but does not state which government agency One way the CLCB could improve the like- will administer the new legal recreational lihood of payment of infringement fees is cannabis sector. This will be key to how to lower the fees set for infringements and/ the sector is perceived and regulated.23 or provide non-fi nancial resolution options, Government agencies with any kind of such as attending a cannabis education economic development mission (ie, business, session or completing community work. innovation or tourism agencies) will place greater emphasis on facilitating cannabis 6. How will purchase and business growth and jobs. For example, the possession limits be enforced? gaming machine regime is regulated by the The CLCB proposes a daily cannabis Ministry of Internal Affairs and they have purchase limit of 14 grams per day shown a willingness to respond to the needs (considered by offi cials to be suffi cient for of the gaming industry.24 Alternatively, a a week of regular use) (cl29). It is not clear health agency is more likely to focus on the how such a daily purchasing limit will be adverse health outcomes from cannabis use. enforced in practice without a real-time 5. How will the cannabis retail system that includes all retail outlets infringement scheme be operated? and collects personal identifying information from buyers to prevent them The CLCB includes provisions for civil purchasing the maximum daily quantity infringement fees of $200–$500 (NZD) for from multiple retail outlets. In Uruguay, a exceeding the 14-gram personal possession biometric system requires registered buyers or purchase limit, exceeding the personal to submit a thumbprint before making a plant cultivation limit, and for public use purchase.28,29 In New Zealand, police already and public cultivation (Part 3). Higher court give cannabis use and possession offences a fi nes of up to $1,000 are also included for very low priority,30 and following cannabis these offences. Criminal penalties remain legalisation it is likely that the monitoring for supplying cannabis to underage people of purchase limits will likewise receive low (ie, 19 years or younger in this case) police priority. (maximum four years imprisonment), selling without a license (up to two years 7. How will home cultivation be imprisonment), cultivating 10 or more monitored? plants (up to three months imprisonment), The limits outlined in the CLCB on importing more than 14 grams (up to two number of plants permitted for home culti- years imprisonment), and “dangerous” vation have been established to prevent production of cannabis concentrates without exploitation of home-grown production a license (up to two years imprisonment). for resale on the black market. In South The CLCB could thus potentially contribute Australia, organised crime groups sponsored to the Government’s wider aspirations individuals to grow the maximum home to reduce conviction and imprisonment grow limit and then combined the crop for rates, particularly among Māori.2 Progress sale on the black market.26,27 The CLCB home towards this objective will crucially depend plant restrictions will only be credible with on how the infringement scheme is applied, some plan of enforcement, but it is not clear and the willingness of offenders to pay what is planned or what agency will carry infringements and thereby avoid further out this enforcement. Enforcement does punishment through the courts. not have to be as intrusive as routine home In Australia, the introduction of inspections and could involve responding infringement schemes for minor cannabis to evidence of syndication and selling offences initially resulted in a counterin- of combined crops on the black market. tuitive “net widening effect” where police Enforcement of home plant limits also needs actually penalised more rather than less to be fl exible enough to take account of the cannabis users as it was easier for police requirement for seedlings to maintain two adult plants over the longer term.31

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8. What health warnings will be demographics, including youth and heavy 5,6,15,35 required? users. Commercial cannabis companies in the US have already recognised that daily The CLCB requires all cannabis products users are the “backbone” of the industry.36 to include mandated health warnings There are examples of alternatives to (cl172(1)a). Tobacco research has shown commercial supply of legal cannabis around these health warnings can reduce initiation the world including government monopoly and encourage smoking cessation.6 The size, at some level of the market,33,37 not-for- text and graphics of the health warnings profi t trusts operating retail outlets24,38 and have been found to be key to their effec- even cannabis social clubs providing both tiveness for tobacco products.6The question production and consumption places.39,40 The is will the same effective standards be advantages of non-commercial suppliers is applied for legal cannabis products. that they are not focused on expanding the 9. How will production be market and have wider social aspirations. monitored? The CLCB largely outlines a “commercial”, A key objective of cannabis legalisation albeit highly regulated, cannabis sector, but is to shrink or even eliminate the black does include options for non-commercial market. One component of this effort is and not-for-profi t supply options. These to ensure legal cannabis production is including home cultivation for personal not leaking into the black market and use (cl. 23–28); separate licensing for 29 vice-versa. Signifi cant black markets for “micro-cultivation” producers (referred to cannabis have persisted in jurisdictions as “small scale cultivation”) (cl58 and cl64); that have legalised cannabis. For example, prioritising licensing for cultivators who in Canada, 40% of cannabis users report partner with communities disproportion- 32 purchasing from the illegal market. The ately harmed by cannabis to generate social most effective way to monitor legal cannabis benefi t and employment (cl85(2)(a-c)); and production is a seed-to-sale system, as estab- prioritising, “where practicable”, licensing lished in many US states, which tracks each retail distributors who are “not-for- cannabis plant from seedling to retail sale. profi t applicants that can demonstrate a This system also provides excellent data to commitment to delivering social benefi t measure total production, illicit diversion, to the community” (cl88(a)). However, it project tax revenue, and track prices and is not clear at this stage what priority and 29 product types. Uruguay has taken this support these social benefi t operators will further by requiring users to register and actually receive, and consequently, what 29,33 then monitoring their purchases. Given the proportion of the larger market they the limited data available on cannabis use will supply. and markets in New Zealand,34 these options It appears the CLCB would not permit could be considered, with the appropriate cannabis social clubs similar to those that privacy protections, to provide important operate in Uruguay, Spain and Belgium.33,39,40 data to refi ne regulatory responses. The The CLCB allows home cultivation for CLCB includes provisions for a “tracking and personal use and social sharing of up to 14 recall” system (cl265(h)), but it is not clear grams of cannabis with others, but restricts whether this will be as comprehensive as a home cultivation to a maximum of four “seed to sale” system that involves tracking plants per household, seemingly preventing individual plants or will be routinely used to the larger communal crops required for monitor production and illicit diversion. a cannabis social club. New Zealand has 10. What will be the role for non- a longstanding sub-culture of hobbyist commercial suppliers? cannabis growers31 who, as has been seen Experience from the alcohol, tobacco, in Uruguay and Spain,33 will likely embrace gambling and most recently, “legal high” cannabis social clubs, and in doing so, will sectors indicates commercial operators will assist in the transition from black market to focus on expanding sales and targeting key legal regime.

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system, product labeling requirements, Conclusions and the priority and support that will be This editorial has identifi ed a range of given to non-commercial and social benefi t issues related to the CLCB on which the suppliers. We recommend the inclusion of Government could provide further infor- a formal minimum price for cannabis, the mation, including the level of the cannabis lowering of the cap on the THC potency of excise tax, maximum potency of edibles cannabis plant products, a set proportion and concentrates, the government agency of licenses for social benefi t operators, and to be tasked with administration of the new a framework to allow the emergence of sector, the proposed production monitoring cannabis social clubs.

Competing interests: Nil. Author information: Chris Wilkins, SHORE & Whariki Research Centre, Massey University, Auckland; Marta Rychert, SHORE & Whariki Research Centre, Massey University, Auckland. Corresponding author: Associate Professor Chris Wilkins, SHORE & Whariki Research Centre, Massey University, PO Box 6137, Wellesley Street, Auckland. [email protected] URL: www.nzma.org.nz/journal-articles/the-governments-proposal-to-legalise-cannabis-in-new- zealand-10-key-questions

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