LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 Inquiry into the use of Cannabis in Victoria

Dr Marta Rychert

Organisation Name: Your position or role:

SURVEY QUESTIONS Drag the statements below to reorder them. In order of priority, please rank the themes you believe are most important for this Inquiry into the use of Cannabis in Victoria to consider:: Public health,Mental health,Young people and children,Social impacts,Accessing and using cannabis,Education,Public safety,Criminal activity

What best describes your interest in our Inquiry? (select all that apply) : Academic and research

Are there any additional themes we should consider? Social equity and social justice, not-for-profit reform options, expungement of cannabis offences, preventing use of cannabis in pregnancy

Select all that apply. Do you think there should be restrictions on the use of cannabis? : Personal use of cannabis should be decriminalised. (Decriminalised: there are no criminal or civil penalties instead a person is referred to a drug diversion program or other health/ treatment service),Personal use of cannabis should be legal. ,Cultivation of cannabis for personal use should be legal.,Other – please explain. Sale via not-for-profit and regulated model

YOUR SUBMISSION Submission: The key challenge in reforming cannabis laws is to capture the benefits of legalisation (e.g. ability to control quality of legal cannabis), while avoiding the health and social problems associated with profit-driven commercial markets. There is a number of cannabis law reform options between prohibition approach and fully commercial alcohol-style legal market. They include cannabis social clubs (not-for-profit associations of cannabis consumers), social enterprises, community enterprises and public monopolies. These “middle ground” options have the potential to avoid the harmful aspects of the fully commercial industry (likely to lobby against public health measures such as price controls and potency limits) and should by considered by policymakers. Key aspects of public health regulations on legal cannabis include: price (controlled via appropriate taxes and minimum unit pricing), potency (controlled via legislated maximum potency limits, CBD:THC ratios and consideration of high-risk product types such as highly potent cannabis extracts), availability (controlled via regulations on density and location of outlets), minimum purchase age and a ban on advertising. Health warnings and public education (which could be funded via revenue from the legal regime) need to include often-overlooked risks (and unknowns) of effects of cannabis on pregnant women. Social equity aspects of cannabis law reform include appropriate measures for expungement of cannabis convictions and ensuring the diversity of licensed legal cannabis operators (via encouraging inclusion of communities disproportionately affected by cannabis prohibition). Evidence from other countries that recently reformed their cannabis laws (e.g. US states, Canada, Jamaica) suggests that ensuring equitable distribution of profits from legal cannabis market has proved challenging. Specific measures are needed in the law and programme support to communities on the ground.

1 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 Attachments: (1) "A community enterprise model for cannabis" - journal article (2) "How NOT to legalise cannabis" - book chapter

Do you have any additional comments or suggestions?:

FILE ATTACHMENTS File1: 5f484f9668035-community enterprise.pdf File2: 5f484f966ac4e-how not to legalise cannabis.pdf File3:

Signature: Marta Rychert

2 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299

11 How not to legalize cannabis Lessons from New Zealand’s experiment with regulating “legal highs”

Marta Rychert and Chris Wilkins

Introduction New Psychoactive Substances (NPS), sometimes also known as “legal highs,” are recreational drugs not controlled under the international drug control system but which “may pose a public health threat” (UNODC, 2013). Since 2009, over 800 different NPS compounds have been reported internationally (UNODC, 2018), well surpassing the number of illegal drugs controlled under the United Nations drug conventions. NPS belong to diverse chemical families, including synthetic cannabinoids (e.g. JWH-200, AB-FUBINACA), synthetic cathinones (e.g. alpha-PVP), piperazines (e.g. mCPP) and synthetic opioids (e.g. acetylfentanyl). They are often manufactured in China and India and shipped to consumer countries where they are marketed as “legal altern­ atives” to illegal drugs. The emergence of NPS has challenged international and national drug control systems over the last decade (Brandt, King and Evans-Brown, 2014). Overwhelmingly, the response to the influx of NPS has been to prohibit the sale of these compounds, either by adding them to the lists of prohibited sub­ stances in national drug laws, or by imposing bans on broad categories of substances defined by their similarity to already scheduled drugs (generic and ana­ logue approaches) (King, 2013). However, scheduling requires time and financial resources as substances have to be assessed for harmfulness and prohibition orders need to pass through legislative assemblies. By the time a given compound is pro­ hibited, a new synthetic substance will be developed and will appear on the market, illustrating the so-called “cat and mouse game” between NPS producers and national authorities (Brandt et al., 2014; Seddon, 2014). A number of coun­ tries, including Ireland, Poland, Romania, the United Kingdom and Australia, have responded by imposing so-called “blanket bans” on sale of any psychoactive products (Barratt, Seear and Lancaster, 2017; Hughes and Griffiths, 2014; Stevens, Fortson, Measham and Sumnall, 2015). These prohibitive responses have been criticized for restricting the use of NPS in legitimate industries and research (Kavanagh and Power, 2014), and for creating practical challenges with policing (Malczewski, 2015) and issues around the legal definition of “psychoactivity” (Reuter and Pardo, 2017; Stevens et al., 2015).

3 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 260 M. Rychert and C. Wilkins In contrast to the prohibitive approaches developed in other countries, the New Zealand Government decided to develop a regulatory approach to NPS (Wilkins, Sheridan, Adams, Russell, Ram and Newcombe, 2013). Between 2005 and 2008, so-called “party pills” containing benzylpiperazines (BZP) were allowed to be sold legally under the “Restricted Substances Regime” (RSR), a new drug classification established under the existing Misuse of Drugs Act 1975. In July 2013, five years after ending the regulated market for BZP, the New Zealand Parliament passed the Psychoactive Substances Act (PSA) 2013, the world’s first comprehensive pre-market approval regime for NPS. Under the PSA, product sponsors can legally manufacture and sell recreational drugs containing NPS, provided they can prove through toxicology and clinical trials that the products pose no more than a “low risk” to consumers’ health (New Zealand Parliament, 2013b). This novel approach received considerable inter­ national attention as a “long-term” (UN, 2013), balanced (EMCDDA, 2015), and “bold and innovative” response (UK NPS Expert Review Panel, 2014). However, both the BZP “party pills” regime and the synthetic cannabi­ noid market, which operated under the interim PSA provisions, failed to endure. In May 2013, an amendment to the Psychoactive Substances Act prohibited the use of evidence from animal testing in product approval applications, setting a prohibitively high bar for approval of any “legal high” product in the foreseeable future. As a result, there are currently no NPS products on legal sale in New Zealand, and indeed no applications for approval of an NPS have ever been made. This chapter analyzes the New Zealand attempts to regulate the legal high market and discusses implications for emerging regimes for recreational cannabis.

Policy context: New Zealand drug market and the new drugs phenomenon New Zealand, an island nation in the South Pacific populated by 4.5 million people, is separated from its neighbor Australia by some 1,500 km of the Tasman Sea. Its geographical isolation has long influenced the traditional illegal drug markets, with drugs that need to be smuggled from other coun­ tries, such as cocaine, MDMA and heroin, of uncertain quality and high price (Wilkins, Prasad, Wong and Rychert, 2015). Locally produced drugs, prim­ arily cannabis and methamphetamine, are much more widely available. As in other Western countries, cannabis has been the most widely used illegal drug for many decades, with the latest general population survey reporting 11.6 percent of adults (defined as 15 and over) used cannabis in the last year (Min­ istry of Health, 2017). The use, possession and supply of cannabis is pro­ hibited. The situation with methamphetamine is distinctive, with prevalence rates high by international standards (i.e. 0.8 percent last year use in the general population, see Ministry of Health, 2017). The scarcity and high price of drug types like MDMA contribute to the demand for alternative syn­ thetic stimulants and hallucinogens.

4 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 How not to legalize cannabis 261 Around 2000, New Zealand entrepreneur Matt Bowden developed a range of products containing the synthetic stimulants benzylpiperazine (BZP) and trifluoromethylphenylpiperazine (TFMPP) (Wilkins and Sweetsur, 2010). Bowden, previously addicted to methamphetamine, presented his product as a lower risk, safer alternative to methamphetamine (Kerr and Davis, 2011). His company and lobby group Stargate International (STAR standing for Social Tonics Advocacy and Research) started marketing BZP “party pills” on a commercial scale, with much of the manufacturing happen­ ing in India and China thanks to the unregulated status of BZP internation­ ally (Szalavitz, 2015). BZP “party pills” rapidly grew in popularity as a new recreational “legal high” product. It is estimated that by 2004, approximately five million legal BZP/TFMPP party pills had been produced, generating sales of 24 million New Zealand Dollars (NZD) per year (Wilkins and Sweetsur, 2010). STANZ (Social Tonics Association of New Zealand), a new party pills industry association, developed a voluntary “Code of Prac­ tice” covering aspects such as the quality and dosages of BZP products (including maximum strength), labelling and packaging (including the warning “do not consume with alcohol”) and retail sales, but attempts at industry self-regulation were not effective at reducing the potency of prod­ ucts and related harms (Wilkins and Sweetsur, 2010). Consequently, there were calls for a government response to address the growing popularity of BZP and uncertainties around potential health impacts.

Restricted Substances Regime (RSR): market regulation that didn’t happen In 2004, following an evaluation of BZP safety, the Expert Advisory Com­ mittee on Drugs (EACD) concluded that existing evidence of BZP-related health harms was insufficient to make an informed scheduling decision (EACD, 2004). While further government-commissioned research was being undertaken, the EACD recommended adoption of some form of government control over the existing BZP market. In 2005, a new regime for substances assessed by the government to be “low risk” was established by an amendment to the Misuse of Drugs Act. The so-called “Restricted Substances Regime” (RSR) imposed broad market regulations, including an age limit on sales (i.e. 18 years or older), restrictions on advertising in major media, and bans on the giving away of free samples as part of promotional activities (Sheridan and Butler, 2010). BZP was immedi­ ately included in the new schedule (New Zealand Parliament, 2005). The BZP industry continued commercial sales of their products under this limited regulatory scheme. It is estimated that in 2007/2008, at the height of BZP’s popularity, the industry was selling 200,000 party pills per month, with a product range of around 80 to 120 brands (Wilkins et al., 2013). More detailed government regulations for the RSR were intended, including product quality standards and maximum dose limits, but there were significant delays

5 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 262 M. Rychert and C. Wilkins in their release. The industry responded to the lack of progress with regulation by commissioning a public law firm to draft regulations (STANZ, 2007b) and a Code of Good Manufacturing Practice (STANZ, 2007a), which were subse­ quently submitted to the government (STANZ, 2007c). In 2008, based on new evidence of BZP-related health harms, including from previously com­ missioned government research (Thompson, Williams, Aldington, Williams, Caldwell, Dickson, and Beasley, 2006), BZP was rescheduled as a Class C drug and prohibited under the Misuse of Drugs Act, thereby removing it from the RSR regime. No other substance was scheduled under the RSR and the regime was ultimately abandoned in 2013. The industry responded to the ban on BZP by shifting production to non-BZP party pills and synthetic cannabinoids, which were not controlled by any legislation (Wilkins et al., 2013). Synthetic cannabinoids became increasingly popular after 2010 and, similarly to BZP products, were sold from convenience stores without any regulatory restrictions. Again, little was known about their health impacts and the speed of government response was limited due to the slowness of assessment and scheduling processes. Despite attempts to ban several synthetic cannabinoid compounds via temporary orders, the market continued to expand with replacement compounds. In early 2013, the Ministry of Health (MOH) estimated that approximately 200–300 psychoactive products were being sold from around 3,000–4,000 retail outlets in New Zealand (MOH, 2014e).

Psychoactive Substances Act (PSA): a promise of comprehensive legal control The ongoing problems with controlling NPS came to the attention of the New Zealand Law Commission (NZLC) in 2011, as part of their independent review of the country’s Misuse of Drugs Act. The Law Commission recom­ mended the development of a new pre-market approval regulatory regime requiring producers of NPS products to demonstrate the safety of their prod­ ucts before they are permitted to be sold on the legal market (rather than the government having to prove that the products are unsafe in order to remove products from the market). Forty-five recommendations on how the new pre- market approval regime should operate were included in the final NZLC report, including restrictions on retail sale and advertising (NZLC, 2011). The Psychoactive Substances Act (PSA) was passed in July 2013 with nearly unanimous cross-party support in parliament (119 in favor and 1 vote against the legislation) (New Zealand Parliament, 2013a). Under this regime, developers of NPS products can receive government approval to legally manufacture, import and sell their products, provided they can prove through pre-clinical and clinical trials that their products cause no more than a “low risk” of harm to their consumers (Wilkins, 2014a). The importation, manu­ facture, supply and possession of any other “unapproved” NPS is prohibited by default (Rychert and Wilkins, 2016b).

6 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 How not to legalize cannabis 263 Requirements for testing the safety of psychoactive products resemble the pre-market approval regime for medicines and are modelled on pharmaceuti­ cals standards developed by the International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use (ICH). This means that scientific evidence from a series of toxicology and clinical trials are required for each product application (PSRA, 2014a). The approval is granted for each separate product formulation (not substance), and thus the strength of the product cannot be modified once approval is granted. The New Zealand Ministry of Health have estimated that the cost of testing is likely to be 1–2 million NZD per product (MOH, 2013a). The product application fee is set at 175,000 NZD per product. While this might seem like a lot of money, returns from the market are likely to compensate the initial expenses. Estimated annual retail sales from a regulated synthetic can­ nabis market during the “interim phase” of the PSA implementation reached 140 million NZD (MOH, 2014e). The retail framework for the regime is broadly modelled on regulations for tobacco and alcohol. Approved recreational products are allowed to be legally sold from specialized licensed retail outlets. No food or alcohol can be sold from the same premises, and the PSA explicitly bans the sale of products from supermarkets, petrol stations, local convenience stores or alcohol retail outlets. Retail sales are only allowed to customers 18 years of age and over (which matches the legal drinking age in New Zealand). Further restrictions on location of licensed retailers, including minimum distance from “sensitive sites” such as schools, sports fields or churches, can be imposed by local councils. Advertising is limited to the “point of sale” only (i.e. no advertising in television, radio, or newspapers) and must be limited to objective informa­ tion about the product, such as active ingredients and the price. The PSA specifically prohibits advertising which conveys a message that an approved product is “safe.” While online sale of products is allowed, it can only be done through websites established specifically for this purpose (but not other internet platforms, including social media websites). Packaging for NPS prod­ ucts must include a list of ingredients, health warnings, contact details of the manufacturer and the telephone number of the National Poisons Centre (New Zealand Parliament, 2013b). The Psychoactive Substances Regulatory Authority (PSRA), a new govern­ ment agency established within the Ministry of Health, is tasked with overseeing implementation of the PSA. The PSRA has the ability to revoke any product approval if, after introducing the product to the market, reports about adverse effects emerge and the product is no longer considered to be “low risk.”

Issues with implementing the PSA during the “interim regime” When the PSA was passed in July 2013, much of the regulatory framework required for the regime to become fully operational had yet to be completed,

7 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 264 M. Rychert and C. Wilkins including the required safety testing standards for product approval. While these regulations were being developed by the PSRA, the so-called “interim regime” was established as a transitional regime. This allowed a limited number of prod­ ucts available on the market before passage of the PSA to continue to be sold subject to new retail and advertising restrictions until the full regime and related regulations were finalized (which was projected to happen by the end of 2013). The interim regime was deemed necessary to avoid the creation of a black market, which could have emerged if all existing products had been immedi­ ately taken off the market (New Zealand Parliament, 2013a). Forty-seven products received interim approvals, 40 of which were synthetic cannabinoid smoking blends containing compounds such as AB- FUBINACA, PB-22, CL-2201, or SGT-24 (Wilkins, 2014b). These products did not pass any safety tests but were deemed to be low risk as they complied with interim approval criteria, i.e. they had been on the market for at least three months before the PSA and there were no adverse effect notifications against them (New Zealand Parliament, 2013a, 2013b). One-hundred and fifty-two specialized retailers were licensed to sell the “interim approved” products, a 95 percent reduction in the number of outlets selling NPS prod­ ucts compared to pre-PSA when an estimated 3,000–4,000 unlicensed shops, mostly local convenience stores, sold NPS products. Managing the market during the interim stage of PSA implementation proved challenging (see implementation timeline, Figure 11.1). The interim PSA regime operated for ten months until the Government brought it to an abrupt end in May 2014, following reports of social disruption around retail stores and health risks from products (MOH, 2014e). Research on the PSA legislation and interim regime identified a range of issues including with identifying and monitoring interim approved products (Rychert, Wilkins and Witten, 2017), regulating the retail environment (Rychert and Wilkins, 2016a; Rychert, Wilkins and Witten, 2018), developing detailed regulations for the full PSA regime, and communicating the policy to the public and key stakeholders (Rychert and Wilkins, 2018b).

Identifying and monitoring interim approved products The products allowed to be sold on the interim PSA market turned out to be problematic, with ongoing reports of health harms and dependency issues (Rychert et al., 2017). Some of the compounds used in the interim approved products were particularly potent synthetic cannabinoids compared to THC in natural cannabis (Hermanns-Clausen, Kneisel, Szabo and Auwärter, 2013; Wilkins, 2014b), and have subsequently been banned in other countries (e.g. AB-FUBINACA, PB-22, PB-22–5F, 5F-ADBICA) (China Food and Drug Administration, 2015; Drug Enforcement Administration Department of Justice, 2014; German Federal Narcotics Act, 2014). A number of New Zealand studies have retrospectively identified serious health harms related to products approved for the interim regime (Glue, Courts, Gray and Patterson,

8 of 33 9 of 33 LC of LSIC Cannabis Submission Figure 11.1 PSA implementation timeline (Update of the timeline originally published in Rychert and Wilkins (2015a)). Inquiry in into Victoria 1299 Use LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 266 M. Rychert and C. Wilkins 2016; Glue, Courts, MacDonald, Gale and Mason, 2015; Macfarlane and Christie, 2015; Wilkins, Prasad, Wong, Graydon-Guy and Rychert, 2016). The approval of high-potency synthetic cannabinoids in the interim market meant that lower-strength and potentially “safer” products were not commer­ cially viable (Rychert et al., 2017). Some commentators have suggested that the legal criteria for interim approvals were too lenient and there were issues in applying the criteria in practice, i.e. interim approvals relied on data about adverse events from specific products, which was largely not available at the time the interim PSA regime was established (Rychert et al., 2017). Issues with harmfulness were exacerbated by the lack of manufacturing controls during the interim regime. The Code of Manufacturing Practice was finalized by the PSRA and came into force only in January 2014, i.e. six months into the interim regime (MOH, 2014d), meaning that for most of the interim regime, there was no specific mechanism for monitoring manufacturing standards. The introduc­ tion of the new standards in the Manufacturing Code resulted in the suspension of all ten interim licenses to manufacture products (MOH, 2014e). The system for monitoring product safety was not fully developed at the time the interim regulated market was established, and hence the process for removing interim approved products that caused harms lacked speed and effi­ ciency (Rychert et al., 2017). The framework to assess the risks of interim products was developed and released two months after the PSA was enacted (MOH, 2013b). The system relied on anonymous telephone calls from the public to the free “Drug and Alcohol Helpline” and National Poisons Centre, reports sent by medical professionals to the Pharmacovigilance Centre, and reports made by a subset of hospital emergency units (MOH, 2013b). However, health professionals appeared to be unaware of the report­ ing system, raising concerns about under-reporting of adverse events from the approved products (Rychert et al., 2017). The existing system for recording hos­ pital admissions in New Zealand (International System of Classification of Dis­ eases (ICD)) did not integrate well into the product monitoring system as it does not include codes specific to synthetic cannabinoids (let alone specific products) and the coding was not applied consistently across different district health boards (Rychert et al., 2017). In retrospect, drug community services and NGOs expressed concerns that the system was complex and confusing for consumers and their families. Eleven products were withdrawn from the market during the interim regime: five in January 2014 (Wilkins, 2014b) and six in May 2014 (MOH, 2014a) (i.e. a mere week before the interim regime was ended).

Controlling interim retail sales Challenges were identified with monitoring the compliance of interim licensed retailers under the new PSA framework, including the age restrictions on pur­ chase (i.e. 18 years+) (Rychert et al., 2018). Other problematic retail behaviors included the operation of shops during late night and early morning hours (as there are no legal rules on retail hours under the PSA), and the price discounting

10 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 How not to legalize cannabis 267 of products (driven by market competition). Some commentators claim that the reduction in the number of retail outlets under the interim regime (i.e. down from 3,000–4,000 convenience stores to 150 licensed outlets) concentrated a large number of customers at licensed shops (the so-called “bottleneck effect”), which then increased the visibility of outlets and related social nuisance such as queuing, begging and intoxication (Rychert et al., 2018). Targeting young and low-income customers was among the business strategies adopted by some indus­ try actors in response to market competition (Rychert and Wilkins, 2016a). There have also been reports that some retailers used price-cutting as a strategy to attract customers (Rychert and Wilkins, 2016a) and offered to sell products on credit to customers awaiting social welfare payments (Rychert et al., 2018). The PSA does not include any special price control provisions (e.g. excise tax or minimum pricing). Although it was acknowledged that an excise tax should be applied, policymakers indicated they were reluctant to do so due to the technical difficulties of choosing an appropriate level of tax without knowledge of how the new market would develop, and agreed to revisit the issue in the future (New Zealand Parliament, 2013a). Under the PSA, local government authorities are granted powers to limit the operation of retail outlets in their district via so-called Local Approved Product Policies (LAPP). LAPPs can include rules about the density of retail outlets and define a minimum distance that retail outlets are required to be from sensitive sites, such as schools, churches or drug treatment facilities (i.e. typically 500 meters). However, there were significant delays in developing these policies; by the end of the interim regime, only 5 out of 71 local councils had developed a LAPP (Anderson, 2014). Stakeholders from local councils explained that delays were caused by not having the financial resources to develop these policies and conduct related public consultations, and by general community opposition to the regime. They also expressed resentment about the lack of local body-specific consultation when the regime was being developed (Rychert et al., 2018). Some councils demonstrated their opposition by implementing LAPPs that severely restricted the operation of retail outlets in their districts. For example, the LAPP developed in Hamilton included bus stops as “sensitive sites,” as they are places where children gather, and this severely reduced the number of places where retail outlets could be located. The industry lobby group challenged the Hamilton LAPP in court (The Star Trust v Hamilton City Council, 2016) but the case was dropped after the ending of the interim regime.

Public communications and regulatory workload Increasing public opposition to the interim PSA regime emerged in response to the opening of retail outlets in local neighborhoods and the ongoing reports of adverse effects from products. Public opposition may have been exacerbated by a lack of clear communication about the aims of the PSA early in the policy process. For example, during parliamentary debates on the PSA, one politician supported the PSA in the hope “it will send them (the industry) out of business”

11 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 268 M. Rychert and C. Wilkins (New Zealand Parliament, 2013a). In public announcements, restrictive regu­ latory measures were emphasized, perhaps adding to the misunderstanding about the PSA among the general public (Rychert and Wilkins, 2018b). For example, 7 out of 72 written submissions from the general public expressed their support for the PSA under the mistaken understanding that it intended to impose a ban on all legal highs (Rychert and Wilkins, 2018a). Some comment­ ators linked public opposition to the “bottleneck effect” which increased visi­ bility of licensed retailers, and in turn, attracted negative media attention. Indeed, media reporting during the interim regime has been described as “biased” and “sensational,” with a focus on negative stories featuring drug dependency and public nuisance (Rychert et al., 2018). The public backlash and related media interest added to the workload of the PSRA. Stakeholders directly involved in the regulatory regime described how their day-to-day work focused on managing the regime, including responding to legal challenges from the industry (when an individual product or license was revoked) and responding to media queries, leaving little time to work on regula­ tions for the full PSA framework (Rychert et al., 2018). Finalizing the product testing regime was originally projected to take no more than six months and be completed by the end of 2013 (MOH, 2014e). However, the Draft Product Approval Guidelines were not actually released until November 2014 (i.e. six months after the ending of the interim regime). The Code of Manufacturing Prac­ tice was the only regulatory instrument developed for the full PSA regime that entered into force during the interim regime (January 17, 2014) (MOH, 2014d). Stakeholders directly involved in the regime believed that resource limitations at the PSRA, and an underestimation of the scale of the regulatory work required, were the reasons for these delays (Rychert et al., 2018).

Psychoactive Substances Amendment Act 2014: policy U-turn Issues with products, retail outlets and the public backlash, in combination with political pressure created by the impending general election (scheduled for September 2014), resulted in an abrupt end to the interim regime (Rychert and Wilkins, 2018b). In May 2014, the government passed an amendment to the PSA which revoked all interim product approvals and interim retail licenses. The amendment was passed under urgency, without public consultation or a Select Committee process. While the ending of the interim regime has been widely viewed as a setback, a potentially more fatal impact of this amendment was the decision to ban the use of evidence from animal tests (including tests conducted overseas) (New Zealand Parliament, 2014a; PSRA, 2014a) in future product approval applications (Bell, 2015; Schep, Gee, Tingle, Galea and Newcombe, 2014). The animal testing ban followed public protests against the harming of animals for the purpose of testing products with no therapeutic effect (Ministry of Health, 2014; New Zealand Par­ liament, 2014a). The issue of testing psychoactive products on animals had been raised during the initial public consultation process in early 2013, but the Select

12 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 How not to legalize cannabis 269 Committee considered it “not relevant to the purpose of the Bill” and oral sub­ missions regarding animal testing were not heard (New Zealand Health Com­ mittee, 2013). As originally enacted, the PSA allowed animal testing only in instances where there was no in vitro alternative. The legislation did not contain any limitation on the animal species allowed to be used for product testing. This led to widespread concerns about the possibility of testing NPS products on com­ panion animals, such as “beagle dogs,” and this concern was manifested in public marches and petitions throughout 2013 and into 2014 (MOH, 2014e; New Zealand Anti-Vivisection Society, 2014; New Zealand Parliament, 2014a). After the amendment, the work on regulations continued, and in Novem­ ber 2014, the regime was open to receive and assess product applications under the newly released Psychoactive Substances Regulations 2014 and related Product Approval Testing Guidelines (MOH, 2014c; PSRA, 2014a). No product applications have been received to date (as of February 2019), with the ban on the use of animals for the testing of products identified as a major challenge to obtaining the necessary evidence for regulatory approval (Rychert and Wilkins, 2015a, 2015b; Schep et al. and, 2014; Wilkins and Rychert, 2017). The Psychoactive Substances Regulatory Authority (PSRA) has gone so far as to state that “it is unlikely that a product can be shown to pose no more than a low risk of harm without the use of animal testing,” suggesting the PSA is now unworkable (PSRA, 2014a).

Implications for other countries: how not to legalize cannabis? Despite two attempts to regulate the market for “legal highs,” there are cur­ rently no recreational NPS products allowed for sale in New Zealand. The troubled implementation of the Restricted Substances Regime and the Psy­ choactive Substances Act provides lessons for other countries which may be contemplating regulating recreational drugs, including natural cannabis. Indeed, there are many similarities to designing and implementing cannabis legislation as illustrated in Table 11.1.

Unrealistic time frames and insufficient planning Perhaps the biggest lesson is that significant time and planning are required to develop a comprehensive and detailed regulatory framework for a recreational drug. The implementation of regulations on the quality and safety of BZP products under the Restricted Substances Regime took over two years (by which time BZP had already been prohibited under Schedule C of the Misuse of Drugs Act). Finalization of the product testing framework for the PSA took one and a half years, instead of the anticipated six months, by which time the PSA had effectively been made unworkable by an amendment to prohibit the use of evidence from animal testing. After the abrupt ending of the interim PSA regime in May 2014, one New Zealand official gave the advice to “keep

13 of 33 Table 11.1 Comparison of selected issues in the design and implementation of legal and regulatory responses to recreational drugs in NZ, Colorado, Washington and Uruguay

“Low risk” psychoactive Recreational cannabis regimes products regime

NZ Colorado Washington Uruguay Level of law National law State constitution (art. 18, s. 16) State law National law PSA 2013 (conflict with federal law) (conflict with federal law) Ley 19.172 Government PSRA (MOH) Marijuana Enforcement State Liquor and Institute for the Control agency Division (Department of Cannabis Board and Regulation of and legal context

Organizational Revenue) Cannabis (IRCA) Legal access Licensed retailers Licensed retailers, Licensed retailers Licensed pharmacies, channels Home-growing for private Home growing for private 14 use (up to 6 plants, 3 in use (up to 6 plants) of flower) Registered clubs 33 Licensing - Products - Retailers - Retailers - Retailers (i.e. pharmacies) - Retailers- - Cultivators - Producers and processors - Cultivating Manufacturing- - Manufacturers (i.e. cultivating and - Manufacturing Import - Testing facilities manufacturing) - Club members (users) - Research

Price control GST only (general sales 15% excise tax on sale from 37% cannabis excise tax “Variable fee” (prices set by LC of

measures tax) cultivator to retailer; 15% IRCA) LSIC sales tax Cannabis Submission

Education and No mention of Colorado Revised Statute (§ Initiative 502 (part 4, s. Ley 19.172 (art. 9) requires Inquiry prevention prevention and 25-3.5-1001 through 28) and Revised Code cannabis education to be

provisions education specific to 25-3.5-1007) requires of Washington (CW integrated into public in into the use of approved implementation of 69.50.540) require education system Victoria 1299

products in NZ laws education, public awareness establishment of Use and prevention messages for cannabis prevention retail cannabis and public health

Policy content (from legal access channels) Policy content (from legal access programs

33 of 15 Table 11.1

Policy content

continued detsn Regulated,allowedat Advertising Delegation of sradsl R18,salelimits(“no User andsale authorities power tolocal etitosmorethan2 restrictions Yes –LocalApproved NZ Recreationalcannabisregimes products regime “Low risk”psychoactive mainstream media prohibited in “point ofsale”but of licensedretailers can restrictlocation Products Policies Regulations 2014) Substances – Psychoactive products atatime” Regulated, e.g.noadvertising Yes –localauthoritiesmay 2,prhs n ossinR21,purchaseand R21, purchaseandpossession Colorado Retail Marijuana Code) Related totheColorado under 21(PermanentRules more than30%audienceis reliable evidencethatno on TVandradiounless 16, point5) retailers intheirlocalities(s. place, manner,numberof enact regulationsontime, iis(pt z(85g) possessionlimits(upto limits (upto1 oz (28.5 g))

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continued

Submission Submission 1299

Cannabis Cannabis of Victoria Victoria in

LC LC Inquiry Inquiry LSIC into into Use Use “Low risk” psychoactive Recreational cannabis regimes products regime

NZ Colorado Washington Uruguay Who initiated Parliament Citizen initiative Citizen initiative Parliament policy change? (“Amendment 64”) (“Initiative 502”) Legislative process Shorter Select Standard Standard Standard Committee (May 2013) Public support at Unknown 55% support, 45% oppose 56% support, 44% Opinion polls: ~30% the time of (from analysis of public oppose support, ~60% oppose, change submissions from 5–10% don’t know individual citizens: 50% support, 32% 16 oppose) of How long from Same day (July 2013) 1 year 2 months 1 year 8 months (Nov 8 months – home growers; 33 the law to the (Nov 2012–Jan 2014) 2012–Jul 2014) 10 months – clubs; first shop? pharmacies – 3 years 7

Policy process months (Dec 2013–July 2017) Major political Associate Minister of No mention in academic No mention in President José Mujica

changes during Health Peter Dunne literature academic literature stepped down from LC of

implementation? out of office office March 2015 LSIC between June 2013 Cannabis Submission

and January 2014 Inquiry Major challenges Animal testing ban Product quality and testing Product quality and Supply at pharmacies;

(purity, potency), testing (purity, reluctance to register as a in into monitoring impacts, potency), monitoring user; opposition from Victoria 1299 industry influence impacts, industry pharmacists Use influence

Compiled through legal research, review of academic literature and policy documents (Colorado Department of Revenue, 2013; Cruz, Queirolo and Boidi, 2016; EMCDDA, 2016; Hall and Lynskey, 2016; Roffman, 2016; Room, 2014; Rychert and Wilkins, 2015b; Subritzky, Pettigrew and Lenton, 2017; Walsh and Ramsey, 2015) LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 transitional provisions short, if at all” (Hannah, 2014), illustrating the challenges with managing the market and developing regulations for the full regime at the same time. Investing time in planning and setting realistic implementation time frames before the cannabis law reform actually takes effect may help secure a more predictable and stable implementation process.

Inadequate financial and personnel resources The design and implementation of a new regulated drug market requires significant resources, including financial, staff and organizational assets. Under the Psychoactive Substances Act, a range of fees and levies have been imposed on the legal high industry, including a product application fee of 175,000 NZD (MOH, 2014b), to cover the direct and indirect costs of man­ aging the regime (s. 90–97 PSA) (PSRA, 2014b). However, these high fees were not required for interim product approvals, resulting in underfunding of the PSRA during the interim regime. The limited number of personnel and their relative lack of experience with drug policy issues were identified as challenges during the implementation of the PSA (Rychert et al., 2018). One lesson for jurisdictions interested in regulating legal recreational can­ nabis is to secure a budget and people with relevant expertise to develop the required regulatory frameworks. Some commentators have suggested that effective health-focused regulation can be achieved by “choosing an aggres­ sive regulatory agency” to manage the new cannabis markets (Caulkins, 2016); for example, an agency located within the portfolio of health rather than government revenue. While this may be true for some jurisdictions, based on the New Zealand experience, it is fair to conclude that relevant expertise and stringent regulations should not be taken for granted based only on the assumed culture of the government agency.

Not covering the basics: prices and availability Evidence from tobacco and alcohol identifies price control (product taxes and minimum prices) and availability restrictions as some of the most powerful regulatory tools to control consumption and related harm (Babor, Caetano, Casswell, Edwards, Giesbrecht and Graham, 2010). Yet, there were no special price control mechanisms under the Restricted Substances Regime and the Psychoactive Substances Act (i.e. either excise tax or minimum pricing), which may have contributed to the declining prices of legal high products over the years, and the “price wars” between retailers. The lack of regulation of retail opening hours meant consumers were able to purchase legal highs when alcohol stores were required to close, an outcome described by communities as “ridiculous” (Rychert et al., 2018). On the other hand, restrictions on the number and location of retail outlets during the interim PSA regime meant large numbers of buyers were concentrated at each retail outlet (known as the “bottleneck effect”), increasing the visibility of the shops, related neighborhood disruption and ultimately attracting negative media attention.

17 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 274 M. Rychert and C. Wilkins In the context of cannabis regulation, there has been extensive policy debate about price control options, e.g. what tax rate to apply and what the tax base for these products should be (i.e. weight of a drug sold, value of a drug or a “unit of intoxication,” such as THC) (Caulkins and Kilmer, 2016). Technical difficulties should not discourage regulators from imposing a price control mechanism which can be adjusted later if needed. With regard to controlling the number of retail outlets, the New Zealand experience shows that careful consideration needs to be given to meeting current demand with adequate supply, without encouraging an expansion of demand via a prolifer­ ation of outlets and availability.

Without risk management and a vigilance plan While the Restricted Substances Regime simply allowed the legal sale of BZP products without detailed regulations on product safety, the Psychoactive Sub­ stances Act provided a much more sophisticated framework for assessment and monitoring of products, even during the interim stage of implementation. Under the interim PSA, regulation focused on specific products rather than generic substances, which improved regulatory control. Product formulations could not be changed once regulatory approval had been granted. The intro­ duction of a new product with the same ingredients but higher potency would require a separate regulatory approval. If anything, the legal cannabis regimes to date have been less focused on the safety of product types, and consequently have been surprised by the emergence of cannabis-infused products and con­ centrates with high health risks (Subritzky, Pettigrew and Lenton, 2016). Adopting a product-based regulatory regime for cannabis, including maximum limits on THC content, could be one possible solution to addressing the prolif­ eration of high-potency cannabis. An alternative approach might be to set a maximum potency limit for all cannabis products. The New Zealand experience also highlights the need for an advanced system for monitoring adverse events from legal recreational products, including integration of existing data collection systems. The challenge is to set up a system that is highly responsive and able to remove unsafe products from the market as quickly as possible.

Without stakeholders and public on board The New Zealand experience also highlights the importance of effective communication with the public and relevant stakeholders involved in the development and implementation of a new regulatory regime (including medical professionals, community representative groups, other government agencies, local government bodies and any other professional groups that may be relevant in cannabis law reform, e.g. pharmacists). Stakeholders should be informed about their potential role in the new regime and allowed time to provide feedback and disseminate knowledge among their peers.

18 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 How not to legalize cannabis 275 The analysis of the PSA implementation process suggests that some aspects of the implementation process (e.g. monitoring harms from interim approved products; development of LAPPs) could have been improved with more extensive stakeholder consultation and communication. On the other hand, some issues raised in the consultation process (e.g. testing the products on animals; the need to control product price via a dedicated excise tax) were simply ignored by policymakers. The subsequent re-surfacing of these issues during the implementation process suggests that more careful consideration of stakeholder feedback may have improved the implementation process. The extent of public support for the drug law reform is another important factor to consider (Cruz, Queirolo and Boidi, 2016). One lesson for emerg­ ing cannabis regimes is to probe public opinion about the proposed policy change and facilitate an honest debate about cannabis regulation in the media. In New Zealand, findings from media opinion polls indicate that public support for the PSA regime declined towards the end of the interim regime (Smith, 2014). This may reflect the potential for public revision of support for drug law reform once people are faced with the reality of retail outlets and legal products. This indicates a need for ongoing monitoring of public support as reforms are implemented.

With industry influence (versus input) The role of the legal high industry in the process of developing the Restricted Substances Regime and the Psychoactive Substances Act was not always clear and transparent, leaving questions about their influence on the final shape of the laws and regulations. Given that the legal high industry freely admitted they were actively lobbying for policy change to a regulated market approach (Rychert and Wilkins, 2016a) and had a clear monetary interest in industry-friendly regulation, greater transparency in interactions with government officials would have been desirable. In the context of emerging cannabis regimes, establishing clear rules around engagement and consultation between government officials and commercial cannabis industry actors could prevent problems with industry influence. One possible approach is to adopt rules similar to those set in the Framework Convention on Tobacco Control (Article 5.3), under which the industry is excluded from the policymaking processes (WHO, 2008). While input from the regulated industry cannot be avoided at times (especially when highly technical aspects of regulation are considered), legislation should guard against commercial influence on laws and regulations.

Without prevention and education campaigns Neither the Restricted Substances Regime nor the Psychoactive Substances Act regime addressed the need to educate the public concerning the health risks of approved legal high products. Public health education was limited to the health warning on product packaging and advice volunteered by the retail staff.

19 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 276 M. Rychert and C. Wilkins Although existing evidence of the effectiveness of education and prevention campaigns in the area of alcohol and other drug use remains limited (with little overall effect of such campaigns on long-term patterns of use and harm, high costs compared to alternative policy interventions such as taxes and retail zoning and only a modest effect of some community-based interventions see Babor et al., 2010), we argue that public education alongside price control and other availability control strategies would be worthwhile in contributing to a wider public health approach. Education campaigns are also a useful mech­ anism for engaging with the public, something that was lacking during the legal high policy process in New Zealand. Public education may be particularly important for cannabis (as opposed to alcohol) because its newly legal status may mean that many new users are not familiar with likely effects. To secure effective implementation of such a campaign, the public agency and external partners responsible for education should be clearly identified and funding secured (e.g. as a percentage of product tax or other industry fees).

Without a “plan B” With adequate planning, resourcing, stakeholder engagement and regulatory controls, the chances are that setbacks along the cannabis law reform pathway can be minimized. Yet, as the New Zealand experience with the regulation of “legal highs” shows, it is difficult to predict how the market, consumers and communities will respond to a new legal drug market. Consequently, devising contingency plans (e.g. imposing further restrictions on sales; remov­ ing suspicious products from the market; engaging in targeted media cam­ paigns) may be needed if a “worst case” scenario materializes. From a policy perspective, measured responses are preferable to a complete overhaul of policy (such as happened with the PSA amendment in New Zealand), as the latter is likely to undermine the credibility of drug reform in general.

Concluding remarks This chapter aimed to analyze the troubled implementation of regulatory regimes for “legal highs” in New Zealand and draw lessons for other countries considering regulatory approaches to cannabis. We have shown that both the Restricted Substances Regime and the interim Psychoactive Substances Act market suffered from insufficient regulation on pricing, availability and product safety. Insufficient planning, resourcing and limited engagement with key stake­ holders during the policy development and implementation stages were identi­ fied as factors in the problems experienced during the implementation process. Industry influence on regulation-making was also identified as problematic, reflecting the need to establish clear legal rules for engagement between govern­ ment and commercial actors during the drug law reform process. Perhaps the biggest lesson for emerging cannabis regimes is to take a con­ sidered approach to drug law reform, both in terms of legislating adequate and detailed market controls and adopting a cautious policy process with

20 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 How not to legalize cannabis 277 wide stakeholder consultation, public communication and buy-in and adequate planning. Given the issues with managing numerous products and the potential for significant commercialization, a cautious approach to opening up a new recreational cannabis market is recommended. This could be achieved by regu­ lating the number and types of different cannabis products allowed on the legal market, and their potency. A case-by-case approval process for products rather than generic compounds, modelled on the PSA provisions, could be adopted to provide greater regulatory control over retail markets. The above suggestion illustrates that there were some positive elements in the way “legal highs” were regulated in New Zealand. Overall, the Restricted Substances Regime and subsequently the Psychoactive Substances Act moved towards more comprehensive regulation of the market. Some commentators even suggested that the interim regime was ended prematurely, as responsible officials were just starting to get control of the numerous chal­ lenges related to monitoring the products and enforcing the law around retailers (MOH, 2014e; Rychert et al., 2017). As of early 2019, progress with the PSA has been stalled by the ban on animal testing included in the May 2014 amendment, which has effectively prohibited all existing products and prevented any new product applications. This has not escaped the attention of some commentators who argue the PSA is essentially “prohibition under the guise of reform” (Buchanan, 2016). This view illustrates how prohibitively high regulatory standards can undermine the credibility and legitimacy of drug reform laws. Meanwhile, a new coali­ tion government in New Zealand has signaled its interest in drug policy reform, with a national referendum on cannabis law reform to be conducted at the next general election in 2020 (Walls and Cheng, 2018). Although some have previously suggested that the PSA could be used to regulate legal recreational cannabis products in New Zealand (New Zealand Herald, 2017), the government is now developing new cannabis-specific legislation. The learnings from the problematic implementation of RSR and PSA will con­ tinue to be relevant for this new process.

Acknowledgments The analysis in this chapter was supported by the Marsden Fund Council managed by New Zealand Royal Society Te Apārangi (MFP-MAU1813).

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25 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 282 M. Rychert and C. Wilkins (TFMPP) and alcohol safety study. Report for the Ministry of Health. Retrieved from www.health.govt.nz/system/files/documents/publications/bzp-report-08.pdf. UK NPS Expert Review Panel. (2014). New psychoactive substances review. Report of the Expert Panel. Retrieved from www.gov.uk/government/uploads/system/uploads/ attachment_data/file/368583/NPSexpertReviewPanelReport.pdf. Archived by Web Cite® at www.webcitation.org/6VXQmAGNd. UN. (2013). Report from expert consultation on New Psychoactive Substances, Vienna. Com­ mission on Narcotic Drugs. Retrieved from www.unodc.org/documents/commissions/ CND/CND_Sessions/CND_57/E-CN7-2014-CRP01_V1400178_E.pdf. UNODC. (2013). The challenge of new psychoactive substances. A report from the global SMART programme. Retrieved from www.unodc.org/documents/scientific/ NPS_2013_SMART.pdf. UNODC. (2018). World drug report 2018. United Nations Office on Drugs and Crime. Retrieved from www.unodc.org/wdr2018/. Walls, J. and Cheng, D. (2018). Justice Minister confirms recreational cannabis refer­ endum at 2020 election. New Zealand Herald. Retrieved from www.nzherald.co. nz/nz/news/article.cfm?c_id=1&objectid=12178729. Walsh, J. and Ramsey, G. (2015). Uruguay’s drug policy, major innovation, major chal­ lenges. Retrieved from www.wola.org/publications/uruguay_s_drug_policy_major_ innovations_major_challenges. WHO. (2008). Guidelines for implementation of Article 5.3 of the WHO Framework Convention on Tobacco Control. Retrieved from www.who.int/fctc/guidelines/article_5_3.pdf. Wilkins, C. (2014a). A critical first assessment of the new pre-market approval regime for New Psychoactive Substances (NPS) in New Zealand. Addiction, 109(10), 1580–1586. Wilkins, C. (2014b). The interim regulated legal market for NPS (“legal high”) products in New Zealand: The impact of new retail restrictions and product licensing. Drug Testing and Analysis, 6, 868–875. Wilkins, C., Prasad, J., Wong, K., Graydon-Guy, T. and Rychert, M. (2016). An exploratory study of the health harms and utilisation of health services of frequent legal high users under the interim regulated legal high market in central Auckland. New Zealand Medical Journal, 129(1431), 51–58. Wilkins, C., Prasad, J., Wong, K. and Rychert, M. (2015). Recent trends in illegal drug use in New Zealand 2006–2013: Findings from the 2006, 2007, 2008, 2009, 2010, 2011, 2012 and 2013 Illegal Drug Monitoring System (IDMS). Auckland: SHORE & Whāriki Research Centre, Massey University. Retrieved from www.massey.ac. nz/massey/learning/departments/centres-research/shore/projects/illicit-drug­ monitoring-system.cfm. Wilkins, C. and Rychert, M. (2017). Recent developments with the New Zealand regulated market approach to “low-risk” psychoactive products. Addiction, 112(1), 34–36. Wilkins, C., Sheridan, J., Adams, P., Russell, B., Ram, S. and Newcombe, D. (2013). The new psychoactive substances regime in New Zealand: A different approach to regulation. Journal of Psychopharmacology, 27(7), 584–589. Wilkins, C. and Sweetsur, P. (2010). Differences in harm from legal BZP/TFMPP party pills between North Island and South Island users in New Zealand: A case of effective industry self-regulation? International Journal of Drug Policy, 21(1), 86–90.

26 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 International Journal of Drug Policy 67 (2019) 72–78

Contents lists available at ScienceDirect

International Journal of Drug Policy

journal homepage: www.elsevier.com/locate/drugpo

Commentary A ‘community enterprise’ model for recreational cannabis: Lessons from alcohol licensing trusts in New Zealand T ⁎ Marta Rychert , Chris Wilkins

SHORE & Whāriki Research Centre, College of Health, Massey University, New Zealand

ARTICLE INFO ABSTRACT

Keywords: The legalisation of cannabis on the American continent in recent years has reinvigorated calls for cannabis law Cannabis law reform reform in many countries. Yet researchers have described potentially negative public health and social impacts Regulated drug markets of profit driven commercial markets for cannabis. Consequently, they have suggested exploring a number of Community enterprise alternative regulatory options, such as “not-for-profit” or “for-benefit” organisations. However, many of these new models are yet to be developed in detail. This paper presents a “community enterprise” model for re- creational cannabis based on the alcohol licensing trusts which have existed in New Zealand for many decades. Alcohol licensing trusts are community-owned entities which operate alcohol retail outlets and return a portion of their profits back to local communities in the form of grants, loans and donations. The principal benefits of the “community trust” model are suppressing the commercial incentive to expand the market, establishing statutory obligations to distribute revenue back to the community, and establishing community governance over alcohol sales. The removal of a strong commercial incentive and community accountability may also contribute to lower levels of availability, higher prices and less harm. A further benefit is providing the local community with some oversight of a trust’s commercial activities via community elections of the trust board and the ability to call a “community poll” to vote on the future existence of the trust. Our proposed community cannabis licensing trust model seeks to address some of the challenges experienced by alcohol licensing trusts in New Zealand, including the lack of general oversight and balancing the commercial and social aims of the trusts. A limitation of this model includes a lack of research and evaluation of the existing alcohol licensing trusts and further research in this area would inform the application of the model to cannabis.

Introduction Decorte et al., 2017; Decorte, 2018; Wilkins, 2018). The challenge in designing new legal regimes for cannabis is to capture the benefits of As policymakers on the American continent experiment with legal legalisation, while avoiding the health and social problems associated markets for cannabis, researchers have increasingly described poten- with profit-driven commercial markets. tially negative health and social developments from these new com- In this paper we explore a “community enterprise” model for re- mercial markets. Issues include declining prices (Smart, Kilmer, creational cannabis based on the community alcohol licensing trusts Davenport, & Midgette, 2017), increasing use of high-potency THC which have operated in New Zealand for over 70 years. extracts (Davenport, 2018), accidental poisonings from cannabis ed- ibles (Monte, Zane, & Heard, 2015), use of unregulated pesticides What are community alcohol trusts? (Subritzky, Pettigrew, & Lenton, 2017), aggressive marketing of new cannabis products (e.g. Fiala, Dilley, Firth, & Maher, 2018) and industry Alcohol licensing trusts are community-owned entities which, influence on regulation-making processes (Subritzky, Lenton, & among other tasks, operate alcohol retail outlets and return a portion of Pettigrew, 2016). Wary of experiences with profit-driven markets for their profits back to local communities in the form of grants, loans and tobacco and alcohol, health experts have suggested exploring a number donations (Auditor General, 2014; Stewart & Casswell, 1987). The of alternative policy models for the regulation of recreational cannabis, trusts’ primary responsibility, as legislated in the very first laws dating including government monopolies, social clubs and other not-for-profit back to the 1940s (Invercargill Licensing Trust Act, 1944; Masterton options (Caulkins & Kilmer, 2016; Caulkins, Kilmer, & Kleiman, 2016; Licensing Trust Act, 1947), has been to “enhance the well-being of their

⁎ Corresponding author at: SHORE & Whāriki Research Centre, College of Health, Massey University, PO Box 6137, Wellesley Street, Auckland 1147, New Zealand. E-mail address: [email protected] (M. Rychert). https://doi.org/10.1016/j.drugpo.2019.03.007

0955-3959/ © 2019 Elsevier B.V. All rights reserved.

27 of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 M. Rychert and C. Wilkins International Journal of Drug Policy 67 (2019) 72–78 communities” (Auditor General, 2014). Born out of the alcohol prohi- alcohol) in the interest of their communities, and a commitment to bition era, alcohol trusts initially played an important role in improving distribute part of the profits from alcohol sales to support community the safety of the retail alcohol environment in communities which services and causes (Teahan, 2006). voted for the restoration of the sale of alcohol after World War II1 (Stewart & Casswell, 1987). Governance, functions and performance of licensing trusts Key features of the alcohol licensing trust model include: commu- nity ownership of alcohol retail outlets in the trust district (i.e. no Central to the ideals on which trusts are based is the concept of private ownership and no shareholders), retention of profits from al- “disinterested ownership and management”, which refers to the lack of cohol sales in the trust district, redistribution of profits back to the local commercial incentive to maximise sales (Licensing Trusts Act, 1949; community to support social causes, provision of a community vote on Teahan, 2017). That is not to say that licensing trusts do not need to be the continuation of the trust and community elections of trust board commercially viable; otherwise they will not continue to operate. In- members. Licensing trusts may have an exclusive near-monopoly right deed, poor management, overinvestment (e.g. opening a luxury res- to sell alcohol in their districts, or, if the community votes otherwise, taurant when likely customers seek more modest dining options), and trusts need to compete with private alcohol sellers. There are currently inadequate equity capital (or too much debt) are some of the reasons 18 licensing trusts in New Zealand, four of which retain the near- behind the collapse of 12 alcohol licensing trusts in the past (Teahan, monopoly right to sell alcohol (Teahan, 2017). 2017). However, with no financial obligations to shareholders and Under the Sale and Supply of Alcohol Act (SSAA) 2004, the mono- private owners, commercial performance should (in theory) be no more poly trusts have an exclusive right to hold alcohol retail on-licenses (i.e. important than the objective of benefiting the community. While al- licenses to sell alcohol to be consumed on the premises) for taverns and cohol trusts recognise there can be a conflict of interest between com- hotels and off-licenses (i.e. licenses to sell alcohol for off-premise con- mercial performance and social goals, they acknowledge the “one thing sumption) for any premises, with some exceptions (e.g. there are his- [they] cannot do, is grow [their] market share at the expense of social re- torical exceptions for off-license wine resellers and places where al- sponsibility” (Cooper, 2017). cohol is produced, i.e. wineries and breweries). In practice, this means Alcohol licensing trusts raise funds through operating commercial that private operators cannot operate taverns or pubs, and alcohol businesses which sell alcohol and providing other hospitality-related cannot be sold from supermarkets in the monopoly trust areas. services (e.g. operating hotels) (SSAA, s 305). Decisions about alcohol Privately-owned restaurants can sell alcohol on site, but this must be in prices and the location of alcohol retailers are made by the trust addition to their primary obligation, i.e. service of meals. Licensing management team and signed off by the community elected trustees. trusts are not involved in the brewing and distribution of alcohol, and Alcohol sales by the trusts are also regulated under national alcohol consequently the alcohol products they sell are supplied from private laws, which means that national-level excise and sales taxes and alcohol alcohol companies. licensing scheme requirements continue to apply. For example, like The licensing trust system covers only parts of New Zealand. Most of private commercial alcohol operators in other parts of the country, the alcohol sold in the country is sold from private retail outlets under trusts need to apply to the local council authority for each liquor license standard commercial conditions. Trust districts vary significantly in and must adhere to restrictions on the location of alcohol retail outlets terms of geographical scope and population size and are based on as detailed in Local Alcohol Policies. former local council boundaries (Local Government Commission, Alcohol licensing trusts may distribute net profits for “education, 2006). For example, the monopoly alcohol trusts in West Auckland science, literature, art, physical welfare and other cultural and recrea- cover around 280,000 people (from a city of 1.57 million), while the tional purposes” or philanthropic activities in the trust district (SSAA, s monopoly trust in Invercargill covers only 55,000 people (the entire 307, s 350). The past contributions of alcohol trusts have ranged from population of a small city). direct gifts to individual households (e.g. smoke alarms, fire extin- guishers), sports activities (e.g. “Kids Learn to Swim” programme), educational and cultural projects (e.g. funding interactive whiteboards Community agency – a unique feature of the licensing trust model in local schools, tertiary scholarships), and investments in major cul- tural and sports infrastructure in the region (e.g. sponsorship of a sta- Licensing trusts offer an alternative to private alcohol sales, and as dium). Grants are allocated to organisations in various ways. For ex- such, they belong to the broader family of publicly-controlled alcohol ample, the West Auckland licensing trusts divide their grant budgets regimes, which include government-run monopolies (Stewart & proportionally to public support received via a web-based voting Casswell, 1987). However, unlike government monopoly systems, li- system (The Trusts, 2018). Legislation does not specify what portion of censing trusts are managed and controlled at the community level in- profits from alcohol sales the trusts are required to spend on advancing dependent from central government (albeit under the wider national community goals. In 2014, the 18 community trusts generated $350 legal framework for alcohol). They are confined to community level million in revenue, distributed $27 million on community projects and territories to which they are directly accountable via a unique public retained $46 million in profit(Teahan, 2018). According to the trusts, voting system, including election of trustees and a community vote on retained profitis“reinvested in [their] businesses with the goal of continuance of the trust. This community capacity to act and be the helping maintain profitability in future years” (Invercargill Licensing agents of change (i.e. community agency (e.g. Eversole, 2011)), is a Trust & ILT Foundation, 2018). Figs. 1 and 2 present the amount of unique feature of the alcohol trust model. What distinguishes alcohol funding provided for community purposes and the types of community licensing trusts from other types of community-managed enterprises is services supported by the Invercargill monopoly licensing trust over the their responsibility for the sale of a potentially risky product (i.e. past five years. The original idea behind alcohol trusts was that communities would have sole control over the sale of alcohol in their area, for example via 1 Although alcohol has never been prohibited at a national level (in 1919 New the election of community trust members. Until the 1960s, wide powers Zealand avoided becoming completely dry by only 3,263 votes), many local were given to the trusts, even to the extent that there was no oversight electorates voted to become dry between 1894 and 1908 (Te Ara. Encyclopedia of New Zealand, 2018). Some provincial districts remained dry well into 20th of the Licensing Control Commission (Teahan, 2017). Over the years, century. For example, western Auckland suburbs voted for restoration of al- however, many communities in New Zealand have restored competitive cohol sales only in the early 1970s, when the community opted for establish- market conditions through so-called “competition polls”, a feature ment of a licensing trust instead of private alcohol sales. The last dry areas went added to the licensing regime in the process of alcohol law liberal- wet in 1999. isation in the late 1980s. A competition poll is a community held public

28 73of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 M. Rychert and C. Wilkins International Journal of Drug Policy 67 (2019) 72–78

Fig. 1. Ivercargill Licensing Trust (ILT) net profit and community grant allocations in the last 5 years. Source: Invercargill Licensing Trust Annual Reports 2018−2014.

alcohol market would go overseas instead of New Zealand (2017). The fact that the decision about dismantling the community monopoly re- gime cannot be reversed also appeared to act in the trusts’ favour (2017). Additionally, in the months leading up to the vote, the trusts announced a $1 million dollar (NZD) donation to local schools and gifted fire extinguishers to individual households (2017). Alcohol licensing trusts are body corporates, i.e. they can be sued, transfer property, and pay taxes. They are not managed or controlled by a central government agency (although the Auditor General has over- sight over financial performance of trusts), but are accountable to their geographically-defined community. One manifestation of alcohol trusts’ accountability to their communities is through “competition polls”. Another manifestation is through triennial elections of trustees, who are chosen by residential electors of the trust’s district on the same day as Fig. 2. Community grant allocation by the Invercargill Licensing Trust (ILT) local elections (SSAA, s 309–314) (Auditor General, 2016). The legis- and ILT Foundation, 2018. lation for alcohol trusts includes conflict of interest policies prohibiting Source: Invercargill Licensing Trust Annual Report 2018. board members from having any involvement with the alcohol industry (SSAA, s 322). vote on whether the trust should continue or lose its monopoly rights on alcohol sales. It may be instigated by the trust itself, or by request of at Benefits, criticisms and limitations least 15% of voters from the area (SSAA, s 349). Sixteen competition polls have been held to date, and in most cases communities have voted Anecdotally, the monopoly alcohol trusts appear to provide more in favour of restoring private alcohol sales. This means that 14 trusts restricted access to alcohol, for example by not allowing sales from now compete with private enterprise in a fully competitive commercial supermarkets. There are also claims (by both supporters and oppo- market. There is no legal mechanism to reverse a community’s decision nents) that alcohol prices are higher in the community alcohol trust to dismantle a trusts’ monopoly once it has been successfully challenged areas. Trusts have also claimed that alcohol related harm is lower in via a competition poll. trust areas than elsewhere, although these claims are hotly contested by Four alcohol trusts have retained their monopoly rights. Two of opponents and not able to be easily verified by routine health and crime those communities are located in West Auckland (Portage and statistics (see e.g. Advertising Standards Authority, 2018). The model Waitakere Licensing Trusts), part of the largest metropolitan area in has not been formally evaluated to date to identify these wider impacts. New Zealand2 . During a competition poll in 2003 (an initiative largely Internationally, there is “quite strong” evidence (Babor et al., 2010) orchestrated by supermarket chains, who wanted to challenge the that off-premise monopoly systems (which are in operation in a number trusts’ monopoly on alcohol sales (Teahan, 2018), the two communities of countries, including Iceland, Norway, Sweden Finland, parts of Ca- voted to maintain the trusts’ monopoly on alcohol distribution – an nada and the US) limit alcohol consumption and alcohol-related pro- outcome which may be seen as surprising given the perception that blems by limiting the number of outlets, hours of sale and removing the trust control had resulted in restricted access and higher prices. Post- profit motive for expanding sales (Babor et al., 2010; Her, Giesbrecht, campaign research commissioned by the trusts attributed this result to Room, & Rehm, 1999). Similarly, a systematic review of studies on strong support for local ownership in West Auckland, a general feeling changes in the opposite direction (that is, replacing a monopoly with that profits from alcohol sales should be retained in the community and private retailers) found “strong evidence” of increases in excessive al- partly – an anti-alcohol sentiment (2017). Australian ownership of a cohol consumption (Hahn et al., 2012). major supermarket chain reinforced that profits from a competitive Two common criticisms of monopoly alcohol licensing trusts in New Zealand are that the monopoly model is no longer consistent with to- 2 The two other trust monopolies include Mataura and Invercargill (relatively day’s open market economy (Slater, 2017), and that trusts fail to live up isolated communities located in the south of the South Island of New Zealand), to their idealistic community motivations (Du Fresne, 2017). Our own the latter being the oldest licensing trust in the country. review of online community forums suggests that existing

29 74of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 M. Rychert and C. Wilkins International Journal of Drug Policy 67 (2019) 72–78 dissatisfaction with the model is focused on restrictions on the avail- cannabis related harm (Hall & Lynskey, 2016). Calculation on the basis ability of alcohol (i.e. that alcohol is not available in local super- of gross sales also removes the trusts’ incentive to inflate expenses (e.g. markets), perceptions ofhigher prices and the unattractiveness of on- overspend on salaries). The regime for gaming machine gambling in license premises run by the trusts. Some opponents of the trust model New Zealand also mandates that operators must distribute a minimum also challenge the extent of redistribution of profits back to the com- of 40% of gross proceeds from gaming machines to authorised commu- munities (e.g. in 2017, West Auckland Trusts donated a quarter of their nity purposes (Wilkins, 2018). Given the potential public health im- 4.5 million net profit(Smith, 2018)) and view some of the donations as pacts of the legal availability of cannabis, we propose that 30% of gross “tokenism” which adds little value to the community overall. Trusts cannabis sales be spent on local drug prevention and treatment services. have countered by arguing that community allocations have to be put in This would respond to the current deficiencies in drug treatment ser- the context of retaining sufficient revenue to support the viability of the vices in regional New Zealand (Wilkins, Prasad, Wong, & Rychert, business. 2015). Existing legal commercial cannabis regimes acknowledge the Our initial investigations have also revealed a close relationship importance of funding drug treatment services. For example in Col- between trusts and the alcohol industry (e.g. alcohol producers spon- orado and Washington, part of the tax revenue from cannabis sales is soring an annual community grants celebration gala; a licensing trust targeted for drug education and treatment programmes. with investment shares in a brewery). This may undermine the ability Communities would elect trust board members to serve on the of trusts to resist alcohol industry influences. community cannabis licensing trust and ensure the trust is meeting its Official reports on alcohol licensing trusts have focused on the statutory and community obligations. To prevent conflicts of interest, limited accountability and oversight of the trusts (2016, Auditor legislation would ban trust members (and employees of the trust) from General, 2014). The Auditor General noted that there is “no compre- being involved in the alcohol or tobacco sector. Further debate would hensive oversight of the trusts generally, other than their elected trus- be required to identify what type of other affiliations would disqualify a tees on behalf of their communities” (Auditor General, 2016). Some person from acting as a cannabis trust board member. For example, have also expressed concern about the conflict of interest where trus- although cannabis is currently prohibited in New Zealand, there is an tees also act as local MPs or councillors (NZ Law Commission, 2010). existing private hemp industry including related non-psychoactive The model was reviewed by the New Zealand Law Commission as part products, e.g. hempseed oil and cosmetic hemp products. With the of their review of alcohol legislation in 2010. The Commission advised imminent legalisation of medicinal cannabis in New Zealand, there is that licensing trusts provide “a useful legal mechanism for control of also an emerging medicinal cannabis industry with significant cannabis alcohol outlets” (NZ Law Commission, 2010). growing and processing facilities (2018b, Venuto, 2018a). Furthermore, New Zealand has previous experience with the regulation of a com- Applying the “community enterprise” model to legal cannabis mercial market for new psychoactive substances (NPS, “legal highs”) and it is possible that industry actors previously engaged in this sector Several aspects of the model that we described as problematic would be interested in this new regime.(Rychert, and Wilkins, 2016) should be improved before applying to cannabis. These include estab- People with previous cannabis convictions may be interested in lishing a minimum community distribution (i.e. as a percentage of gross working in cannabis trust businesses or serving as trust board members sales revenue), increased accountability and governance mechanisms, and we would argue that the law should create opportunities for their and a legislative mechanism to conduct the community vote on the participation in the legal cannabis market. In the community trust continuance and alternatively the reconstitution of the trust. model, local conflicts of interest would also be particularly important. Additionally, when applying the model to cannabis, several specifics Cannabis trusts themselves would be banned from any commercial that reflect the current level of knowledge about the substance and partnerships with the alcohol or tobacco industry. effective means of regulating it need to be taken into account. These The regime would also include the establishment of a Cannabis include the change in the legal status of the drug determined on the Trusts Advisory Committee consisting of national experts with medical, national level and recommendations with respect to the THC limits, drug treatment and business backgrounds, which would provide advice advertising and price control. on public health and financial management to individual trusts on an If the community alcohol trust model was to be applied to regulate a ad-hoc basis. The Committee could be funded through a proportional legal cannabis market, new purpose designed legislation would be re- contribution (e.g. 5%) from trust gross cannabis sales. The rationale for quired. In a local vote, communities would decide if they want to es- the Advisory Committee is to support the establishment and good tablish a community cannabis licensing trust responsible for meeting, but business practices of cannabis trusts, something that had been histori- not stimulating, the demand for cannabis in their district. An essential cally lacking in the licensing trust model for alcohol and has resulted in condition for the regime would be the national legalisation of the use poor financial performance and oversight. Also, such advice is likely to and personal possession of cannabis subject to any local by-laws (e.g. be needed given the novelty of the new cannabis regime and related ban on use in public spaces, etc.). In this approach, communities that regulatory compliance and administration. A separate Cannabis Trust choose not to establish a cannabis licensing trust would maintain the Grant Oversight Agency located within the Ministry of Health would be legality of use and personal possession but there would be no com- tasked with independently distributing monies from the combined mercial retail outlets. Organisation of the vote to establish a cannabis cannabis trust contributions to local community groups. This allocation trust could be delegated to local councils. process would be informed by an independent expert committee who The main objectives of cannabis licensing trusts would be to operate would evaluate proposals based on a predetermined criterion of social cannabis dispensaries (and this could be extended to consumption ve- benefit. The distribution of grants via a national body would help nues in the future) in the interests of harm minimisation and commu- prevent conflict of interests in funding arrangements at a local level and nity wellbeing. As with the alcohol licensing trusts, revenue from the contribute to greater distance between community grant recipients and sale of cannabis would be spent for the community benefit, for example the trusts. Such an approach has been recommended in reviews of ap- the promotion of culture, arts, science and sports within the trust ter- proaches to distribute funding from addictive consumption industries ritory. We recommend the cannabis trust legislation defines a minimum (including tobacco, alcohol and gambling) to the social sector (Adams, percentage of gross cannabis sales revenue to be spent on community 2007). Enforcement of the regime would generally be left to existing purposes. The reason we suggest gross sales (and not “net profits”)as agencies, including the police (e.g. drug driving) and public health the basis for calculating minimum community distribution is due to the inspectors (e.g. controlled purchase operations monitoring sale to un- fact that the level of cannabis consumption, not the level of profit derage customers). cannabis dispensaries are able to earn, is one of the key determinants of Local farmers and horticulturists would be contracted to grow,

30 75of 33 LC LSIC Inquiry into Use of Cannabis in Victoria Submission 1299 M. Rychert and C. Wilkins International Journal of Drug Policy 67 (2019) 72–78 process and package cannabis products. The farming industry in New the gambling gaming machine regime (Wilkins, 2018). The resulting Zealand has previously expressed interest in cultivating cannabis for competition would ensure a range of products to suit all consumer medicinal and recreational purposes (Fyers, 2017; Hayes, 2017). preferences at competitive prices. The ongoing existence of a cannabis licensing trust would rely on the continued support of their local community. Should a community Concluding thoughts be dissatisfied with the trust, they could request a “prohibition poll” (through a petition signed by 15% of eligible voters), which may then The principal advantages of the community trust model approach to result in the return to the default nationwide policy where cannabis use a legal cannabis market are: firstly, suppressing the commercial in- and possession is legal but there are no commercial retail sales. There centive to expand the market by removing financial obligations to would be some time limit on the frequency of community-initiated shareholders and private owners; secondly, establishing statutory ob- polls, e.g. no more than one every three years. As with alcohol trusts, ligations on trusts to distribute part of the revenue from cannabis sales local voting for the cannabis trust could be integrated into local elec- back to the community for beneficial purposes; and thirdly, establishing tions. The community would also have the power to vote to reinstate community governance over cannabis retail sales via community the trust at some future date. This power to reinstate the trust is not elected trustees and the ability to call for a community poll on the fu- available in the current alcohol trust regime. ture of the trust. The removal of a strong commercial incentive and community governance may also contribute to lower levels of avail- Balancing commercialisation with public good ability, higher prices and less harm, although further research is re- quired to explore these claims. An important benefit of community As cannabis trusts would need to be commercially viable in order to trusts is that they provide the local community with some oversight of fl continue operating, there is a potential con ict of interest between their their trust’s commercial activities via election of the trust board and the commercial and social objectives. We suggest a cautionary approach to ability to call a community poll on the future existence of the trust. The the regulation of cannabis products and advertising to assist with model therefore promotes the idea of “community agency” rather than reaching this balance. For example, under this model, the advertising of a narrower concept of “consumer agency” (Belackova & Wilkins, 2018). cannabis products would be prohibited except for within trust cannabis This is manifested through provisions that empower the community to retail stores, and any labelling of the product would be limited to ob- call a referendum on whether legal access to cannabis should be al- jective data about the cannabis strain, potency, information about the lowed in their territory in the first place, and the subsequent power to manufacturer and a health warning message. These suggestions follow review this decision through a community vote every three years. ff public health learnings from research on e ective public health reg- Our proposed community cannabis licensing trust model seeks to ulation of alcohol and tobacco (Babor et al., 2010; Henriksen, 2012). To address some of the challenges experienced by alcohol licensing trusts prevent sale of high-potency THC cannabis (which have been linked to in New Zealand, including the lack of general oversight and account- increased risk of psychosis (Di Forti et al., 2015; Gage, Hickman, & ability and balancing the commercial and social aims of the trusts. The Zammit, 2016) and admissions to drug treatment (Freeman et al., proposed “community enterprise” model goes a step further than the 2018)), legislation would also prescribe maximum potency limits. “cannabis social club” model by empowering the entire community Other public health features of the regime would include setting a rather than just cannabis consumers who are club members (Table 1). minimum price based on THC, a product tax and implementing smoke- Cannabis users can participate in the trust model as community elected – free environment policies all regulated top-down through the national board members, employees in trust companies, by voting in community legislation. polls and as customers of trust retail outlets. Since the 1970s, the decade when a record number of new alcohol The challenge of black market and variations across communities licensing trusts were established4, the appeal of the trust model for the sale of alcohol has been declining. Some commentators have attributed The proposed framework would potentially result in differences in this decline to the wider societal movement toward private market cannabis retail supply between regions, with retail sales allowed in one approaches in the New Zealand economy during the 1980s and 1990s district but not allowed in another3 . Law enforcement would continue (Teahan, 2017). However, there is a growing interest in community and to target illegal cannabis supply and illegal selling practices within trust social enterprise approaches (Laville & Salamon, 2015; Laville, 2014; areas (e.g. diverted sales, underage sales). Any attempt to open a retail UK Department of Trade & Industry, 2002) and this may bring the outlet in an area that has voted to not have cannabis sales will be quite model back into public and policy favour. Previous experiences with visible to enforcement agencies and the local community. The opera- alcohol licensing trusts may also facilitate the utilisation of the model tional benefit of the cannabis trust model is that cannabis dispensaries for cannabis in New Zealand. The government has promised to hold a will be managed by a limited number of entities with close ties to local national referendum on recreational cannabis law reform by 2020, and communities, thus decreasing monitoring costs for enforcement agen- recent public opinion polling has found majority support for some form cies. of reform (i.e. 67% for personal possession, 61% for grow your own and Overseas experience of cannabis legalisation suggests that a black 38% for sales from retail outlets (NZ Drug Foundation, 2018; Young, market for cannabis is likely to persist (Subritzky, Pettigrew, & Lenton, 2018)). 2016). The challenge is to create a legal cannabis industry that attracts There are a number of significant gaps in our understanding of the users away from black market overtime via greater convenience, effectiveness of community trusts. For example, the purported public quality and safe products, product innovation, avoiding legal issues, health benefits of alcohol licensing trusts are largely based on anecdotal and other perceived benefits (e.g. in the trust regime profits from sales evidence and are often contested by trust opponents. Similarly, claims are reinvested back into local communities). The efficiency of the trusts of reduced alcohol availability and higher prices are based on the an- at meeting cannabis users’ preferences could be enhanced by allowing ecdotal views of people living in the trust areas. Further research is two or three separate trusts to operate in the same territory, similar to therefore required to investigate these issues to inform the future via- bility and usefulness of a similar community trust model for legal

3 It is not unusual for cannabis policies to vary significantly across different US states (Kilmer & Pacula, 2016). A similar regional variation is being con- 4 Four licensing trusts were established in the 1940s, six in the 1950s, eight in sidered in New Zealand in regard to tobacco sales, with one District Health the 1960s, and 12 in the 1970s, with the last operational trusts established in Board recently announcing plans to ban cigarette sales (Wilson, 2018). 1975.

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Table 1 Comparison of four conceptual models for cannabis law reform.

Home growing Cannabis social clubs Community cannabis trust Profit-driven regulated market

Production Individual consumers Associations of consumers Licensed private companies Licensed private companies Distribution Self-cultivation and gifting Club production to club members only Community trusts Licensed private companies Availability Self-supply or gifts Club members only Via licensed trust-run outlets Via licensed private retailers Profit motive Absent Absent/cover costs Secondary (community funding obligations) Primary Advertising Absent Absent Regulated Regulated Price N/A (no selling) Fees set internally Prices decided by the trust, taxes Market driven, taxes Governance Individual growers Club members Community trustees and community vote Commercial law

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