What happened with cannabis legalization in Uruguay?

by Alfredo Pascual* I will never forget the watershed moment […]

by Alfredo Pascual*

I will never forget the watershed moment when, in December 2013, Uruguay became the first country in the world to completely legalize cannabis on a nation-wide level. I was away from my home country, so I couldn’t take part in the celebrations. Due to the fact that I missed the moment perhaps, I kept some healthy dose of skepticism while still being happy that something new was about to be implemented. Uruguay was finally going to embark on a revolutionary alternative to the, world-wide and decades-long, failed war on drugs.

Cannabis isn’t good or bad. The best thing to do with debates, between those who claim cannabis will solve all our problems and those who claim cannabis is one of the deadliest things on Earth, is to avoid them. Something similar happens with cannabis legalization. It isn’t a simple thing of “yes” or “no”, but mostly about how. It was pretty clear that the government legalizing cannabis in Uruguay had very paternalistic leaders spearheading the efforts, including former President José “Pepe” Mujica. For instance, “El Pepe” has claimed that he favors coerced rehabilitation, a reason more than enough to remain skeptical of his proposals. In addition, it wasn’t convincing that the arguments used in Uruguay to legalize cannabis were mostly centered on vague public health and public security promises instead of addressing individual liberty issues. Regardless, December 2013 was a moment to celebrate.

In April 2014, the Uruguayan government unfolded the regulatory framework. It included a state-enforced oligopoly, production and consumption quotas, price-fixing, coerced registrations, and many other characteristics that usually peeve liberty-minded people. Overly-regulated and centrally planned markets rarely work the way their designers intend. One need not be an expert in economics to know this, but rather visit the many examples in history that show this theme.

It’s been more than two years since cannabis was legalized in Uruguay. What can be observed? I visited Uruguay three times since the legalization, and I interviewed relevant policy-makers and activists about how legalization is working. The new recreational cannabis legislation allows users legal access in just one of the following three ways: grow at home, belong to a club, or buy it in licensed pharmacies.

  • Home-growing is working, though mostly in a grey area. This is because there’s a government database where those who want to legally have plants at home need to register, and most of the home-growers don’t want to. The government states that the register is for your own protection, but it’s hard to blame home-growers for being skeptics after decades of state persecution; especially when the actual president, Tabaré Vázquez, played with the idea of using the database to “rehabilitate” users. Police harassment has also been a problem. Until recently, law enforcement agents had no idea what to do. For instance, they didn’t know if they should seize plants or not, or if they could ask for proof of registration. Although there was quite a lot of confusion, it seems it was corrected. It’s also understandable that these changes need some time. In any case, I personally saw home-growing everywhere. It wasn’t uncommon before legalization, but now the number of grow-shops skyrocketed. Last month I attended the massive 2015 Uruguayan Expocannabis, and it was heavily focused on home-growing.
  • The cannabis clubs are also working in a somewhat grey area. There are about 20 of them growing plants in Uruguay, but only a handful finished all the legal paperwork. In any case, it’s good that there’s an alternative for those who don’t want to grow cannabis at home nor buy it in the black-market. For a sign-up fee and monthly fee determined by each club, members can have their weekly quota of cannabis. Of course, the clubs are non-profit organizations, and the only way to have access to their cannabis is to become a member. The number of members, plants, and cannabis grams you can receive is limited. The price per gram also tends to end up being much higher than black-market prices, but the product is expected to be much better than what you can find in the street.
  • The big failure until now is the promised, so-called “government cannabis”. It has been delayed many times during the past two years. Government officials repeat they are working without any haste in order to do it right, but Uruguayans are getting anxious. The new president isn’t as enthusiastic about cannabis legalization as the one before, so there’s no reason to believe the implementation is going to be any quicker now. Two companies, finally, recently obtained the permit to grow cannabis under strict government regulations and controls. Hopefully one day in 2016, cannabis is going to be sold in pharmacies all across the country. The major problem with the government is that they are regulating each tiny step of the production and selling process, even fixing the price, and when the government fixes the price the whole production ends up being over-regulated and inefficient. As a result, everyone is still skeptic about seeing weed in the pharmacies any time soon. Even if they do manage to sell high quality cannabis this year at the promised about $1 (US dollar) per gram price, the limited production quota will surely not be enough.

Tourists are not allowed to buy cannabis, which is only legally available to Uruguayan nationals and legal residents. However, with just a quick google search, one can find, for about 200 USD, a tour through Montevideo that includes a “free gift”. Hence, an example of the market spontaneously working around absurd regulations.

And what about the promises of better public health and public safety? Unfortunately, it’s hard to see clear improvements. It’s certainly positive that many users now get their cannabis from legal or semi-legal sources and avoid the terrible Paraguayan brick weed that’s sold on the black-market. However, some statistics are perplexing. While in 2013 (the year before cannabis legalization) 739 persons were indicted for drug-related crimes, in 2015 that number raised to 1233. Cannabis is still by far the most seized drug, with 2015 being the historical record. While statistics can be explained in different ways, there’s one big lesson to be learned here. Drug Policy reformers shouldn’t promise big crime reduction and consumption reduction once cannabis is legalized. This is especially true in places such as Uruguay, where before cannabis legalization, its consumption and possession in reasonable quantities was already legal and largely tolerated. Making vague promises could end up being fuel for those who oppose legalization. Drug policy reforms should be about individual liberty and reducing the harms of the state’s reaction to drug-related phenomena.

Some people see the Uruguayan experiment as a model to copy as an alternative to the war on drugs. While Uruguay certainly bravely paved the way for other countries to introduce drug reforms, it shouldn’t be considered the best or only alternative. Unfortunately, there’s not a perfect way of legalizing cannabis or any other psychoactive substance. In Uruguay things have always been done the same way: state-centered, slow, bureaucratic, and in a certain way still improvised.

One of the most important lessons we can learn from this experience is that legalizing cannabis isn’t just about legalizing, it’s rather about how to legalize. What kind of market do we want once the product is legal is the important question that needs focus. Many local political, historical, social, economic, and cultural factors play a huge role when creating the new regulations. In the following years we’ll probably see many new experiments and keeping our eyes open and learning from them will be pivotal. At least now we have new experiences to learn from, previously all we had was the one-size-fits-all prohibition failure.

Source: European Students for Liberty

* Alfredo Pascual is a former intern of the Austrian Economics Center. You can read an extensive article of his on this subject here.


The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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