Final Report - CARICOM Regional Commission on Marijuana 2018 Waiting to Exhale

In addition, the Literature highlights the fact that in some countries that have legalized marijuana, the black market for the drug remains vibrant. In fact, in 2014, one year after legalization, it was estimated that roughly 60 percent of the marijuana consumed in Uruguay was sourced from the blackmarket. This outcome is hardly desirable as it robs the government of revenues and diminishes the influence of the authorities on the market for the product, among other things. One of the main reasons for this outcome may be that the black-market price and to a lesser extent, product quality may be more favourable to the marijuana user. Therefore, an important component of any marijuana legalization thrust is a sustained anti-black market effort. As outlined above, when such efforts by the authorities are effective, the non-monetary costs of the product tend to remain high, leading to a higher priced, less competitive product. If this result is achieved, the incentive to purchase marijuana from the illegal market will be minimized.

The importance of time horizon in the assessment of the outcomes of such legislative changes, must not be understated. Many of the countries experiences show that the initial response (in terms of prevalence, arrests etc.) tend to be significant, but over time as the novelty of the new framework diminishes, the long-term response is likely to be more tamed. Likewise, as seen in the case of Washington State and Colorado, marijuana-related tax revenues have grown over time.

1. Introduction It is estimated that between 128.1 million to 237.9 million people worldwide consumed marijuana in 2015[1]. Furthermore, although the supply and frequently, the possession of marijuana continues to be illegal in most countries, consumption prevalence continues to increase, moving from an estimated range of between 2.9% and 4.3% in 2008[2] to between 2.7% to 4.9% in 2015 [1]. Additionally, changing attitudes towards marijuana have resulted in a growing number of countries implementing “alternate regulatory strategies” [2] regarding the production, sale, and possession of marijuana. For instance, as of January 1st, 2018, the use of recreational marijuana has been legalized in 9 states and medical marijuana in 29 states in the United States of America. In 2013, Uruguay became the first country in the world to fully legalize the production, sale, and consumption of marijuana. The Statecontrolled marijuana regime allows residents to grow, consume and distribute marijuana without legal penalty [3]. Other countries have implemented various forms of liberalization of marijuana laws, including Costa Rica, Peru (2013), Mexico (2016), Ecuador (2013) and some states in Australia.

This trend is present not only in Europe, North America, and Latin America, but can also be observed in the Caribbean Community (CARICOM). In 2015, Jamaica formalized the decriminalization of small amounts of marijuana (2 ounces or less). Moreover, many other CARICOM Member States including Saint Vincent and the Grenadines are currently considering various policy options for the legal treatment of marijuana, including the legalization of medical marijuana. Given these developments, it has become necessary for CARICOM to develop a policy position on the issue that will seek to guide Member States in the decision-making process. A necessary part of this initiative is an economic analysis of possible outcomes of adopting a more relaxed legislative approach to marijuana use, production, and distribution in the region.

Because there is no specific CARICOM proposal for the liberalization of the legislation of marijuana in the region, three plausible models are examined in this study. This approach is necessary as the model of liberalization adopted can have a profound impact on price, demand, and supply of the product and on the economic and social outcomes of the applied measure. The three proposed models are as follows:  Decriminalization of marijuana use only;  Full legalization of marijuana production, sale and use, with state control; and 82