Currently, in most CARICOM Member States , marijuana is illegally supplied by the quasiunderground marijuana market. Under these conditions, the selling price of the product will not only include the direct costs of production, such as material, labour costs and cost of sale, but also the indirect costs (risks) associated with the production, distribution, and sale of an illegal good. These include the risk of arrest and imprisonment or the risk of personal harm that tends to be associated with illegal drug activity [4–6]. The additional markup serves as compensation to the dealers and others along the supply chain[6]. Since the supply curve demonstrates a willingness to sell the product, in an environment where the legislation governing activities in the illegal marijuana market becomes more favourable and penalties become less severe, it is expected that in response to the reduced risks direct costs will fall. The fall in direct costs, coincides with legalization, as the extra, sometimes costly measures that were needed to avoid detection, will no longer be necessary. Presumably, labour cost will also fall, stemming from reduced or no risk of persecution and an increased availability of willing workers. Reduced risks will also lower indirect costs and result in a reduction of the compensatory mark-up on marijuana price. These changes will lead to a rightward shift in the supply curve. Moreover, in addition to the purchase price of the product, the full cost of an illegal good also includes the risk of persecution by the authorities and the risk of personal harm associated with conducting transactions with criminals (non-monetary costs)235. If the loosening of legislation that targets only the use of the drug, such as the decriminalization of its use, then it is expected that there will be some increased demand for the drug. Furthermore, the loosening of marijuana-related laws will reduce or eliminate the non-monetary costs to the buyer (under decriminalization) or to both the buyer and supplier (under legalization). Once these costs are lowered, the buyer will demand more marijuana. Under legalization, the downward shift of the supply curve may or may not trigger a fall in the price. If the supply curve moves low enough and the demand curve moves only moderately then the price will fall and marijuana in the legal market will be cheaper than in the non-legal market. This will trigger a gradual transition from black market suppliers to legal suppliers. Figure 2: Illegal vs legal Market for Marijuana
3. Model One: Decriminalization of Marijuana Use, with Supply Remaining Illegal The decriminalization of marijuana use means that a person caught with marijuana not exceeding a specified amount will be fined, rather than face arrest and possible incarceration. An important aspect of this model lies in the fact that the use/possession of large amounts, production, and sale of marijuana remain illegal; however, the possession of small amounts will no longer be considered a 235This does not include costs related to drug-induced negative health consequences.
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