Cannabis referendum: How weed legalisation has gone overseas, and its lessons for New Zealand

On Saturday, Kiwis will have their final opportunity to vote on whether recreational cannabis should be legalised or remain prohibited in New Zealand.

While the 'yes' campaign has pointed to tight regulations, fewer arrests and huge tax revenues as reasons Kiwis should vote in favour of cannabis legalisation, detractors say it's a dangerous social experiment that could normalise a harmful substance and put young people at risk.

With only our experiences of prohibition to go on, New Zealand's cannabis campaigners and public health experts have cast their eye across the Americas to work whether legal weed could benefit society, or if it's more trouble than it's worth.

Canada, Uruguay and 11 states in the US have made the step into the unknown territory of legalisation - so how's it all going?

And what can it tell us about how cannabis legalisation would play out in New Zealand?

How legalisation has impacted cannabis usage rates

Using weed is clearly not without its harms. The 2016 New Zealand Drug Harm Index estimates the social cost of cannabinoid usage is well over $1 billion per annum.

A 2019 Royal Society Te Apārangi report found it's associated with mental illness, drug use disorders, respiratory illness, impaired cognition, increased road accidents, and lower birth weight in babies.

A pair of longitudinal studies carried out over 40 years in Christchurch and Dunedin concluded much the same, and also noted links to psychosis, gum disease and impaired lung function.

For these reasons, it's in New Zealand's best interests to ensure usage doesn't increase markedly should cannabis be legalised - particularly among young people, who are at greater risk of dependence, mental health issues and lung damage.

It's no surprise, then, that a favourite statistic of the 'yes' campaign shows legalisation in Canada coincided not with the predicted uptick in usage among youth, but with a colossal drop.

In 2018, before Canada legalised weed, use among 15- to 17-year-olds was at 19.8 percent. A year later, this plummeted by nearly half to 10.4 percent (though it should be noted that this statistic is marked 'use with caution').

For the pro-legalisation NZ Drug Foundation, this is their headline figure - but it's not the only one suggesting legalisation won't be the calamitous approach many on the 'no' campaign worry it will be.

A 2018 Youth Risk Behaviour Survey concludes much the same in the US, among states where recreational cannabis has recently been legalised. Researchers found cannabis legalisation had caused an increase in use among adults, who are at far lower risk of harm, but generally not youth.

A similar study on the impact of cannabis legalisation in Uruguay on adolescent use backs this up - there is no evidence there of an impact on cannabis use or the perceived risk of use in the South American nation.

Consumption among high school students did not increase, and the average age at which youth were first exposed to cannabis actually rose.

Ross Bell, chief executive of the Drug Foundation, told Newshub last month that this overseas data shows the "explosion of use" a lot of Kiwis are worried about simply doesn't happen - especially not among those most vulnerable to weed's negative effects.

"Washington state and Canada, for example - the real issue for us is will cannabis use among young people increase? That's the thing we should be worried about," he said.

"And actually, what we've seen in those places is that youth use has not increased. In some cases it's stayed the same, but in most cases it's actually gone down - which is absolutely counter-intuitive.

"We have seen already in places that have legalised that there may be a slight increase in use among adults - funnily enough, the biggest increases we've seen in places like Colorado and Canada are among people aged over 50."

Kiwi health researcher and Massey University professor Chris Wilkins says this is ultimately correct: legalisation increases frequency of use and dependency among adults, while the effect on youth use is "a bit mixed - some [jurisdictions] go up, some go down and some stay the same". 

"It seems to me it's pretty reasonable to expect that cannabis use within adults is going to go up. That's for pretty straight-forward reasons - if you've got a legal market, you've got more availability and more normalisation."

He says the increase among adults is caused by a cohort coming back into the market who gave up cannabis earlier in their lives because they had to consider their careers and children, and worried how it might affect their reputations.

Say Nope to Dope spokesperson Aaron Ironside concedes there haven't been any dramatic increases in usage when cannabis has been legalised, but says the mixed changes in usage overseas show no one can say with great confidence what the long-term trends will be.

"Our suggestion would be why put our young people into this social experiment when the likes of Canada and many of the states in the US are already doing that for us? The early signals are concerning," he told Newshub.

Canada legalised and regulated cannabis in December 2018, the second country in the world to do so after Uruguay.
Canada legalised and regulated cannabis in December 2018, the second country in the world to do so after Uruguay. Photo credit: Getty

"The trends across the board have been an increase in cannabis used and an increase in adolescent use. Now are they dramatic increases? No, they're not. The sky does not fall - we're not doing scaremongering.

"What we are saying is that if those little increases are maintained over long periods of time it'll create a snowball effect. That means we won't see the full effects of this until 20 years from now - and by then it'll be too late."

Ironside predicts usage will increase if New Zealand is to legalise it, arguing that the provisions of the Cannabis Legalisation and Control Bill just set up an environment where it's more likely that young people will be exposed to weed.

"They'll have shops in their community where they'll only have to find an older friend to purchase for them, and people will be growing cannabis on their properties. That'll make it just that bit more likely they'll start to use," he said.

But Bell says the overseas data doesn't suggest this - and even if it were to increase, the removal of criminality, fear and stigma around cannabis means those people at greater risk of negative health impacts find it easier to get help.

"The fact you can then start putting money into drug prevention, education and treatment means it's easier to help that proportion of people who might get into trouble with cannabis use."

The benefits of legalisation: How well has it really worked overseas?

The most compelling benefits of cannabis legalisation relate to the transfer of recreational weed out of the hands of criminals and into the hands of tax-paying companies.

Advocates say legalisation results in:

  • Weed becoming a regulated commodity, with strict limits on how much can be bought, the levels of psychoactive THC, and the age at which it can be accessed

  • Hundreds of millions of dollars in tax revenue

  • Profits being removed from the black market

  • A reduction in arrests and convictions for cannabis-related crime

Prof Wilkins says the latter benefit is the one of the biggest drawcards, with strong evidence it's been achieved in overseas jurisdictions where cannabis was legalised.

"Obviously if you legalise cannabis you're going to get less arrests for those offences, [though] you still do get some arrests and penalties because people break the law," he said.

"With the regulations around the legal market and young people continuing to access the black market, there is still some arrests happening. But in general it's pretty substantial - a 75 percent reduction in arrests is not uncommon."

The reduction in influence of the criminal black market is another key argument for legalisation, but Prof Wilkins says the extent to which this happens overseas is often overstated.

"You do get some reduction in the black market - but a key question is how much," he said.

"Some people expect that when you legalise cannabis the black market's going to disappear, but the experience has been that that's not generally the case, and when you think about it that's quite reasonable.

"Maybe 50-60 percent of people purchase from the legal market - but it's still early days, so it's reasonable to expect that might increase over time as the legal market gets more established and gets better product."

This transfer of industry from the black market to the legal market allows the Government to earn revenue through taxation. In some jurisdictions this has been huge - and estimates suggest it could result in a huge windfall for New Zealand, too.

"In Colorado, which is about the same size as New Zealand, they get between $200-300 million in cannabis taxes. And you're going to employ some people - so a few-thousand people will be employed in the industry."

A pair of Business and Economic Research Ltd (BERL) reports obtained by Newshub earlier this month show the Government could make more than $1 billion in annual taxes if cannabis is legalised.

They also estimated the cannabis industry could employ about 5000 people - a boon for the new Government as they wrestle with an expected surge in unemployment brought on by COVID-19.

A pair of reports showed cannabis could make the Government as much as $1b a year and create about 5000 jobs.
A pair of reports showed cannabis could make the Government as much as $1b a year and create about 5000 jobs. Photo credit: Getty

Ironside says while New Zealand will undeniably earn large sums of money from establishing a legal cannabis market, it won't be anywhere near what the BERL report estimates because the black market will still be operating.

"We know from overseas models that tax-takes are almost never what's anticipated. Canada only received 50 percent of their projected tax. The BERL report has inflated the idea of tax because it assumes the black market won't exist, which we know it will," he said.

"When Canada's legal market finally outsold the black market, the major cannabis companies posted significant multi-million-dollar losses. It is not possible to beat the black market and make a profit."

Indeed in Canada the black market continues to thrive despite legalisation, as legal sellers struggle to keep pace with demand, and their product costs more and has a more limited range than their criminal competitors.

Ironside worries about the risk of setting up what he calls an 'addiction for profit' industry to replace the criminal black market in New Zealand. He says it's a broken model not motivated by health, but by money.

Canadian cannabis researcher Dr Marco Leyton expressed similar concerns in an editorial for the Journal of Psychiatry and Neuroscience, arguing that the cannabis market could head the way of the legal tobacco, alcohol and opioid industries should it go unchecked.

"These for-profit companies have shown inadequate concern for the harm done and find little incentive to do more," he said.

"Purdue Pharmaceuticals, for example, recently announced their plans for undeveloped countries, where they look forward to fighting 'opiophobia'. The black market often behaves worse, but we can and should expect more."

The cannabis market could go the way of the alcohol, opioid and tobacco industries if left unchecked, an expert says.
The cannabis market could go the way of the alcohol, opioid and tobacco industries if left unchecked, an expert says. Photo credit: Getty

And there's another lesson for New Zealand from overseas - there's a strong link between the money invested in drug harm reduction policies and keeping cannabis usage down.

A cost-benefit analysis of the NZ Drug Foundation's drug reform plan by economic consultancy Sense Partners found the country could save $10-53 million on policing, court and prison costs should cannabis be legalised - but said those savings need to be reinvested to get a good result.

"Data to date does not show any significant change in cannabis use by youth in Colorado, but an increase in Washington - reiterating the importance of education and prevention programmes," the report says.

Is it too early to tell if legalisation works?

Prof Wilkins argues it's still too early to tell what the social and health effects of legalising cannabis would be in New Zealand - even with the screes of data from overseas jurisdictions.

"The most honest appraisal so far is that it's inconclusive," he said. "There could be all these benefits and harms, but it's really too early to say."

Prof Wilkins points to the effects of repealing America's alcohol prohibition legislation in the early 1930s as a reason to be wary of taking overseas usage statistics at face value.

He says at that time, it took years for the alcohol industry to re-establish itself and for behaviours to change - and several decades for alcohol use to return to pre-prohibition levels.

"Legalisation hasn't been implemented in any jurisdictions to get a really good idea of what the impacts are going to be. Canada has only been legalised for one year, while most of the legal states in the US only saw a law change very recently," he said.

"That's really important because it takes a while to get retail outlets established, the industry takes a while to get moving and people's norms and attitudes need to change, and most of the health and social outcomes are quite considerably time-lagged."

Wilkins says the most notable examples of this time-lag are in areas that cause some of the most concern for 'no' advocates - about cannabis legalisation's potential links to addiction and mental health issues.

"If you're interested in cannabis dependence, for example, it's going to take a few years of using legal cannabis to even be at risk of being dependent. The same with mental illness; you don't just use cannabis once and get mental health problems - that happens over years."

Prof Wilkins says in an ideal world, a referendum on cannabis legalisation would've been held for a few years to get a better handle on how well it's worked.

However he acknowledges that's not really how New Zealand's political system operates.

"We would probably know a lot more two or three years from now, but policy change really doesn't work that way," he said.

"There are political and policy windows where something comes on the agenda and you want to address the issue - so it's a little bit beyond our control."