Confronting the challenges of conducting a CBA of cannabis policies

Cannabis policies in Canada: How will we know which is best?

BACKGROUND

The recent legalisation of cannabis in Canada by the Federal Government, along with the accompanying laws and regulations of provincial and territorial governments provides an opportunity to assess the expected benefits and harms of legalisation. While the legislative changes have been initiated by the federal government, much of the responsibility for the implementation falls onto the provinces and territories. These jurisdictions are responsible for regulating the wholesale distribution, retail structures, cannabis consumption, as well as a host of other regulations.

METHODS

Key characteristics of policies outlined are categorised according to a framework previously developed by the authors (2018). The categories are: (1) government regulation or control, (2) social costs that accompany its use, and (3) legal sanctions that accompany its production and use. Towards that end, we develop a framework for a cost benefit analysis (CBA) outlining in some detail the data that is needed to undertake a credible economic evaluation of cannabis policies.

RESULTS

Key data issues discussed include consumer surplus, government receipts including legal and regulatory costs, impact on substitutes, change in profits to firms (growers, wholesalers, and retailers), incomes earned in the industry, health and other costs incurred by cannabis users.

DISCUSSION

This paper presents a summary of the expected categories of costs and benefits given the various provincial cannabis policies. Additionally, it provides a framework for subsequent cost benefit analyses which can quantify said harms and benefits.