creating the light cannabis market in the eu: a … · 2020. 1. 8. · • cbd reduces cigarette...

Creating the light cannabis

market in the EU: a

preliminary framework

Addictions 2019: Regulating the

low-THC cannabis market in Europe

24 October 2019

Davide Fortin

OVERVIEW

Background

• The European and the US context

Interrelation with other substances

• Illicit cannabis (high THC)

• Tobacco

• Prescription medications

Additional tool for harm reductions

• Type of products

• Distribution System

• Taxation

• THC threshold

TREND “CBD”

0

20

40

60

80

100

Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19

Italy Switzerland France

Source: Google Trend

TREND “CANNABIS LIGHT”

0

10

20

30

40

50

60

70

80

90

100

Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Jan-19 Jul-19

Italy Switzerland France

Source: Google Trend

US TOTAL CBD SALES

by product type

0

100

200

300

400

500

600

2014 2015 2016 2017 2018 2019 2020 2021 2022

Mill

ion

s($

)

Cannabis Light CBD-based products

Source: Hemp business Journal; New Frontier Data

0

0

0

1

1

1

1

1

Hemp-derived

CBD

Industrial

Applications

Personal Care Food Consumer

Textiles

Supplements Other consumer

products

Bil

lio

n($

)

2018 2022

US SALES OF HEMP-BASED PRODUCTS

by product category

Source: Hemp business Journal; New Frontier Data

CANNABIS LIGHT INTERRELATION

WITH OTHER SUBSTANCE

Illicit Cannabis

(high THC)Tobacco

Other Medications

LIGHT vs ILLICIT CANNABIS

• 14% reduction in cannabis

confiscations per each pre-

existing specialized shop

• Significant decrease in

• other cannabis-derived drugs

• the number of people arrested

for drug-related offences

• Forgone revenue for drug

traffickers of at least € 90–170

million per year.

MECHANISMS OF SUBSTITUTION OF

ILLICIT CANNABIS

• Reduce the number of joints per day

• CBD reduces the attentional bias to drug stimuli (Morgan et al.,2010)

• Delayed use during the day

• Increased delay between them

• Reduce the amount per joint

• Indirect increase in the ratio CBD/THC

• Lower risk of psychosis (Morgan & Curran, 2008)

SUBSTITUTING TOBACCO

• CBD reduces cigarette consumption in tobacco smokers

(Morgan et al., 2013)

• In Switzerland, 7,8-10,2% of individuals surveyed use light

cannabis to stop or reduce the consumption of tobacco (Frank

et al., 2019)

• Mechanisms of substitution

• Reduce the amount of tobacco per joint

• Lower number of cigarettes per day

SUBSTITUTING PRESCRIPTION DRUGS

SUBSTITUTING PRESCRIPTION DRUGS

RECOMMENDATIONS TO ENHANCE THE HARM

REDUCTION POTENTIAL OF LIGHT CANNABIS

Maximize the number of

varieties

Different distribution

channels across product types

Tax regime based on the

expected negative

externality

LIBERALIZE THE VARIETIES OF

LIGHT CANNABIS IN THE EU

• Consumers prefer the organoleptic properties of international varieties

• EU certified genetics have been selected for the production of hemp fiber or seeds

• Significantly higher value for international varieties

• The effectiveness of a cannabis strain on a specific condition depends on the

genetic of the individual (Atakan, 2012)

• The more varieties are allowed, the higher probability for an individual to find the most

effective for its conditions (Baram et al., 2019)

• THC content should be the only parameter defining the legal status

• Possibly imposing certain requirements for the light cannabis market (e.g. license)

• This how it is regulated in Switzerland, US and Cana

WHOLESALE MARKET FOR LIGHT CANNABIS

Source: HempBroker420

International varietyEU certified variety

WHOLESALE PRICE

FOR LIGHT CANNABIS

0 €

500 €

1,000 €

1,500 €

2,000 €

Indoor Greenhouse Outdoor Outdoor with EU

seeds

Extraction

Biomass with EU

seeds

Prezzo al Kg

Minimum Average

Source: HempBroker420 (27 September 2019)

TOBACCO SHOPS AS DISTRIBUTION

CHANNELS?

DISTRIBUTION CHANNELS

• Dried cannabis flowers should be sold in specialized shop or herbalists

• Necessary to have specialized knowledge in advising different varieties

• Their co-usage with tobacco would be incentivized when sold in tobacco shop

• Tobacco shops should only sell light cannabis products for combustion as an

alternative to cigarettes

• Only pre-rolled cigarettes containing light cannabis or with a mixture between light

cannabis and tobacco

• These products would be a harm reduction alternative to tobacco cigarettes

DISTRIBUTION CHANNEL

FOR PURCHASE IN SWITZERLANDCHANNEL FIRST USE PREVIOUS MONTH

SPECIALIZED SHOP33.1 – 32.1% 39 - 36%

SERVICE-STATION OR

NEWSPAPER SHOP 21.7 - 8.7% 26.8 - 16.1%

INTERNET 6,9 - 28% 5,3 - 14.9%

SUPER MARKET 5 – 0.9% 7.4 - 4.3%

OTHER PEOPLE 2.5% -

TOTAL PURCHASED 69 -72% 86.7 - 78.1%

Source: Zobel et al. (2019)

OPTIMAL TAXATION FRAMEWORKPRODUCT TYPOLOGY MODE OF

CONSUMPTION

DISTRIBUTION

CHANNEL

TAXATION

Mixed Cigarettes

(light cannabis

+ tobacco)

• Combustion • Tobacco shops • Lower tax rate compared to

tobacco cigarettes and fine

cut tobacco

Cannabis cigarettes

(only trimmed

light cannabis )

• Combustion • Tobacco shops • Lower tax rate than

cigarettes with both

cannabis and tobacco

Raw herbal cannabis

(light cannabis flowers)

• Combustion

• Vaporization

• Specialized shops

• Herbalist

• No taxation (no evidence

vaporization produce

negative externalities)

Other CBD-based

products

• Combustion

• Vaporization

• Ingestion

• Etc.

• Supermarkets

• Pharmacies

• Etc.

• Based on the expected

negative externality

Thank you for the attention

mail@fortindavide.com

davide.fortin@etu.univ-paris1.fr

LITERATURE• Atakan, Z. (2012). Cannabis, a complex plant: different compounds and different effects on

individuals. Therapeutic advances in psychopharmacology, 2(6), 241-254.

• Baram, L., Peled, E., Berman, P., Yellin, B., Besser, E., Benami, M., ... & Meiri, D. (2019). The heterogeneity and complexity of Cannabis extracts as antitumor agents. Oncotarget, 10(41), 4091.

• Morgan, C. J., & Curran, H. V. (2008). Effects of cannabidiol on schizophrenia-like symptoms in people who use cannabis. The British Journal of Psychiatry, 192(4), 306-307.

• Morgan, C. J., Freeman, T. P., Schafer, G. L., & Curran, H. V. (2010). Cannabidiol attenuates the appetitive effects of Δ 9-tetrahydrocannabinol in humans smoking their chosen cannabis. Neuropsychopharmacology, 35(9), 1879.

• Morgan, C. J., Das, R. K., Joye, A., Curran, H. V., & Kamboj, S. K. (2013). Cannabidiol reduces cigarette consumption in tobacco smokers: preliminary findings. Addictive behaviors, 38(9), 2433-2436.

• Carrieri, V., Madio, L., & Principe, F. (2019). Light cannabis and organized crime: Evidence from (unintended) liberalization in Italy. European economic review, 113, 63-76.

• Carrieri, V., Madio, L., & Principe, F. (2019). Do-It-Yourself medicine? The impact of light cannabis liberalization on prescription drugs. The Impact of Light Cannabis Liberalization on Prescription Drugs (July 9, 2019).

• Zobel, F., Notari, L., Schneider, E., & Rudmann, O. (2019). Cannabidiol (CBD): analyse de situation. Addiction Suisse: rapport de recherche, (97).