Ending the Drug Wars: Report of the LSE Expert Group on the

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Costs and Benefits of Drug-Related Health Services
by Joanne Csete

Health services for people who use drugs are important on many levels. In addition to the clinical benefits to the individual and the benefit to the community of reducing drug-related harms such as HIV and drug-related crime, they represent an alternative to arrest and detention for some offenses and thus are a possible starting point for developing less repressive drug policies. In spite of a significant body of evidence that drug-related health services are a very good investment for society, they remain woefully underfunded and unavailable.

Summary

• Governments should ensure that health services for people who use drugs (at adequate scale) are a priority for public resource allocation. These services currently have a very low availability relative to need.
• Governments should develop standards and monitoring systems to ensure good-quality health services for people who use drugs in both public and private sector facilities. Further, they should not impede those services.
• Governments should ensure that police do not interfere with health service provision. They should, for example, not use numbers of arrests of drug users as a basis for police compensation or performance review. Police, prosecutors and judges should be trained on the importance of basic health services for people who use drugs.
• Governments may find it useful to invest in benefit-cost studies of these services and should inform the public and legislators in user-friendly ways of their benefits.
• In multilateral bodies, health services for people who use drugs are in dire need of member state champions. United Nations agencies, especially WHO and UNAIDS, have commissioned research and made statements in support of most of these services, but international debates remain dominated by positions based on fear and ideology rather than evidence.

The policy approach to drug control in most countries features heavy spending on policing, interdiction of drugs, judicial processes and incarceration. In the United States, for example, it is estimated that about $50 billion a year from state and federal budgets goes to drug control, of which the majority is devoted to law enforcement and interdiction.1 One estimate of drug-related law enforcement expenses globally puts the figure at about $100 billion per year.2 Drug-related health and social services are nonetheless often underfunded and inadequate to meet the need. Treatment for drug dependence, for example, is frequently inaccessible or unaffordable to people who need it, and this service may not exist without (often grudging) public sector support. Millions of people who need them are without services to protect themselves from injection-related harms, such as provision of sterile injecting equipment and medicines, such as methadone, that stabilise cravings and do not require injection.3

Good-quality treatment for drug dependence and drugrelated harm reduction services have been widely studied and can be life-saving for those fortunate enough to have access to them. The clinical evidence for effectiveness of these measures, particularly with respect to outcomes such as averting HIV or hepatitis C transmission, is very strong. The purpose of this contribution is to review the evidence that they also have a larger economic and social value – that is, to assess their costs and benefits in a broad sense, including with respect to social outcomes such as crime reduction.

Basic ideas: cost of drug use and promise of treatment

Not all drug use is problematic, and thus not all drug use requires a health service response. The most recent annual report of the UN Office on Drugs and Crime (UNODC) uses the rough estimate that globally 167 to 315 million persons aged 15-64 used illicit substances.4 The large range of the estimate reflects the paucity of countries with population-based surveys that would allow more precise estimates and the fact that people who use drugs are highly criminalised in many places and thus may be hidden from surveys. UNODC defines ‘problem drug use’ to include people who inject drugs and people who are diagnosed with drug dependence or other drug-related disorders. It estimated that in 2011 there were 16 to 29 million persons whose drug use was problematic, less than 10 percent of the total of people who use drugs.5 Thus, part of the challenge of drug-related health services is to target those most in need of services and ensure that the services are effective and readily accessible. (A corresponding challenge of economic importance is to ensure that people who use drugs but do not have problematic use are not obliged or otherwise directed into services that they do not need.)

Treatment for drug addiction takes many forms – residential and non-residential, assisted by medications such as methadone or not, ‘12-step’ programmes and other group support approaches, behavioural and cognitive therapies, and many others. It is plain from clinical experience, as noted by the World Health Organization (WHO) and UNODC, that while all of these have some record of success for some people, none is effective 100 percent of the time.6 It is common for people with drug dependence, if they have varied services available to them, to attempt several forms of therapy before finding the one that succeeds for them, whether ‘success’ is judged as complete abstinence or less problematic drug use. There is also evidence from many settings to suggest, not surprisingly, that drug treatment combined with support in the form of stable housing, food assistance and support to family members has the greatest chance of success.7 Based on evidence to date, it is safe to say that drug treatment (combined or not with some form of social support) can reduce problematic drug consumption and thus the costs associated with it, and we take that as a point of departure in this contribution.

Cost-benefit analysis – comparison of the cost of an intervention or programme to a monetary estimate of its benefit – is an essential tool for evaluation of health interventions. (The technique of cost-benefit analysis produces results usually expressed as benefit-cost ratios – that is, an estimate of the benefits derived divided by the cost incurred. Positive net benefits are indicated by benefit-cost ratios greater than one.) It is important to assess costs and benefits of treatment of drug dependence, not least because many of the people needing this intervention are reliant on publicly supported treatment, thereby making it particularly susceptible to political controversy.8 While many studies demonstrate the clinical benefit to the individual of various forms of treatment for drug dependence, consideration of social and economic costs has generated a smaller literature. Indeed, the multifaceted nature of the costs of drug dependence and benefits of reducing it pose considerable methodological challenges, a full treatment of which is beyond the scope of this contribution. For our purposes, it is useful to note that WHO, recognising these challenges, has established guidelines suggesting that quantifying the economic impact of drug use on society should include assigning monetary value to the following costs:

WHO: ‘Tangible’ elements of economic impact of problematic drug use

• Health, social and welfare services (i.e. reduced drug dependence should result in a lower burden of health and social services related to drug dependence).
• Productivity loss in the workplace and the home.
• Drug-related crime, law enforcement and criminal justice.
• Road accidents.
• Cleaning up the environment (e.g. of unsafely discarded injection equipment).
• Research and prevention activities.9

These are the categories of ‘tangible’ cost; loss of life, pain and suffering are noted by WHO as intangible costs. WHO’s guidelines then seek to consider the various measurement challenges, necessary simplifying assumptions and other elements of putting cost figures on the tangible items in an effort to enable national governments to make estimates that will be comparable to some degree.

For some of these items, methodological debates will possibly never be completely settled. Quantifying crime-related costs, for example, includes obvious criminal justice activities, including incarceration (though drug-related activities may not always be distinguished); costs of drug-related crime to individuals, including material loss and loss of time and productivity; and the ‘esoteric and ephemeral’ costs to the legitimate economy of the human resources represented by people who are involved with drug trafficking or other drug-related crimes.10 It is recognised that for many of these elements, there will not be good data in even the best-organised jurisdictions, and simplifying assumptions will be necessary. In addition, WHO experts note that many drug-related crimes, particularly assaults and thefts, are habitually under-reported by victims and thus not captured in official data.11 Ideally, moreover, these factors should be studied over a long period, which is rarely possible in practice.

METHODS

This contribution benefits from a number of careful reviews of cost-benefit and cost-effectiveness studies of health services for people who use drugs, particularly of treatment for drug dependence, which were complemented with an updated search of cost-benefit and cost-effectiveness studies of drug-related health services.12

COSTS AND BENEFITS OF TREATMENT OF DRUG DEPENDENCE

An important review of 11 cost-benefit analyses published before 2003, all of them conducted in the United States, included only published peer-reviewed studies that attempted cost-benefit analyses of one of more of these factors: crime, health services utilisation, employment earnings and expenditure on illicit drugs and alcohol.13 The authors note, in sum:

• The average total net benefit accruing from all categories of cost reductions estimated over the 12-month period was $42,905. The average benefit-cost ratio for studies in which it was calculated was 8.9, ranging from 1.33 to 23.33.
• The greatest economic benefit was in reduced criminal activity, over half of the total.
• The economic benefit of savings on health services averted was about 15 percent of the total, and of increased employment earnings was about 13 percent. The authors note that the latter, measured only as actual in-pocket earnings, probably underestimates the importance of having any kind of stable employment as a determinant of long-term ‘success’.14

Since that review, there have been a number of interesting attempts to estimate social costs and benefits of treatment. Using data from 43 treatment facilities in the state of California supplemented by surveys, Ettner and colleagues used WHO guidelines to assess the benefits of treatment with respect to medical care, criminal activity, earnings of people treated and welfare programme (government transfer) payments.15 Their finding was that treatment cost an average $1,583 per person but benefited society at the level of $11,487, a 7:1 ratio.16 As in the earlier review, the authors estimate that the greatest savings – 65 percent – were in lower crime-related costs, with 29 percent attributable to increased earnings and six percent due to reduced medical costs. They suggest that the actual benefit-cost ratio is probably closer to 9:1 because of the use of arrests as a proxy for crime, given that many crimes do not ever result in an arrest.17

A study that focused narrowly on costs related only to robbery looked at several forms of treatment for drug dependence in the United States.18 Across all forms of treatment, being in treatment was associated with a reduction in robbery incidence of at least 0.4 robberies per patient per year. The authors conclude: ‘Given reasonable valuations associated with averting, at the margin, a single armed robbery, this one component of benefit may be large enough to offset the economic costs’ of drug treatment.19 They further note that while residential treatment is generally considerably more expensive than outpatient care, the greater benefit of residential programmes in averting crime may ‘more than offset’ the added cost.20 Policymakers and service providers alike may tend to favour support for drug treatment programmes that admit older, more educated patients with no criminal record and no psychiatric disorders, but the results of this study suggest that much greater social benefits would derive from expanding treatment access for those patients with a propensity to commit crimes.21

Opioid Substitution Therapy (OST)

In part because of its link to HIV prevention and its long clinical track record, one of the most widely studied forms of treatment for drug dependence is medication-assisted therapy for opiate addiction, also called opioid maintenance treatment or opioid substitution treatment (OST hereinafter). Opiumderived medicines, especially methadone and buprenorphine, can be administered daily by mouth – thus obviating injection – and can stabilise cravings of people with opiate dependence. As UN agencies have noted, this therapy can enable people to hold jobs and eliminate the need to commit crimes to obtain illicit opiates, as well as reducing heroin use, heroin overdose, overdose mortality and reducing other injection-related harms.22 UN agencies have promoted OST as a central element of HIV prevention where illicit opiate use is significant because OST ‘can decrease the high cost of opioid dependence to individuals, their families and society at large by reducing heroin use, associated deaths, HIV risk behaviours and criminal activity’.23 They also note that it may be optimal for some patients to continue OST indefinitely,24 a response to the misinformed but still widely held view that methadone therapy should always be of limited duration as a bridge to abstinence from all opiates.25

OST is limited and stigmatised in many countries and banned outright in a few (notably the Russian Federation).26 In spite of OST’s track record of successful treatment of heroin addiction that dates from the late 1960s, some practitioners and policymakers deride it as substituting one addiction for another. The potential for diversion of methadone and buprenorphine to illicit markets also means that their medical use must be carefully controlled and the costs of that control figured into assessments. In many countries, including the US, the administration of methadone must be directly observed – that is, patients must come to a health facility every day and take their medicine in front of a health professional – an enormous inconvenience to the patient and a practice with considerable other costs. Buprenorphine, particularly in a formulation in which it is combined with the opioid antagonist naloxone, is considered to have a lower potential for diversion to illicit use, and in many places it is possible to receive take-home doses rather than requiring daily direct observation.

...for every one dollar invested in NSPs (2000-2009), $27 is returned in cost savings. This return increases considerably over a longer time horizon.

Because drug injection is associated with high risk of transmission of HIV, a very expensive disease to treat, some cost-benefit studies of OST count benefits mainly in savings from HIV cases averted. In spite of hard-won victories in lowering the cost of HIV treatment, HIV remains quite expensive to treat.27 In addition, HIV transmission through injection with contaminated equipment is much more efficient than sexual transmission; even a very small number of injections poses a high risk.28 Given the high cost of HIV treatment, as some experts have noted, OST expansion carries a benefit so substantial as to be self-justifying ‘regardless of what assumptions are made about the effect of opiate dependence or methadone prescription on the quality of life’.29 Reviewing the research on OST in 2004, WHO, UNAIDS and UNODC summarised it as follows:

According to several conservative estimates, every dollar invested in opioid dependence treatment programmes may yield a return of between $4 and $7 in reduced drug-related crime, criminal justice costs and theft alone. When savings related to health care are included, total savings can exceed costs by a ratio of 12:1.30

Most studies of the cost and benefit of OST have been undertaken in countries of the global North. Recently, however, a number of studies from Asia have made cost-benefit calculations of OST, though generally only of benefits related to averting cases of HIV. A 2012 study in Dehong (Yunnan), China estimated that against a per-patient cost of OST of $9.10-16.70 per month over the 30-month period followed, methadone programmes averted HIV cases of which the cost would have been a net $4600 per case to treat.31 A similar study over a five-year period estimated that OST programmes in the Xinjiang, China averted over 5600 HIV infections that would have incurred a cost to the health system of over $4.4 million in the same period.32 These studies obviously rely on assumptions about risks of HIV transmission faced by people who inject drugs, mostly extrapolations from previous periods. They notably did not calculate the costs of sexual transmission of HIV to people who do not inject drugs and so probably underestimate the benefits accrued.

A special category of treatment of drug dependence is the legal administration of medicinal heroin available in a few countries, generally only for small numbers of people with long-standing addictions who, for various reasons, have not benefited from other therapies. A review of evaluations of heroin-assisted treatment in Switzerland, Germany, the Netherlands, Spain, Canada and the UK concluded that these programmes have generally demonstrated considerable benefits through the reduction of criminal activities among these patients, decline in use of illicitly obtained drugs and decline in risky injection.33 One study of the Swiss experience indicated that the incidence of the crimes of burglary, muggings and drug trafficking declined between 50 to 90 percent among people in the prescription heroin programme, depending on the crime, but did not attempt to assign costs to this reduction.34 It is not expected that this intervention would ever be offered on a mass scale, but it illustrates the principle of achieving significant benefits by reaching those associated with the most problematic use.

OTHER SERVICES FOR PEOPLE WHO USE DRUGS

Needle and Syringe Programmes (NSPs)

Programmes that furnish clean injection equipment to people who inject drugs are proven to be extremely effective with respect to prevention of HIV. The review commissioned by WHO of the extensive research on this subject shows, in fact, that these programmes, most often established as needle exchanges (whereby used injection equipment can be exchanged for sterile equipment), are among the most effective and cost-effective programmes in the HIV prevention arsenal.35 These programmes should not be expected to have the range of potential social benefits that are associated with treatment of drug dependence since they do not necessarily reduce drug use or addiction, though they may present important opportunities for referral to treatment services and other social support – an element that has not been extensively evaluated economically in the published literature.

As of 2012, there were about 500 overdose episodes that occurred among people using Insite but no deaths, whereas the neighbourhood of Insite was previously known for frequent overdose-related incidents and deaths on the street.

A 2010 review of cost studies – mostly cost-effectiveness rather than cost-benefit – concluded that if averting HIV cases could be demonstrated, as they were convincingly in a number of studies, the benefit-cost ratio of these programmes should be expected to be very high because the programmes tend to cost little, and HIV care is expensive.36 A widely cited study by the government of Australia drew the following conclusion about these programmes across the country:

For every one dollar invested in NSPs, more than four dollars were returned (additional to the investment) in healthcare cost-savings in the short term (10 years) if only direct costs are included; greater returns are expected over longer time horizons….If patient/client costs and productivity gains and losses are included in the analysis, then…for every one dollar invested in NSPs (2000-2009), $27 is returned in cost savings. This return increases considerably over a longer time horizon.37

As noted above, NSP programmes reach people who are actively injecting and who are more likely than non-injectors to have drug-related health problems, and NSP staff can provide a link to other health services and counselling. A 2010 review in The Lancet concluded that if the desired outcome is HIV control, the greatest cost-effectiveness and benefit-cost will be achieved by high coverage of both these interventions in combination with high coverage of HIV treatment, even though the last element is very costly in most places.38 The authors bemoan the low availability of all these services for many people who use drugs, which is linked to the stigma they face and their fear of using services that may result in their drug use being brought to the attention of the police.39

Needle and syringe programmes may yield particularly high returns in prison settings. Countries including Germany, Switzerland, Spain, Moldova, Belarus, Luxembourg, Romania and Kyrgyzstan have programmes that furnish clean injection equipment in prison,40 an intervention that requires the politically courageous recognition that in spite of even the best efforts to stop it, drug injection occurs in prisons. All of those programmes studied have had dramatic results in reducing transmission of HIV and in some cases hepatitis C, though benefit-cost ratios have not been calculated.41 Since treating HIV among prisoners is the responsibility of the state and could be a long-term responsibility, the cost savings from HIV and hepatitis cases averted are likely to be considerable. OST is offered in prison in some countries, where it has an excellent track record (directly observed administration is facilitated by the prison environment), but many countries that offer OST in the broader community still do not offer it in prisons.42

Supervised Injection Facilities

Some countries committed to comprehensive HIV services for people who use drugs also authorise so-called supervised or safe injection facilities, places where people can inject illicit drugs with clean equipment in the presence of health professionals. These facilities exist in many western European countries – Germany, the Netherlands and Switzerland were pioneers – as well as Canada and Australia.43 The facility in Vancouver, Canada, called Insite, has been extensively studied by public health and social science researchers. As of 2012, there were about 500 overdose episodes that occurred among people using Insite but no deaths,44 whereas the neighbourhood of Insite was previously known for frequent overdose-related incidents and deaths on the street. In addition, a 2011 study found that not only was overdose mortality averted in the facility itself, but in a 500-metre radius of Insite, overdose episodes dropped by 35 percent in the first years of the facility’s operation, compared to a nine percent decline in the rest of the city.45 In benefit-cost terms, a 2010 study that made conservative assumptions about overdose mortality, other overdose complications and HIV cases averted estimated a benefit-cost ratio for Insite of about 5:1 or in monetary terms about $6 million a year.46

Drug Treatment Courts

A number of countries, particularly the US and Canada, have invested in specialised drug courts or drug treatment courts in which some alleged offenders can be diverted to court-supervised treatment programmes as an alternative to incarceration. Drug courts in the US have been extensively evaluated, mostly on the criterion of criminal recidivism. The US model of courts raises a number of questions, including the due process issue of requiring people to plead guilty to whatever charge is before them as a condition of being diverted to treatment, the question of whether treatment should ever be coercive in any sense, and the fact that many courts refuse OST as a treatment option in spite of great need for it.47 An extensive drug court evaluation supported by the US Department of Justice included a cost-benefit calculation that assigned monetary values to components of a broad definition of benefits, including social and economic productivity of drug court participants, welfare programme savings, and criminal justice and health service savings and compared them to drug court costs, which are generally well documented.48 Their sophisticated analysis, involving many well-specified assumptions, concluded that drug courts in the US carry a benefit-cost ratio of 1.92:1.49 At this writing, the US is promoting drug courts heavily as part of its international drug control programmes.

Drug treatment courts have potentially large economic benefits in theory from incarceration costs averted, but not if their rules are so onerous or their protection of due process so flawed as to make them unattractive to a significant percentage of those who might benefit from them. In places where opiate addiction is a public health problem, drug courts should follow the recommendation of the board of the US National Association of Drug Court Professionals and allow OST as a treatment alternative likely to be essential for many participants.50

CONCLUSION

In spite of methodological challenges, a significant body of evidence shows that health services for people who use drugs have significant social and economic benefits, including reduction of crime and increasing the ability of people who have lived with addiction to be economically productive. This evidence has figured insufficiently in policy and resource allocation decision-making on drugs, apparently frequently overshadowed by political factors. These services should be a high priority for fiscally-minded governments, which should especially ensure that they are not undermined, for example, by policing that targets health or needle exchange facilities to find drug users to fill arrest quotas, or by undue ‘not in my backyard’ neighbourhood opposition to the placement of drug treatment clinics. Moreover, drug-related health services derive the greatest benefits when they target marginalised people with a propensity to commit crime, in spite of the obvious political challenges posed by directing funding toward these individuals.

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Notes:

1 See US Office of National Drug Control Policy, ‘The National Drug Control Budget FY 2103 Funding Highlights’ and Drug Policy Alliance, ‘The Federal Drug Control Budget: New Rhetoric, Same Failed Drug War,’ 2013, http://www.drugpolicy.org/sites/default ... Budget.pdf

2 Count the Costs, ‘The war on drugs: Wasting billions and undermining economies,’ http://www.countthecosts.org/sites/defa ... iefing.pdf.

3 Bradley Mathers, Louisa Degenhardt, Hammad Ali, Lucas Wiessing et al., ‘HIV prevention, treatment and care services for people who inject drugs: a systematic review of global, regional and national coverage,’ Lancet 375 (2010): 1014-1028.

4 UN Office on Drugs and Crime, World Drug Report 2013 (Vienna: United Nations, 2013), appended fact sheet, http://www.unodc.org/doc/wdr/Fact_Sheet_Chp1_2013.pdf

5 Ibid.

6 WHO and UNODC, ‘Principles of drug dependence treatment: discussion paper.’ (Vienna: United Nations, 2008), https://www.unodc.org/documents/drug-tr ... arch08.pdf.

7 Ibid.

8 Susan L. Ettner, David Huang, Elizabeth Evans, Danielle Rose Ash et al., ‘Cost-benefit in the California Treatment Outcome Project: does substance abuse treatment ‘pay for itself?,’ Health Research and Educational Trust 41 (2005):193-194.

9 Eric Single et al., International guidelines for estimating the costs of substance abuse, 2nd ed. (Geneva: World Health Organization, 2004).

10 Single et al., 59-62.

11 Ibid., 60-61.

12 Kathryn E. McCollister and Michael T. French. ‘The relative contribution of outcome domains in the total economic benefit of addiction interventions: a review of first findings,’ Addiction 98 (2003): 1647-1659; Louisa Degenhardt, Bradley Mathers, Peter Vickerman, Tim Rhodes et al. ‘Prevention of HIV infection for people who inject drugs: why individual, structural and combination approaches are needed,’ Lancet DOI:10.1016/S0140-6736(10)60742-8; Daniel Wolfe, M. Patrizia Carrieri and Donald Shepard, ‘Treatment and care for injecting drug users with HIV infection: a review of barriers and ways forward,’ Lancet DOI:10.1016/S0140-6736(10)60832-X; Center for Health Program Development and Management, ‘Review of cost-benefit and cost-effectiveness literature for methadone or buprenorphine as a treatment for opiate addiction,’ Baltimore, 9 May, 2007.

13 McCollister and French, op. cit.

14 Ibid., 1655.

15 Ettner et al., 196.

16 Ibid., 205.

17 Ibid., 204, 206.

18 Anirban Basu, A. David Paltiel and Harold A. Pollack, ‘Social costs of robbery and the cost-effectiveness of substance abuse treatment,’ Health Economics (2008): 927-946.

19 Ibid., 939.

20 Ibid., 939-940.

21 Ibid., 940.

22 World Health Organization, UN Office on Drugs and Crime and UNAIDS (UN Joint Programme on HIV/AIDS), ‘WHO/UNODC/UNAIDS position paper: Substitution maintenance therapy in the management of opioid dependence and HIV/AIDS prevention,’ Geneva, 2004, http://www.unodc.org/documents/hiv-aids ... herapy.pdf

23 Ibid., 1.

24 Ibid.

25 See, for example, Charles Winick, ‘A mandatory short-term methadone-to-abstinence program in New York City,’ Mount Sinai Journal of Medicine 68(2001): 41-45; the Manhattan and Brooklyn drug treatment courts in New York City as of 2013 require participants to use methadone only as a short-term bridge to abstinence.

26 Mathers et al., op.cit.

27 HIV treatment costs vary considerably based on the percentage of patients who may have developed resistance or intolerable side effects to generic first-line medicines, as well as whether countries have access to generic forms of some medicines. The cost of a WHO-recommended first-line regimen was about $112 per patient per year in 2012. Second-line regimens cost on average about $450 per person per year in 2012, but much more in the US and other high-income countries. The cost of third-line treatments was $13,225 per person per year in Georgia, $7,782 in Paraguay, $8,468 in Armenia, and $4,760 in Thailand. See World Health Organization, ‘Global update on HIV treatment 2013: results, impacts and opportunities,’ Geneva, United Nations, 99-100, http://apps.who.int/iris/bitstream/1066 ... 34_eng.pdf.

28 One review of the research indicates that HIV risk from one episode of vaginal (male-female) sex is as low as 0.05 percent (or 1 in 2000) while injection with contaminated equipment carries a risk of about 0.7 percent or 0.8 percent. Government of Canada, Public Health Agency, ‘HIV transmission risk: a summary of evidence,’ Ottawa, 2013, http://www.phac-aspc.gc.ca/aids-sida/pu ... ih-eng.php.

29 Paul G. Barnett and Sally S. Hui, ‘The cost-effectiveness of methadone maintenance,’ Mount Sinai Journal of Medicine 67 (2000): 371.

30 World Health Organization, Joint UN Programme on HIV/AIDS (UNAIDS) and UN Office on Drugs and Crime. ‘Position Paper: Substitution Maintenance Therapy in the Management of Opioid Dependence and HIV Prevention,’ Geneva, United Nations, 2004.

31 Yan Xing, Jiangping Sun, Weihua Cao, Liming Lee et al., ‘Economic evaluation of methadone maintenance treatment in HIV/AIDS control among injection drug users in Dehong, China,’ AIDS Care 24 (2012): 756-762.

32 Mingjian J. Ni, Li Ping Fu, Xue Ling Chen et al., ‘Net financial benefits of averting HIV infections among people who inject drugs in Urumqi, Xinjiang, People’s Republic of China (2005-2010),’ BMC Public Health 2012, 12:572, http://www.biomedcentral.com/1471-2458/12/572.

33 Benedikt Fischer, Eugenia Oviedo-Joekes, Peter Blanken, Christian Haasen et al., ‘Heroin-assisted treatment (HAT) a decade later: a brief update on science and politics,’ Journal of Urban Health 84 (2007): 552-562.

34 Martin Killias, Marcel F. Aebi and Denis Ribeaud, ‘Key findings concerning the effects of heroin prescription on crime,’ in Heroin-assisted treatment: work in progress eds. Margret Rihs-Middel, Robert Hämmig and Nina Jacobshagen (Bern: Verlag Hans Huber, 2005).

35 Alex Wodak and Annie Cooney, ‘Effectiveness of sterile needle and syringe programming in reducing HIV/AIDS among injection drug users – Evidence for Action Technical Paper,’ Geneva, World Health Organization, 2004, http://whqlibdoc.who.int/publications/2 ... 591641.pdf

36 Degenhardt et al., 35-36.

37 Government of Australia, National Centre in HIV Epidemiology and Clinical Research’ ‘Return on investment 2: evaluating the costeffectiveness of needle and syringe programs in Australia,’ 2009, http://www.health.gov.au/internet/main/ ... retexe.pdf.

38 Degenhardt et al., 30.

39 Ibid.

40 See Rick Lines, Ralf Jürgens, Glenn Betteridge et al., ‘Prison needle exchange: lessons from a comprehensive review of international evidence and experience,’ (Toronto: Canadian HIV/AIDS Legal Network, 2006), http://www.aidslaw.ca/publications/inte ... wnloadFile. php?ref=1173; and Ingo Ilya Michels and Heino Stöver, ‘Harm reduction – from a conceptual framework to practical experience: the example of Germany’. Substance Use and Misuse 47 (2012): 910-922.

41 Lines et al., ibid.

42 Kate Dolan, Ben Kite, Emma Black et al., ‘HIV in prison in low-income and middle-income countries,’ Lancet Infectious Diseases 7 (2007): 32–41.

43 Harm Reduction International, Global state of harm reduction 2012: toward an integrated response, London, 2012, http://www.ihra.net/files/2012/07/24/Gl ... 12_Web.pdf.

44 Vancouver Coastal Health, ‘Supervised Injection Site – User Statistics,’ http://supervisedinjection.vch.ca/resea ... statistics

45 Brandon D.L. Marshall, M-J Milloy, Evan Wood, Julio Montaner and Thomas Kerr, ‘Reduction in overdose mortality after the opening of North America’s first medically supervised safer injection facility: a retrospective population-based study,’ Lancet 377 (2011): 1429-1437.

46 Martin A. Andresen and Neil Boyd, ‘A cost-benefit and cost-effectiveness analysis of Vancouver’s supervised injection facility,’ International Journal of Drug Policy 21 (2010): 70-76.

47 Ryan S. King and Jill Pasquarella, ‘Drug courts: a review of the evidence,’ (Washington, DC: The Sentencing Project, 2009), http://www.sentencingproject.org/doc/dp_drugcourts.pdf; and Drug Policy Alliance, ‘Drug courts are not the answer: toward a health-centered approach to drug use,’ New York, 2011, http://www.drugpolicy.org/sites/default ... Final2.pdf.

48 P. Mitchell Downey and John K. Roman, ‘Chapter 9 – Cost-benefit analyses,’ in Shelli B. Rossman, John K. Roman, Janine M. Zweig et al., eds. The multi-site adult drug court evaluation: the impact of drug courts. (Washington, DC: Urban Institute, 2011), 228-250.

49 Ibid., 247.

50 National Association of Drug Court Professionals: Resolution of the Board of Directors on the availability of medically assisted treatment (M.A.T.) for addiction in drug courts, 17 July 2011, http://www.nadcp.org/sites/default/file ... %20MAT.pdf

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Lawful Access to Cannabis: Gains, Losses and Design Criteria
by Mark A.R. Kleiman [1] and Jeremy Ziskind

Much of the current argument about whether to legalise various currently illicit drugs is conducted at a high level of abstraction (morality and health vs. liberty and public safety). The details of post-prohibition policies are barely mentioned and concrete outcomes are either ignored or baldly asserted without any careful marshalling of fact and analysis. But it is possible to try to predict and evaluate – albeit imperfectly – the likely consequences of proposed policy changes and to use those predictions to choose systems of legal availability that would result in better, rather than worse, combinations of gain and loss from the change.

Summary

• Adopt policies that learn. Policymakers should try out ideas, measure their outcomes and make mid-course corrections accordingly. One extreme version would be to incorporate a ‘sunset’ clause into the initial regulation, requiring a legislative or popular re-authorisation of legal availability after a trial period.
• Beware commercialisation. The commercial interest in promoting heavy use will prove difficult to control through taxes and regulations. Not-forprofit- only production and sale on the one hand, and state monopoly on the other, are options to consider before rushing headlong into a replication for cannabis of something resembling the existing alcohol industry.
• Consider incremental approaches. Not all initial policies are equally easy to change. In particular, the greater the financial (and therefore political) power of a commercial, for-profit cannabis industry, the harder it will be to make policy adjustments that might reduce the revenues of that industry. Thus, pioneering jurisdictions may want to consider incremental approaches that begin – and might end – with non-profit regimes.
• Let the experiments run. The places that legalise cannabis first will provide – at some risk to their own populations – an external benefit to the rest of the world in the form of knowledge, however the experiments turn out. Federal authorities in the United States and other places where states or provinces try to innovate and the guardians of the international treaty regimes would be well advised to keep their hands off as long as the pioneering jurisdictions take adequate measures to prevent ‘exports’.2
• Prevent price decreases. Any consumer concerned about cannabis prices is probably using too much.
• Plan for prevention and treatment. Abuse will almost certainly go up under legal availability, but prevention and treatment efforts can help to limit the size of that increase and the suffering it creates.
• Consider user-set quotas and other ‘nudge’ options. If substance abuse is a ‘disorder of choice,’3 then managing the choice architecture might be one mechanism for preventing and managing that disorder.

The analysis below focuses on cannabis, the drug for which serious legalisation efforts are now in motion. The difficulty of that analysis will provide some indication of how much more difficult it would be to evaluate the question for ‘drugs’ more generally. Cannabis is the most widely used illicit drug, so its legalisation would influence the largest number – in some countries an absolute majority – of all users of illicit drugs, and eliminate a large number of arrests. But since other drugs dominate drug-related violence and incarceration, many of the costs of the ‘war on drugs’ would remain in place after cannabis legalisation: a point often omitted by proponents of legalisation as they skip directly from mass incarceration and illicit-market violence as problems to the legalisation of cannabis as a solution. The claims of advocates might be more convincing if they were more restrained.

At the opposite pole from bare assertion either of moral claims (e.g. that drug-taking is inherently wrong, or alternatively that any drug prohibition violates basic human rights) or of factual predictions (about drug abuse or incarceration) lies the project of formal cost-benefit analysis, which aims to weigh all of the gains and losses from a proposed policy change on the same scale: the valuations of the individual gainers and losers, measured by their (hypothetical) willingness to pay to enjoy the gains or avoid the losses. It is possible to imagine doing an elaborate cost-benefit analysis of legalising cannabis,4 but doing so in practice would require one to predict the extent of changes in variables that cannot even be accurately measured in the present, and to perform implausible feats of relative valuation (e.g. comparing person-years of incarceration with person-years of cannabis dependency).

The size of the gains from legalisation, and in particular the reduction in the extent of illicit activity and of enforcement effort, would be greater in high-consumption countries such as the United States than it would in the lower-consumption conditions characteristic of most other advanced economies.

Key uncertainties include:

• The demand-side responses to price changes after legalisation, more convenient access, the removal of legal sanctions and the diminution of social stigma.
• The size and direction of changes in abuse risk (the probability of proceeding from casual to problem use).
• Changes in product choice (to more or less risky forms of the drug).
• Effects on the abuse of alcohol and other drugs.

This last set of effects is both important and unknown. In particular, whether alcohol is a substitute for, or instead a complement to, cannabis remains to be ascertained, and the answer might not be the same for all populations and may differ in terms of short-run and long-run effects.

Since the alcohol problem in all countries is much bigger than the cannabis problem, indirect effects on alcohol could overwhelm the direct effects, converting the results of cannabis legalisation from a net gain to a net loss or vice versa.

Thus reasonable ranges of difference over valuations and predictions will probably span the break-even point. Moreover, the outcomes of legalisation depend very sharply on details of policy that are usually not specified in the debate.

Thus it seems hard to justify any dogmatic statement that cannabis legalisation would, or would not, be beneficial on balance, without reference to a specific locale and a specific set of post-prohibition policies.

If legalisation is to be tried – as now in Colorado, Washington State and Uruguay, very likely soon in other US states and quite possibly within the next decade in the US on a national level – it ought to be tried in an experimental spirit. Given the huge range of potential gains and losses, and of policy options, the probability of finding the perfect combination right from the start must surely be near zero. Thus the best initial policy will not be the one that comes closest to some calculated optimum, but instead the one easiest to adjust in light of experience, which among other things means building in evaluation and policy feedback mechanisms. The pioneers of cannabis legalisation are all too likely to experience in practice the validity of von Moltke’s maxim that no battle plan survives first contact with the enemy.

That is not, of course, a reason not to analyse and to plan, but some of that analysis and planning should involve building in to the process the capacity to improvise in the face of the predictable appearance of unpredicted phenomena.

Categories of Gain and Loss

One way to start the analysis would be by cataloguing the categories of personal and social gain and loss that might arise from legalisation. The following list – far from exhaustive – suggests the range of possible considerations.

Potential Gains:

• Reduce the size and revenue of illicit trade, the associated violence and disorder and the harm done by arrests and incarceration.
• Increase somewhat the range of licit economic opportunity and generate public revenue.
• Either reduce public expenditure on law enforcement or free enforcement resources for other uses.
• Reduce the risks of cannabis consumption by replacing untested, unlabelled and unregulated product with tested, labelled and regulated product.
• More speculatively, it might encourage consumption using less health-damaging means (e.g. vaporisation rather than smoking) or new cultural practices, such as cannabis use short of intoxication.
• All consumers would face lower prices and a wider choice of products, generating increased consumers’ surpluses among all whose consumption is well-informed and not the result of substance-abuse disorder, and even among some unwise or dependent consumers.

Potential Losses:

• Increased consumption for those consumers whose consumption is, on balance and at the margin, damaging rather than beneficial to themselves. That might be especially true of dependent users (including those not now dependent who might become so under conditions of legal access) and of minors. But as the examples of tobacco, alcohol, gambling and food all illustrate, fashion and present-orientation can lead even non-dependent adults to make self-harming decisions.
• Losses to those whose welfare is interdependent (materially or emotionally) with self-harming users who are their kin or friends and to those harmed by accidents, crimes or derelictions of duty caused by cannabis intoxication or dependency. There would be analogous gains related to users whose lives or social performance improves from using licit cannabis or who avoid legal penalties for using or selling it due to the repeal of prohibitory laws.

There might also be, as noted, either gains or losses from decreased or increased self-harming or socially harmful use of alcohol and other drugs.

Policy Details

The actual outcomes of any scheme of legal access would depend strongly on details rarely mentioned in the abstract proand- con discussion of whether to legalise. The risk of a large increase in damaging forms of consumption would be greater at a lower price; the need for enforcement against illicit production and sale, or tax evasion by licensed producers and sellers, would be higher.

Another central decision is whether to allow private for-profit enterprises to produce and sell cannabis, or instead to restrict licit activity to:

(1) Production for personal use and free distribution only.

(2) Production and sale by not-for-profit enterprises such as consumer-owned cooperatives like the Spanish ‘cannabis clubs’

(3) Some variety of state monopoly, perhaps of retail sales only, leaving production to private enterprise.

If the private enterprise model is chosen, an additional choice must be made about whether to limit market concentration to ensure the existence of a variety of competing firms (thus perhaps limiting the marketing and political power of the industry as a whole and – again perhaps – increasing the rate of product innovation and the range of products easily available) or instead to allow the likely development of oligopolistic competition, as in the markets for cigarettes and beer. A potential advantage of legalisation would be the provision of consumer information superior to that available on the illicit market. The corresponding disadvantage might be the application of powerful marketing techniques to making excessive consumption seem desirable and fashionable.

Cannabis is a more complex product than beer, with at least two and perhaps dozens of significantly psychoactive chemicals and, to date, only limited scientific knowledge about their actions and interactions. Requiring accurate label information about chemical content seems a sensible approach, but not all consumers will be able to make good use of a collection of chemical names and percentages. Industry participants could be given the responsibility of providing sound consumer information, including due warnings about the risks of habituation, at the point of sale or via websites, or that responsibility could be assigned to NGOs or public agencies, perhaps financed by cannabis taxation. It seems at least arguable that cannabis sales personnel should have extensive training both about the pharmacology of the drug and about offering good advice to consumers, making their role closer to that of a pharmacist or nutritionist than of a mere sales clerk or bartender.

By the same token, decisions would have to be made and executed about whether and how to limit marketing efforts. To some eyes at least, the alcohol industry provides a warning by example of what could go wrong. In the United States, the doctrine of ‘commercial free speech’ might gravely impair the capacity of the state to allow private enterprise but restrain promotion.

Again as with alcohol, rules would have to be set and (imperfectly) enforced about public intoxication, workplace intoxication, operating a motor vehicle under the influence and provision to or use by minors.

A central fact about cannabis – as about alcohol and many other activities that form a persistent bad habit in a significant minority of their participants – is that the problem minority consumes the dominant share of the product. (A generalisation often cited as ‘Pareto’s Law’ holds that 20 percent of the participants in an activity account for 80 percent of the activity.) As a result, a commercial industry, or a revenue-oriented state monopoly, would depend for much if not most of its sales on behaviour that is self-harming. In the case of cannabis in the United States, something like four-fifths of total product currently goes to consumers of more than a gram of high-potency cannabis per day; about half of those daily users, according to their own self-report, meet clinical criteria for abuse or dependency. That would create a commercial incentive directly contrary to the public interest, and potentially great political pressure to do away with any restriction that promises to be efficacious in reducing the frequency of drug misuse. Under contemporary conditions in advanced Western countries, it is difficult to make any commodity available to adults without increasing access to minors, since every adult is a potential point of ‘leakage’ across the age barrier. Teenagers are not merely an important current market segment; in the eyes of companies trying to increase their ‘brand equity,’ they are the future. Within legal constraints, the alcohol and tobacco industries do their utmost to compete for teenage market share, even where that consumption is illegal. There is no reason to think that formal bans on marketing to minors would have more than a trivial impact on the efforts of participants in a legal cannabis industry to penetrate the youthful demographic.

Taxation and Revenue

Cannabis, even under illegal conditions, is a highly cost-effective intoxicant. At prevailing prices in the United States, a drinker who has not built up a tolerance for alcohol might need about $5 worth of store-purchased mass-market beer to become drunk; a similarly fresh smoker could become intoxicated on perhaps $2 worth of cannabis, or even less. Medical dispensaries in Colorado already offer ‘weekly special’ strains of sinsemilla cannabis at $5 per gram (with volume discounts), where a gram represents more than two standard ‘joints’ (cannabis cigarettes), each more than adequate to intoxicate a non-tolerant user. Vaporisation seems likely to lower the effective cost substantially, both because concentrates trade at discount to herbal cannabis on an intoxicant-equivalency basis and because the vaporisation process loses fewer of the active chemicals to combustion or as sidestream smoke.

Thus there seems to be no strong argument for letting prices fall much from existing levels; even a user of modest means will reach the point where his or her cannabis use is self-harming before reaching the point where it becomes a budget problem. But since production costs under legal conditions would be negligible (Jonathan P. Caulkins and his colleagues have estimated costs in the pennies-per-joint range5) maintaining current prices would require very heavy taxation, whether measured in terms of the tax share of the final price (more than 95 percent) or in terms of tax-per-unit-weight (roughly $300 per ounce). Collecting such taxes would pose a daunting challenge; in New York City, where a pack (roughly one ounce) of cigarettes bears a tax burden of approximately $8, full tax has not been paid on more than one-third of all cigarettes consumed.6

This suggests that taxation be a specific excise (perhaps per unit of THC) rather than on an ad valorem (percentage-of-marketprice) basis. Taxation levels might also be varied with product composition to encourage the sale of less hazardous (e.g. lower-THC, higher-CBD) forms of the drug. Alternatively, annual production quotas could be set to restrict production to achieve some desired price level, and producers could be required to bid at auction for quota rights. A properly-designed auction ought to be able to capture for the state almost all of the producers’ surplus in the commodity cannabis market.

With taxes (or quota prices) high enough to maintain illicit prices, cannabis could be a significant, though not a major, source of public revenue, on about the same scale (low double digits of billions of dollars per year in the United States) as alcohol and tobacco. How to keep even a state monopoly from encouraging problem use to hit revenue targets – as American state lotteries notoriously do – would remain a problem.

Culture and Cannabis Consumption

Though a very large share of all alcohol – in the United States, approximately 50 percent – is consumed as part of intoxication events (‘drinking binges’), the vast majority of drinking occasions do not involve the user becoming intoxicated. The opposite seems to be true now for cannabis, where ‘getting high’ is the socially understood purpose of using the drug. But it is possible – and might be easier with clearly labelled products and more controllable means of administration, such as vaporisation rather than smoking – to have the cannabis equivalent of a single alcoholic drink, and it is conceivable that, under legality, norms of using cannabis not to intoxication might establish themselves at least in some social circles. Doubtless some policies would be more favourable than others to such a development, but too little is yet known to allow more than mere speculation about what might, or might not, work in that regard.

Enforcement

In the long run, a legal market should require less enforcement attention than an illegal market. But regulations and taxes do not enforce themselves, and an untaxed and unregulated illegal market has some natural advantages over a taxed and regulated legal market, especially when the legal market is new and competitive pressures and technological advances have not yet driven prices down. Just as the first step in making rabbit stew is catching a rabbit, the first step in running a controlled market is to draw customers in from the uncontrolled markets. That will require mounting sufficient enforcement efforts to shift the balance of competitive advantage toward licit activity.

Prevention and Treatment

Drug consumption has risks, including the risk of progressing to problem use. ‘Just-say-no’ prevention efforts have limited efficacy.7 But the natural effect of legal availability, bringing lower prices and decreased non-price barriers to use, is to increase consumption, including problem consumption. Therefore a legalisation scheme ought, ideally, to include a comprehensive information and persuasion strategy, aimed at potential as well as current users, and designed to minimise the number of people who find themselves in the grip of a substance abuse disorder. There are lessons to be learned from both the successes and the failures of current efforts to prevent alcohol and tobacco misuse.

For those who do find themselves with harmful patterns of drug use that prove resistant to efforts at self-management, services directed at ameliorating the harm they do to themselves and others, and if possible to restoring normal volitional control. It would be wrong to expect that expanded drug treatment services would be capable of preventing a rise in the number of persons currently suffering from cannabis abuse disorder, but the need for those services will increase. Designing ways to meet that need – to identify problem users, persuade them to seek help, and ensure an adequate supply of services and a means of paying for them – ought to enter into the legalisation planning process.

User-Set Quotas : A ‘Nudge’ Strategy

Problem drug-taking can be thought of as a problem of impaired volition, in which the easy and natural thing for the user to do is not the most beneficial thing to do – even as the consumer would understand it if approaching the question thoughtfully. (Someone once said that if the pain of the hangover came before the pleasure of the intoxication, heavy drinking would be a virtue rather than a vice.) If that is the case, then one way to deal with addiction would be to change the ‘choice architecture’ – the decision problem presented to the consumer – in ways more conducive to choices consistent with the consumer’s goals and values and less dominated by impulse.8 In one of his ‘self-command’ essays, Thomas Schelling tells the story of a firm alarmed by spreading waistlines among its executives, who seemed to have a hard time restraining their caloric intake in the company dining room.9 The elegant – and, apparently, effective – solution was to have everyone order lunch at 9:30 in the morning, when the executives were not hungry and when the decision to order the brownie sundae did not result in having a brownie sundae immediately. Once it got to be lunchtime, when the temptation to overeat was stronger and more immediate, the option was no longer available: everyone was stuck with whatever he or she ordered at 9:30. Now of course no one was being fooled; the executives knew perfectly well that at 1 pm they would desire more, and different, food than they ordered at 9:30. But, at 9:30, that forgone future – rather than current satisfaction – seemed like a perfectly reasonable sacrifice for a smaller shirt or dress size.

That suggests a policy intervention for cannabis (or alcohol or gambling): a system of user-set personal quotas. Under such an approach, any adult might purchase cannabis from a set of competing outlets offering a variety of products at a variety of prices, just as in any normal market, and do so without any externally-imposed limit on quantity. But every user would be required to register, with the registration information treated as personal health information and thus strongly privacy-protected. (Given the somewhat complex and risky nature of cannabistaking as an activity, it might be reasonable to require every new user to go over some educational material and pass a simple test, like a driver’s license exam, but that is a different issue.)

At registration – which could take place in any retail establishment or at a state office – the new user would be asked to establish a personal monthly or weekly purchase quota, perhaps denominated in multiples of some standard dosing unit: for example, 40 mg of THC, roughly the content of the average joint. A request for a very large quota might call for some counselling (or even lead to suspicion that the consumer intended to purchase for resale to minors or other unlicensed buyers), but the consumer’s final decision would stand, whatever it turned out to be.

But that choice, once made, would then be binding; every purchase would have to be centrally tracked against the consumer’s personal limit, just as every credit card transaction is tracked against the cardholder’s credit limit. Once the weekly or monthly quota had been reached, no retail outlet would be allowed to sell any more cannabis to that consumer in that time period. The consumer would have the right to modify his or her quota, but while a request for a decrease would take immediate effect, a request for an increase would not become effective until after some delay, perhaps two weeks.

That system would not interfere with anyone who really wanted to be chronically intoxicated. But it would allow someone who really wanted to be an occasional user from slipping insensibly into a bad habit, and someone who really wanted to cut back to protect that desire from his or her own transient impulses. At minimum, it would make every cannabis user aware of his or her consumption pattern.

Of course, the limit would not really bind any sufficiently determined user, even in the short term: it would always be possible, with some amount of effort, to find a friend, or even a stranger, willing to share supplies or to make a ‘straw’ purchase. But just having that barrier in place might prevent some fraction of the substance abuse disorder that would otherwise result from free access to cannabis.

It seems likely that most users would set moderate quotas for themselves and never run into those limits, and that a smaller number would either start with a very high quota or start with a moderate quota, hit the limit a few times, increase the limit, start hitting the limit again, increase the limit again, and find themselves with bad cannabis habits. But – and this is the empirically open claim – it is also possible that a substantial number would set a limit, hit it repeatedly, and never increase it, and that a non-trivial number would voluntarily cut back their personal quotas or take themselves off the rolls entirely. That surely would not eliminate cannabis abuse and dependency, but it would give the potential problem user a fighting chance to overcome the joint forces of his or her own weakness of will and the cleverness of the cannabis industry marketing experts who would be doing their utmost to turn him into a ‘good’ – that is, addicted – customer. Imperfect self-command is not a disease; it is part of the human condition. Virtually all of us need, at some times and with respect to some behaviours, what Herbert Kleber has called ‘prosthetic support for weak will’. ‘Nudging’ in the form of self-set but externally enforced quotas is one possible way to help deal with the self-command problem when the problem is quantitative and involves a well-defined salable product. It would not solve the problem, which is after all not soluble. But it might diminish its extent without the well-known side-effects of dealing with cannabis (and perhaps other habit-forming drugs) by making sale and use illegal.

Conclusion

The debate over how to legalise cannabis tends to assume that for-profit commercial enterprise is the default option. Legalising cannabis on the alcohol model may, however, be the second-worst option (behind only continued prohibition); commercialisation creates an industry with a strong incentive to promote heavy use and appeal to minors through aggressive marketing.No system of legal availability is likely to entirely prevent an increase in problem use. But pioneering jurisdictions should consider alternative approaches including non-profit regimes and state monopoly. Both sides of the legalisation debate should acknowledge that the question is complex and the range of uncertainties wide. Such modesty, alas, is in short supply.

_______________

Notes:

1 Mark Kleiman would like to thank GiveWell and Good Ventures for supporting his work on cannabis policy. The views expressed are the author’s and should not be attributed to UCLA, GiveWell or Good Ventures, whose officials did not review this article in advance.

2 James M. Cole, ‘Guidance Regarding Marijuana Enforcement,’ US Department of Justice, Office of the Deputy Attorney General, 29 August 2013, http://www.justice.gov/iso/opa/resource ... 857467.pdf.

3 Gene M. Heyman, Addiction: A Disorder of Choice (Harvard University Press, 2010).

4 Stephen Pudney, Mark Bryan and Emilia DelBono, ‘Licensing and Regulation of the Cannabis Market in England and Wales: Towards a Cost/ Benefit Analysis,’ Beckley Foundation, 14 September, 2013.

5 Jonathan P. Caulkins, ‘Estimated Cost of Production for Legalized Cannabis,’ RAND Corporation, July 2010; Beau Kilmer, Jonathan P. Caulkins, Rosalie Liccardo Pacula, Robert J. MacCoun and Peter H. Reuter, ‘Altered State? Assessing How Marijuana Legalization in California Could Influence Marijuana Consumption and Public Budgets,’ RAND Corporation, 2010; Jonathan P. Caulkins and Peter Reuter, ‘What Can We Learn from Drug Prices?,’ Journal of Drug Issues 28 (1998): 593–612.

6 Paul McGee, ‘Fact Sheet: NYS Cigarette Tax Evasion,’ American Cancer Society (accessed Nov. 11, 2013)

7 Jonathan P. Caulkins, Susan S. Everingham, C. Peter Rydell, James Chiesa and Shawn Bushway, An Ounce of Prevention, a Pound of Uncertainty. The Cost of School-Based Drug Prevention Programs, RAND, 1999.

8 Richard Thaler and Cass Sunstein, Nudge: Improving Decisions and Health, Wealth, and Happiness (Yale University Press: 2008).

9 Thomas Schelling, ‘Self-Command in Practice, in Policy, and in a Theory of Rational Choice,’ The American Economic Review, Vol. 74, No. 2, May 1984, 1-11.

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