Creating the light cannabis market in the EU: a … · 2020. 1. 8. · • CBD reduces cigarette...
Transcript of Creating the light cannabis market in the EU: a … · 2020. 1. 8. · • CBD reduces cigarette...
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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
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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
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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
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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
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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
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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
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CANNABIS LIGHT INTERRELATION
WITH OTHER SUBSTANCE
Illicit Cannabis
(high THC)Tobacco
Other Medications
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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.
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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)
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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
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SUBSTITUTING PRESCRIPTION DRUGS
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SUBSTITUTING PRESCRIPTION DRUGS
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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
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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
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WHOLESALE MARKET FOR LIGHT CANNABIS
Source: HempBroker420
International varietyEU certified variety
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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)
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TOBACCO SHOPS AS DISTRIBUTION
CHANNELS?
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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
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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)
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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
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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).