Uruguay and the Black Market

In Uruguay, the government has recently announced it will not tax marijuana so that legal marijuana will be too cheap for the black market to compete. In addition, the government-controlled Institute for the Regulation and Control of Cannabis has already set the price of cannabis at $1.00 per gram. Uruguayan black market cannabis sells for $22 – $125 for 25 grams depending on the region. Much of the black market cannabis in Uruguay comes from Paraguay and is considered to be low quality. Freshly cut cannabis can be bought in Paraguay for $10 a kilo. Of course, criminal organizations exporting this cheap, poor-quality cannabis to Uruguay pay no taxes.

In Colorado the state has imposed a 15% wholesale and 10% retail tax on marijuana transactions while in Denver there is a further 8% sales tax, all of which has, since the start of the year, doubled the price of legal cannabis to $400.00 an ounce.  Currently in Colorado, good quality black market cannabis is going for $60 to $250 an ounce.

During the first four months of legalization Colorado has collected $10.8 million in tax revenue, $1.9 million of which is going to improve Colorado’s schools.  Tax revenue is great, however, according to anecdotal reports Colorado’s cannabis black market is thriving.

Uruguay might have a smart approach on tax, but its heavy hand on regulation could end up undermining their long term objectives.  Uruguay will be tightly regulating how cannabis can be grown, sold, and consumed.  For example, Uruguayans will not be allowed to purchase more than 40 grams in a month or grow more than six plants, unless they join a grower’s club.  Cannabis can only be sold in pharmacies.  Buyers, growers, and sellers must be registered in a government registry.

Jeffrey Miron, senior fellow at the Cato Institute, describes Uruguay’s tough regulations:

“These restrictions on the legal market are somewhere between irrelevant and counter-productive.  If marijuana users and producers have no trouble staying within these limits, then the limits themselves are irrelevant.  More likely, however, these restrictions will keep the black market alive, undoing the key benefit of legalization.”

When a government makes it difficult to obtain a product, whether the obstacles are high taxes or tough regulations, criminal organizations are the financial beneficiaries.  That is why ending marijuana prohibition will make society safer.  What type of legal marijuana regime would be most effective at removing this lucrative revenue stream is a matter of some debate.

Jamaica to Decriminalize

Jamaica will soon join the growing number of countries and states to formally decriminalize the possession of small amounts of cannabis. Minister of Justice Mark Goulding announced earlier this month that Jamaica’s Dangerous Drugs Act would be formally amended this summer, effectively decriminalizing small amounts of cannabis for recreational, medical, and spiritual purposes. Similar to much of the legislation that has been seen as of late, the amendment would make possession of small amounts of cannabis a ticketable offence; specifically, anyone found possessing cannabis in excess of the two ounce limit would be subject to a fine. Failure to pay the fine within 30 days will result in a minor offence and court ordered community service. Hats off to Jamaica for the sensible move; perhaps, and hopefully, full legalization isn’t too far from a reality in the near future!

Florida Introduces CBD-only Medical Cannabis Bill

Earlier this month Florida became the 9th state to enact a CBD (cannabidiol) only medical cannabis bill, and the 31st to allow for some form of medical cannabis. The bill is highly restrictive, and allows for limited access to CBD based medical cannabis for treatment of epileptic seizures and a few other severe illnesses.

The bill only allows for a specific strain of high CBD cannabis, “Charlotte’s Web,” to be grown and distributed by five dispensaries in the state; only patients with cancer, or conditions that result in chronic seizures or muscle spasms, are allowed to obtain medical cannabis. The medical cannabis grown is also limited to containing 0.8% THC or less, while allowing for CBD in excess of 10%. Patients may administer their medicine via pills, oils, or vaporization, however smoking is strictly prohibited.

Needless to say, the restrictive nature of the bill has sparked much controversy and debate in Florida. On November 2nd of this year, Florida voters will have the opportunity to decide, via a ballot question, whether or not a more comprehensive medical cannabis program should be created in Florida. Requiring 60% support to pass, the amendment would legalize medical cannabis in Florida, allowing for a greater number of patients to have access to medical cannabis.

Despite being a highly restrictive bill, and although many will not consider this a win for pro-cannabis activists, the fact that a highly conservative state such as Florida has passed any form of pro-cannabis legislation is surely indicative of an evolving opinion on cannabis.

Investor Warning Issued for Pot Stocks

On June 16, 2014 the Canadian Securities Administrators, an umbrella organization composed of the provincial and territorial securities regulators, issued a warning to investors to take caution when considering investments in Canadian marijuana companies. This is the first such warning issued by the CSA since 2001 and indicates that, at least to the CSA, we are in the midst of the “Pot-Com” Bubble.

The warning comes on the heels of companies and investors jumping head first into the medical marijuana sector. Over the past months many companies, particularly junior mining companies, have transitioned their businesses into medical marijuana companies and have reaped huge increases in share price from eager investors salivating over the potential multi-billion dollar medical marijuana industry.

NORML Canada takes no position regarding the CSA warning, or companies which have entered the medical marijuana space. However, it is important that anyone considering an investment takes the time to make a reasoned financial decision to avoid seeing your investment go up in smoke..

NORML Canada National Conference Videos

NORML Canada’s National Conference took place in May 2014 and was a resounding success. Many fresh viewpoints on cannabis legalization were shared during the many panel discussions.

If you’d like to view the panel discussions, as well as the addresses from John Conroy and Alan Young, then check out NORML Canada’s YouTube channel right here:

NORML Canada YouTube channel

Pot TV has also kindly been broadcasting some of the videos to their many viewers.

Finally, if any members have particular requests for issues they’d like to see covered in the newsletter, please let us know: info@norml.ca