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TRANSCRIPT
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
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).