Assessing the economic consequences of two cannabis policy options

Abstract

The research in this dissertation addresses the question of costs and benefits of two policy options for cannabis in the context of New South Wales, Australia. The first policy is the current one, where cannabis is illegal, although a cannabis cautioning program is available for the use or possession of a small amount of cannabis. In the second policy option, cannabis is a legal but a highly regulated good. As no legalised-regulated policy currently exists, as part of this research the policy framework was developed with the objective of minimising the harms associated with the use of cannabis and with the policy itself. The societal value and preferences for the policies were evaluated in two ways. First, through the use of a traditional cost benefit analysis (CBA) and secondly, with a discrete choice experiment (DCE). The CBA estimated important costs and benefits in monetary terms for each policy with the results presented as a net social benefit. The DCE assessed the preferences for different policies for cannabis among a representative sample of the population. Potential trade-offs between key outcomes including the prevalence of consumption, expenditures by the criminal justice system and health care systems related to cannabis were explored. The results from the CBA indicate there is no clear difference in the net social benefit between the two policy options, although there is a potential revenue gain for government in the legalised-regulated option. The results from the DCE reveal that compared to the current policy there is a moderate preference for legalisation of cannabis among a community sample and strong preference against the complete criminalisation of cannabis. The results also demonstrate the trade-offs between different harms and benefits as well as the interactions between personal characteristics and the policy preferences. The findings from this analysis of the costs and benefits of two cannabis policy options will start to redress some of the evidence gaps that arise when making public policy in this area.