James Farmer


Will the Proposed Cannabis Legislation Achieve its "Overarching Objective" of Reducing the Harms Associated with Cannabis Use?

Monday, May 18, 2020

What does the proposed Cannabis Legalisation and Control Bill (to be voted for or against in the Referendum) provide?

It is an overstatement to say that the Bill legalises cannabis.  It does allow cannabis to be purchased by adults up to a maximum daily amount from licensed businesses and to be used by them either at home or at a licensed cannabis cafe.  Adults may also grow 2 cannabis plants at home (maximum 4 per household) out of sight and not accessible from public areas.  However, persons under the age of 20 are prohibited from growing, possessing or using and, if they breach that prohibition, may be issued with an infringement notice and ordered to pay an infringement fee of $100 or a fine up to $200.  The infringement notice may however include a requirement for the youth to attend a “support service” and if that is done within the prescribed period the fee is waived and the notice is treated as being revoked. There is thus an incentive on a youth offender to take the option of seeking advice and help from a support service rather than pay a fine or infringement fee.   Any person who supplies (i.e. whether by sale or otherwise) cannabis to a person under the age of 20 is liable to imprisonment for 4 years or a fine up to $150,000.

Apart from home-grown product, the supply of cannabis must be through a licensed market.  Licensees are vetted for suitability and there is a cap on the amount of cannabis for sale in that market.  No licensee may hold more than 20% of the cap.  The criteria to be taken into account by the Cannabis Regulatory Authority when deciding which businesses will be given a portion of the cap are the degree to which the licence applicant represents or partners with communities disproportionately harmed by cannabis, generates social benefit and builds community partnerships or promotes employment opportunities and career pathways.  Vertical integration – based perhaps on the telecommunications and electricity models – is prevented by prohibiting a licensed grower from also being a licensed retailer or the owner of licensed premises where cannabis may be consumed.  A person who sells cannabis without a licence is liable to 2 years imprisonment or a fine up to $100,000.

Price and quality (i.e. potency limits) are regulated.  Retailers may not sell cannabis products at a reduced price and the levels of THC (tetrahydrocannabinol), described as “the main psychoactive compound in cannabis” are set by the Authority which, when doing so, must take account of reducing problematic use and preventing overconsumption, providing consumer choice and the potency of illegal cannabis.   That regulation clearly recognizes the fact that there will be competition both as to price and potency between the regulated, legal product and the unregulated, illegal product.  Advertising by licensed retailers is prohibited.  Once again, it is good to see competition law principles – here maintaining a level playing field – being applied!

Excise tax will be charged on cannabis product that is produced, rather like it is now with alcohol, and income tax will be payable on profits of growers and retailers. There will also be a levy payable which will go towards the cost of developing a national plan including public health, drug education and treatment services strategy.  Some have predicted a huge take for the public purse and see this as a reason for legalising cannabis, bearing in mind that illegal operators are not inclined to pay tax on the gains on their drug activities.

My previous paper on cannabis legalisation 


My understanding, based on public commentary and my own enquiries of Green Party politicians (who are the prime drivers of the referendum), is that the major justification for legalising the supply and use of cannabis products is that it will eliminate the black market that is the present source of supply.  If we do that, so it is presumably thought, it is ok if “recreational” marijuana users descend into cloud cuckoo land through the psychoactive effects of THC.  We are talking of a so-called victimless crime.

A question: are the teenage children who observe or otherwise learn of their parents’ recreational activities and who conclude that it must be ok and who take to using cannabis themselves not indeed victims?   There is now a considerable body of medical research and experience that establishes beyond doubt that the effect of cannabis on the development of the teenage brain (and indeed up towards mid-twenties) is very harmful, at best inhibiting learning and motivation, at worst triggering schizophrenia and other enduring psychotic illnesses. 

To summarise  the other main points in my earlier paper:

First, decriminalization is not the same as legalisation.  It can agreed that it is pointless sending mere users (as opposed to illegal suppliers) to jail.   But, as in Portugal, compulsory attendances at a panel composed or medical and social experts is dealing with the problem in an educational and more constructive way. I refer in the next paragraph below to an amendment that was made to our Misuse of Drugs Act in August last year that seeks to achieve the same goal.   And in Portugal trafficking remains an offence.

Secondly, the Police have in fact been acting with considerable restraint and sense, making good use of prosecutorial discretion and the diversion scheme. And significantly, there is the recently (August 2019) enacted statutory power (Misuse of Drugs Amendment Act 2019, inserting section 7(5)(6) into the 2015 Act) which expressly affirms prosecutorial discretion and directs the Police not to prosecute drug users (including the users of the “harder” drugs) where prosecution is not in the public interest.  In determining that question, regard must be given to whether a health-centred or therapeutic approach would be more beneficial to the public interest than criminal punishment.

Thirdly, research in those States in America which have legalised and regulated the cultivation, supply and use of cannabis have seen a jump in the overall number of deaths from drug use (an increase of 165,000 deaths during the period of cannabis reforms).  This arose because the Mexican drug lords who traditionally supplied marijuana undercut the new regulated product price with heroin, increasing production by 70%, increasing its potency level from 46% to 90% and dropping price (in New York) from $200,000 a kilo to $50,000 a kilo.  This was described by one writer as “classic market economics”.

The inherent contradictions of the Bill and its failure to achieve its stated goal of reducing harm from cannabis use by allowing adults to cultivate and use cannabis without legal sanction

This Bill does not absolutely legalise cannabis.  It does so only in the limited sense that it allows adults to cultivate limited amounts of cannabis for their own use under strict conditions including limiting consumption to their own homes and to special cannabis cafes.  It also permits and regulates cannabis production, wholesale distribution and licensed specialist cannabis retail outlets.  Further, it controls price, quantity sold and potency and imposes excise tax and a levy intended to fund services “that will assist in reducing the harm caused by cannabis use”.   In short, the more cannabis that is sold and used, the more money that will be raised to apply in measures to reduce the harm that is being caused.

There is a very long list of offences, which can lead to prosecution and conviction with a fine or in some cases imprisonment, in the Bill.  These include: home-growing more than permitted (fine or imprisonment if more than 10 plants: cl. 24), possessing more than 14 grams in a public place or in a vehicle (cl.29), supplying or purchasing more than 14 grams per day (cls.31, 36), possessing cannabis under the age of 20 (cl. 32), supplying or offering to supply a person under the age of 20 (cl. 35), selling to a person under the age of 20 (fine or imprisonment: cl. 38), consuming cannabis in a public place or in a vehicle (cl. 37), selling cannabis without a license (fine or imprisonment: cl. 39), supplying by mail or courier (cl. 40), importing or exporting (fine or imprisonment: cl. 41), exposing a person under 20 to cannabis emissions or vaping (cl. 43). 

One very serious anomaly is that this Bill, if enacted, will emasculate the very beneficial provision that was enacted in August last year referred to above, namely section 7(5)(6) of the Misuse of Drugs Act. That provision applies to all drug offences, affirms prosecutorial discretion and directs that a prosecution should not be brought for possession or use unless it is in the public interest to do so.  In that respect, consideration must be given “to whether a health-centred or therapeutic approach would be more beneficial to the public interest”.  Clearly, given the option of prosecution or voluntary submission to counselling, medical or other therapeutic assistance, most if not all offenders who are apprehended will take the latter.  That is what is envisaged also in the Bill in the case of youth offenders who are subject to an infringement fee or fine but will be waived if the offender engages with a support service.

Under the Bill, however, it will no longer be an offence for an adult to possess or use cannabis (within the allowable limits) and so there will be no ability to incentivise a user to seek health or therapeutic assistance to deal with what may well be harmful effects from regular cannabis use or addiction.  In its campaign for the Bill to be supported at the referendum, the Green Party seems to have overlooked the fact that, if passed, the Bill will be destroying the benefit that section 7(5)(6) of the 2019 amendment achieved when it was enacted last year, an enactment which its spokesperson described at the time as “a triumph for compassion and a triumph for common sense”.

So will this Bill, if it passes the referendum hurdle and is enacted, achieve its other main objective claimed by its supporters – the elimination of the Black Market and, with it, a safer drug for those desperate for that form of recreation?   I refer above to the American experience which has been that the drug lords have simply switched cultivation and supply to a more potent and cheaper drug that undercuts the price of regulated and lawful marijuana with the result of a substantial increase in deaths from drug use.  In New Zealand, it will not be difficult for meth manufacturers and sellers to do the same.  Cannabis will be subject to regulatory costs, to excise tax, to the levy and then income tax that licensed growers, distributors and retailers are not able to avoid.  The meth and heroin markets do not have regulatory, excise or other tax costs.  Nor do illegal cannabis suppliers who will have little difficulty in undercutting the regulated product and increasing its THC potency beyond the regulated limit for those who want a bigger kick.

That has been the Canadian experience to date. Those who cite Canada as a success reform story should read the following recent account of the Canadian experience from The Guardian:


The journalist who researched and wrote this piece said: “… all drug [reform] laws are unworkable, illogical, unjustifiable, unscientific, counterproductive and generate unintended consequences – in fact, drug laws often create the exact opposite outcome to those desired.” 

There is another perspective of the relationship between legally and regulated produced and sold cannabis and black market cannabis which, once stated, is obvious.  The point was made by Patrick Cockburn, who refers to the body of scientific research that establishes a firm link between cannabis use and the onset of schizophrenia (as to which see also the Judgment of Jagose J in The Queen v. Brackenridge [2019] NZHC 1004), and then says (https://www.independent.co.uk/voices/cannabis-legalisation-psychosis-billy-caldwell-william-hague-schizophrenia-a8410581.html):

“…legal restrictions alone will not stop … people who take cannabis from going on doing so.  But the legalisation of cannabis legitimises it and says a message that the government views it as relatively harmless.”

And on the subject of the legislating to eliminate the black market, he says:

“The legalisation of cannabis might take its production and sale out of the hands of criminal gangs – [as stated above, I would suggest not entirely] – but it would be put into the hands of commercial companies who want to make a profit … and increase the number of their customers.  Commercialisation of cannabis has as many dangers as criminalisation.” 

Drs Robin Murray and Wayne Hall have recently researched the increase in the use of cannabis in those States in America that have legalised cannabis and found that the risk of dependence among those who use cannabis was estimated at 9% in the 1990s but is now closer to 30% with attendant increases in such harmful effects as cognitive impairment and effects on the unborn child by women who use it to combat nausea.  They also refer to some evidence of increased risks of depression and suicide but then say that “by far the strongest evidence concerns psychosis [including] an increased risk of later schizophrenia-like psychosis”: Will Legalization and Commercialization of Cannabis Use Increase the Incidence and Prevalence of Psychosis, (American Medical Association, JAMA Psychiatry, 8 April 2020).

No doubt the middle classes who fashionably use cannabis for their recreation will happily bear the extra costs of, and enjoy the greater access, to their habit and also be relieved that their reputations are no longer at risk from prosecution.  The harm that is being done with the growth of the cannabis, meth and heroin markets elsewhere is to them someone else’s problem.

James Farmer QC

18 May 2020

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