The High Cost of Cannabis Prohibition: Lessons from Australia and the US
Article Written by Adam Isaac Miller
In Australia and the United States, the debate over cannabis legalisation continues to evolve, with growing evidence suggesting that prohibition may be doing more harm than good. A recent report from Australia's Penington Institute highlights the disproportionate impact of cannabis criminalisation on disadvantaged communities. In contrast, data from the US cannabis industry demonstrates the economic potential of a regulated market. By examining these contrasting approaches, we can better understand the costs of maintaining cannabis prohibition and the potential benefits of responsible regulation.
The Australian Perspective: Criminalising the Vulnerable
The Penington Institute's report paints a stark picture of how Australia's war on cannabis disproportionately affects the poor. Key findings include:
Targeted enforcement: 18 out of the 20 council areas with the highest per capita cannabis arrests were also the most disadvantaged, characterised by high unemployment, low educational achievement, and low income.
Low-level offenses: Over 90% of cannabis-related offenses in Victoria were for possession, use, or small-scale cultivation, rather than trafficking.
Ineffective deterrence: Despite significant law enforcement spending (AUD 3.5 billion annually), policing has neither reduced cannabis availability nor consumption.
Criminal enterprise: The unregulated cannabis market, estimated at AUD 5 billion annually, primarily benefits organised crime networks.
These findings suggest that Australia's current approach to cannabis not only fails to achieve its intended goals but also exacerbates existing social inequalities. By criminalising cannabis possession and use, the system creates additional barriers for already disadvantaged communities, potentially trapping individuals in cycles of poverty and criminality.
The US Experience: Economic Opportunities in Regulated Markets
In contrast to Australia's prohibitionist stance, many US states have moved towards cannabis legalisation and regulation. The 2024 Vangst Jobs Report highlights the economic potential of this approach:
Job creation: The legal cannabis industry added 22,952 new jobs in 2023, totalling 440,445 full-time equivalent positions.
Economic impact: The industry generated $28.8 billion in annual sales in 2023, a 10.3% increase from the previous year.
Regional growth: Emerging markets in the Midwest and East Coast drove job growth, with states like Michigan and Missouri seeing significant increases in cannabis-related employment.
Future potential: States such as Ohio, New York, New Jersey, and Maryland are poised for substantial industry growth in the coming years.
These figures demonstrate that a regulated cannabis market can create legitimate employment opportunities and contribute significantly to the economy. Moreover, by bringing the industry into the legal sphere, states can better control product quality, protect consumers, and generate tax revenue for public services.
The Costs of Prohibition vs. The Benefits of Regulation
When comparing the Australian and US approaches, several key points emerge:
Social equity
Australia's criminalisation of cannabis disproportionately impacts disadvantaged communities, perpetuating cycles of poverty and criminality. In contrast, some US states have implemented social equity programs within their legal cannabis frameworks, aiming to address historical injustices and provide opportunities for those most affected by the war on drugs.
Economic opportunities
While Australia's unregulated cannabis market primarily benefits criminal organisations, the US has demonstrated that a legal industry can create legitimate jobs and contribute to economic growth.
Resource allocation
Australia spends billions on cannabis law enforcement, with little to show for it in terms of reduced consumption or availability. US states with legal markets can redirect resources from law enforcement to public health, education, and addiction treatment.
Consumer safety
Unregulated markets do not provide quality control or safety standards for cannabis products. Legal markets can implement testing requirements and labelling standards to protect consumers.
Tax revenue
Australia misses out on potential tax revenue from cannabis sales, while US states with legal markets have generated millions in tax dollars for public services, including education and infrastructure.
The Path Forward: Responsible Regulation
The contrasting experiences of Australia and the US highlight the potential benefits of moving away from cannabis prohibition towards a model of responsible regulation. Key considerations for policymakers include:
Social justice: Implement policies that address the disproportionate impact of criminalisation on disadvantaged communities, including expungement of past cannabis convictions and social equity programs in new legal markets.
Public health: Prioritise evidence-based education, prevention, and treatment programs rather than punitive measures.
Economic development: Create frameworks that allow for legitimate business growth while preventing market domination by large corporations.
Consumer protection: Establish strict quality control and labelling standards to ensure product safety.
Tax policy: Design tax structures that generate revenue for public services without incentivising a continued black market.
Research: Facilitate further study into the health effects of cannabis use and the societal impacts of different regulatory approaches.
The evidence from Australia and the US suggests that cannabis prohibition comes at a high cost to society, particularly to disadvantaged communities. By keeping cannabis in the hands of the black market, countries like Australia not only fail to reduce consumption but also miss out on significant economic opportunities and perpetuate social inequities.
While not without its challenges, the US's experience with cannabis legalisation demonstrates the potential for a regulated market to create jobs, generate tax revenue, and provide safer products to consumers. As the global conversation around cannabis policy continues to evolve, policymakers would do well to consider the lessons learned from both prohibition and regulation.
Ultimately, the goal should be to develop policies prioritising public health, social equity, and economic opportunity over outdated and ineffective punitive measures. By moving towards responsible regulation, countries can address the harms associated with both cannabis use and prohibition while harnessing the potential benefits of a legal industry.
Adam has spent over eight years working with unregistered medicines. With a specialization in Cannabinoid Therapeutics, Adam has supported the development, implementation, and market entry of multiple cannabinoid product portfolios in markets such as Australia, New Zealand, Germany, and Brazil. Before working in the medical cannabis field, Adam spent almost a decade building various B2B businesses within education, investment, and medicinal cannabis, with progressive roles including business development, strategy, product development, and project management. He has consulted private and listed cannabis producers and ancillary businesses since 2015 as one of the early entrants and experts in the burgeoning Australian cannabis industry. Adam founded and sat on the board of The Medical Cannabis Council, Australia’s first not-for-profit industry body. He is a frequent public speaker and publishes a widely read industry newsletter. Adam earned a Bachelor of Entrepreneurship from the Royal Melbourne Institute of Technology. Adam has appeared in several major news outlets, including the Sydney Morning Herald, The Australian Financial Review, Nine News, Startup Smart, SBS, SkyNews, MJBizDaily, and other major publications.
Disclaimer: This information is shared with a global readership for educational purposes only and does not constitute medical advice. All patient-related information has been de-identified OR fictional to protect privacy. Nothing in this article is intended to promote the use or supply of medical cannabis to members of the public.