Friday, 8 April 2016

How to legalise drugs (this is not an article about how to legalise drugs)

Perhaps all this recent talk about marijuana, Peter Dunne and the “War on Drugs” is best left to the mainstream media, but I don’t think so. The calls drip-drip-dripping to legalise drugs is a long-term play and the media is happy to make piles of money in the meantime by stirring the conversation.

But then the New Zealand MP the Hon Peter Dunne said:

“Above all, sensible drug policy is about a prudent and balanced response. It should address the supply and distribution issues through the law, as well as ensuring good health services are available to assist those suffering from the misuse of drugs.”

And I start to think there’s a business angle worth teasing out. Because the profit motive can’t be removed from the drug trade simply by legalising everything because it wouldn't eliminate the trade aspect and therein lies the profit for commerce. There is a reason why the government gets involved in the legalisation of products and services.

(“Narcotics” is used here to denote any illegal drug for which there is a sizable and organised black market. Not for its medical/chemical properties.)

Let’s get one thing out of the way first. Prohibition doesn’t cause people to use drugs. People try exotic substances because they are stupid. And I mean that literally: they suspend the normal-functioning of their brain.

Would a functioning human buy a hamburger from a guy selling them in a damp alley? No. But somehow that aversion disappears when it’s a chemical that alters brain chemistry because people are stupid. Everyone knows using drugs may result in a fatal overdose, yet they take them anyway. They know not to mix prescription drugs with alcohol, yet street drugs are routinely consumed with unhealthy quantities of alcohol.

And the debate isn't just about rights either. The public pays to clean up drug corpses and hospital visits, not the drug user. And when a user’s nasty addictive behaviour ruins the lives of everyone around them, that person is no longer an island. The government has a legitimate interest in maintaining a civil society where people act like people, instead of like animals.

Criminalising street narcotics isn’t the maaann harshing your buzz. Has anyone ever tried suing a drug dealer for product liability because the cocaine was cut with crushed glass or the heroin was actually detergent? And are those little bags child-proof? What about the needles, are they clean?

Do people really need to get high so badly that they’ll buy an unknown chemical from some idiot in a club and shoot straight it into their eyeballs before they even leave the bathroom? If the answer is yes, then it’s perfectly acceptable for the government to agree with that person’s own assessment that their brain is defective, and to separate them from the rest of society.

Want to know why there is a war on drugs? Here’s why: everyone cigarette smoker under the age of 40 knew that smoking causes fatal lung cancer before they lit the first cigarette. And yet they did it anyway. Why did they do it? For all the reasons people do other irrational stuff. They wanted attention, to be rebellious, or cool, whatever. But hey, it’s their right, right?

Wrong. You don't have the right to cook hamburgers and sell it on the street without a government magnifying glass looking at the cleanliness of your kitchen and ingredients before forcing you to wear a hairnet. Restaurants are regulated precisely because people will try to screw over their customers for a measly dollar, and we don't trust customers to determine for themselves what is safe to consume.

After all, what if beef were illegal? Would people be willing to sidestep established standards of health and cleanliness just to consume it? What if the illegal meat is riddled with bacteria or parasites? Would most people even know how to check? Does any of this seem rational?

Fundamentally, narcotics aren't safe because they make the brain operate abnormally. Panadol isn’t safe because it reduces the body's ability to feel pain, so it is regulated – not just a little bit, but by an incredible amount.

So after thinking about this, I've concluded that New Zealand won’t legalise narcotics until the following conditions are met. Furthermore, I predict that legalisation will occur soon after the last of these conditions is met (within one election cycle). The conditions are:

1. Narcotics become a low-margin commodity manufacturing process, similar to staple foods or low-end manufactured goods. This would require drug production to be legalised in the countries where narcotics are presently produced.

2. Profit margins become the widest within the distribution (wholesale) section of the supply chain. This will require multiple sourcing. For instance, cocaine must be sourced from a variety of countries and production cartels, not just Colombia under the control of whatever cartel succeeded Pablo Escobar's gang.

3. Medical research must demonstrate that health risks associated with drug use are often not due to the drug itself but to (a) poor dosage control from inconsistent or unreliable purity; (b) poor quality control by narcotics cut with toxic chemicals or dangerous contaminants; (c) or associating with violent criminals in the process of acquiring illegal narcotics.

4. Acknowledgment by government officials that the overall drug trade creates a grey-market underclass of non-drug traffickers whose income is derived indirectly from the drug trade (family members, friends, etc). This generates undeclarable cash incomes precluding these people from accessing legitimate banking, housing and healthcare industries.

5. Evidence showing that continuing to declare narcotics illegal deprives the local, regional and central governments of substantial corporate, payroll and personal income tax revenue that could be collected if an identically structured drug market was made legal.

6. Pharmaceutical companies convince governments that issues of quality control, dosage and other safety provisions can be satisfactorily addressed if they gain permission to sell narcotics alongside generic pharmaceuticals. Remember that (a) most street drugs were invented by pharmaceutical companies and (b) none of those drugs are covered by patents, so they could be sold just like generic prescriptions.

7. The pharmaceutical industry convinces the government that selling narcotics will lead to substantial investment in medical research which is presently woefully underfunded due to a lack of significant patented drug pipelines.

All these conditions are important because in a modern economy, profits are downstream from distribution. In most consumer markets the retailer controls the behaviour of the supplier, especially in markets where multiple suppliers offer identical products. In the narcotics trade, profits are concentrated in the supplier (the cartel) and the importer (the trafficker). Which means in a legitimate market these two functions would become low-margin commodity operations.

Assuming these conditions are met – either through the natural evolution of the drug market or forced legislation – then all kinds of drugs will eventually be legalised. Cocaine would probably be trademarked, branded and sold by Pfizer and Big Pharma would make all the money, but I think this is the most likely route to legalisation.

The key is to align different parts of the market so that all the powerful lobbying forces desire the same result, even if they do so for diverse and selfish reasons. If this doesn’t happen and Farm Boyz Growery in Waikato wants to produce marijuana on an industrial scale, well, FoodStuffs or Monsanto will probably lobby against that position. They will win and Farm Boyz Growery will lose.

Consumer product distribution is a massive decent-margin industry. It employs a lot of people, pays plenty of taxes and it is “politically active” – to put it mildly. If the above conditions are met and narcotics are distributed alongside aspirin, then we can expect a sudden and gigantic bottom line boost to every company with the necessary distribution infrastructure already in place.

Following this logic, business will eventually support legalisation because it will own distribution and can truthfully claim doing so will boost tax revenue and add paying jobs to a fragile economy. We’re yet to decide as a society whether this is a goal we want, but if narcotics are similar to every other industry, big business might decide that for us. Over to you, New Zealand.

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