Intoxicants Economics

by December 22, 2018 0 comments

Economics

In the last decade or so, many countries in Europe, South America, Canada and various states in the US have either legalised or decriminalised marijuana/cannabis. The degrees of decriminalisation and legalisation in these countries vary but recent laws passed in these regions have received a lot of media attention. In some of these countries, the legalisation and/or decriminalisation process began by first allowing the drug to be used for medicinal purposes — especially after various recent studies concluded that cannabis was helpful in the treatment of epilepsy and multiple sclerosis. Dr Tori Rodriguez, in her essay, Neurology Advisor, cited at least eight such studies in the US alone.

However, the recent decriminalisation/legalisation process is largely believed to be influenced by one of the earliest legislative experiments in this context in the Netherlands. In 1972, the Dutch Government divided contraband drugs into two categories: The harmful and the less harmful. Cannabis was slotted in the ‘less harmful’ category and its recreational use was decriminalised. In 1975, ‘licensed coffee shops’ were allowed to sell it.

A July 2013 report by the Global Drug Policy Programme states that the policy aided the Dutch Government to utilise funds in curbing sale and usage of more harmful drugs like heroin. This led to fewer people using needles and, therefore, contracting deadly diseases such as HIV/AIDS. The Netherlands now has one of the lowest numbers of drug-related offenders. Almost three decades after the Dutch experiment, cannabis has either been legalised, decriminalised or allowed for medicinal use in over 30 countries. At the moment, Portugal has the most liberal laws in this context. According to a December 5, 2017, article in The Guardian, the Portuguese policy had yielded some of the best results in the continent. The old fear that liberal legislation towards intoxicants, especially cannabis, would see societies plunge into drug-crazed anarchy have withered away.

Even though there are more countries where recreational cannabis usage is decriminalised, rather than outright legalised, many believe the next step is legalisation — something which, in varying degrees, is already a reality in some countries. Those who are predicting the drug’s gradual legalisation suggest that Governments, which are slowly moving towards this, are also eyeing the potential of gaining huge revenues through taxation.

Interestingly, this model of legalising the once-banned intoxicants to gain a windfall of tax revenues is over a 100 years old. The model is about limiting the large amount of manpower and funds that the state has to generate to maintain bans on intoxicants, and instead legalise their sale and usage so that they could be formally taxed and better monitored and controlled.

In an essay in Psychology Today, Dr Jann Gumbiner wrote that when the British completely took over India, they found that millions of Indians of all faiths used cannabis as a recreational drug. After failing to curb its usage, the British commissioned a large-scale study on the effects of the drug on the users’ mind and body. This produced the 1894 Indian Hemp Drugs Commission Report.

The findings of the report influenced the legalisation of cannabis in British India. The drug’s production and sales were heavily taxed and the users could only buy it from licensed shops, thus eliminating undocumented middlemen. The British did the same with alcohol. They were not only able to generate huge revenues through taxation of both the intoxicants, but also monitor their usage more closely and keep their use ‘to acceptable levels’.

When the British left the region after the creation of India and Pakistan in August 1947, the two new countries adopted the British laws related to intoxicants. Almost 29 years before the Netherlands’ initial foray into allowing the sale of cannabis at coffee shops, and 70 years before the drug’s legalisation in Canada and Paraguay, it was already legal in India and Pakistan.

In the late 1970s, American cultural anthropologist, Richard Kurin, visited Pakistan and conducted a study of village life in the country’s Punjab Province. This resulted in his essay, ‘A view from the Countryside’ (Asian Survey, August 1985). In it, Kurin mentioned ‘licensed hashish shops’ which were allowed to sell a certain amount of cannabis to the villagers. These shops seemed to be located only in villages and towns and not in major cities. Legal cannabis outlets could also be found in various towns of Khyber Pakhtunkhwa and interior Sindh.

Across the border in India, cannabis remained legal till 1985 (before being criminalised through that year’s Narcotic Drugs and Psychotropic Substances Act). According to a 2018 report published by Seedo’s Cannabis Price Index, both India and Pakistan feature in the top 10 list of countries where cannabis usage is the highest.

Recently with the possibility of a ‘sin tax’ on cigarettes and a struggling economy, some experts have advised that Pakistan’s laws, banning the sale of alcoholic beverages to Muslims and cannabis, should be altered so that revenues can be generated by ‘sin taxing’ them as well. They believe that the bans failed to work and have, in fact, encouraged the creation of mafia, consumption of tainted intoxicants and corruption. The Sindh Government received over three billion rupees in 2015 in duties from ‘licensed wine shops’ which, according to a 1979 Ordinance, are allowed to sell liquor to non-Muslims. Before a ban was imposed on the sale of alcoholic beverages in April 1977, the federal Government was earning huge revenues by taxing alcohol and cannabis.

Those advocating a modification of laws against alcohol and cannabis claim that altering such laws will help the Government in generating large sums of taxation money. They say this will also help in putting additional effort and funds in curbing more harmful drugs such as heroin and neutralise corruption and mafia related to bootlegging and drug peddling.

Writer: Nadeem Paracha

Source: The pioneer

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