Legalization of cannabis in France: an idea that pays?

A note from the very serious Center for Economic Analysis highlights, Thursday, the economic benefits of the legalization of cannabis in France and argues for the creation of a state monopoly of sales.

After Uruguay, part of Canada or a dozen states, will France be the next country to take the legalization of recreational cannabis? The pressure in this direction is increasing, in any case.

A forum signed by 70 personalities has been published in favor of legalization by the Obs, and a note from the very serious Center for Economic Analysis (CAE) highlights, Thursday, June 20, the legalization of this drug could have an economic interest .

40 years of failure

The debate is not new, and most of the arguments put forward by the two authors of the document - the economist Emmanuelle Auriol of the Toulouse School of Economics and his colleague at the Paris School of Economics, Pierre-Yves Geoffard - have already been developed in the past.

But this is the first time that such a sharp opinion is issued by an organization as close to political power. Although the CAE is an independent economic think-tank, it is statutorily attached to the Prime Minister's Office.

The statement of the two economists is without appeal: it would be, according to them, more than time to stop the costs of almost forty years of failure of purely repressive policies to fight against the trafficking of cannabis. "Far from curbing its consumption, prohibition has encouraged the experimentation of cannabis because of its very high availability," say the authors. There are more people in France who have tried cannabis at least once than anywhere else in Europe.

This gap results in a huge financial waste, since 568 million euros are invested each year in the fight against cannabis ... without managing to stop the phenomenon. In addition, taking into account the "loss of income, production and mandatory levies related to imprisonment [users, Ed], the social cost would be 919 million euros," the authors of the note.

Right price

In their eyes, the main lesson to be learned from this failure is legalization. The territories that have taken the step have not regretted it from a financial point of view: the cannabis industry generates between 200 and 300 million dollars in tax revenues for the American states of Colorado and Washington. For France, the two economists have calculated - taking all the tweezers of use due to the difficulty of assessing the actual consumption of cannabis - that legalization could bring in more than two billion euros of tax revenue and create between 40 000 and 80 000 jobs. Provided you find the right price.

There are two ways to do this: let the market go, which was the option chosen by Colorado, or establish a state monopoly, which is the scenario chosen by the ACE note. The advantage of free-competition is that "the legal proves very competitive compared to the illegal, which has resulted [in Colorado, Ed], it seems, a (near) eradication of the traffic", explains Pierre-Yves Geoffard, one of the authors, contacted by France 24. But "its main fault is that it allows to control sales prices only indirectly, through taxes.Or the Colorado experience shows that in a very competitive system, the retail price may collapse, which is not very good for the regulation of demand and raises fears about tax revenues, "adds the researcher.

Because the two economists argue that legalization should not be a tool to enrich oneself but to fight against the drug trafficking networks and to make prevention. A viable track would be that the state breaks the prices, at first, to cut the grass under the foot of the organized crime, even to raise them later to avoid "an explosion of the demand", summarizes Pierre-Yves Geoffard.

Such an approach may push traffickers to diversify and expand the trade in other drugs - far more dangerous to health than cannabis, such as cocaine or heroin - to compensate for the loss of market. The authors recognize this risk and, in response, advocate that a significant portion of the revenues from legal sales be reinvested in the fight against organized crime. They also suggest allocating part of the funds to the policy of the city and the so-called "sensitive" neighborhoods, where the traffic of cannabis allowed some inhabitants to survive financially, even if the two economists judge "overvalued" the risk that the legalization cannabis has a "destabilizing effect" on these "neighborhoods". According to them, "field surveys show that only the heads of networks really benefit" from the money of the traffic.

ref: france24