Legal Commercial Cannabis Sales in Colorado and Washington: What Can We Learn?

Abstract Colorado and Washington were the first states to legalize the production and sale of cannabis without a medical recommendation; Oregon and Alaska have followed suit, and additional states will likely do so in coming years. The effects of legalization are multi-dimensional, hard to predict, difficult to measure, and dependent on policy details. The primary gains from legal availability (beyond personal liberty and enjoyment) are likely to take the form of reduced illicit activity and reduced need for enforcement, along with relatively modest revenues. The primary losses will likely involve increased problematic drug use, which may include use by minors. The extent of those gains and losses is likely sensitive to price; very high prices (substantially above prices in the illicit markets) will likely frustrate the aim of shrinking illegal production and dealing; very low prices – which are technically possible, given how inexpensive it is to produce cannabis under legal conditions – risk accentuating the increase in problematic use and generating illegal diversion of legally sold product for out-of-state sale and sale to minors. Because the systems of supply for medically recommended use in Colorado and Washington were sufficiently loose to make cannabis easily available to virtually any adult; because regulatory restrictions on commercial supplies have so far kept the commercial prices above illicit and medical-dispensary levels; and because those prices have now begun to fall and are likely to fall rapidly, the results in Colorado and Washington so far cannot be used to evaluate the effects of legalization, especially in states without readily-available quasi-medical supplies. Patience is required.