Economics of cannabis: Can India grab a share of the $350 bn global market?

Recreational drugs were popular winners in the November US elections. Both “Red” and “Blue” states voted to decriminalise drugs, wherever such propositions were on the ballot. Arizona, New Jersey, South Dakota, Montana, and Mississippi voted to legalise cannabis use. Oregon (where marijuana was already legal) went further, decriminalising possession of heroin and cocaine in small quantities. Washington, District of Columbia, decriminalised psychedelic mushrooms.

On Wednesday, the United Nations Commission on Narcotic Drugs (CND) accepted a World Health Organization (WHO) recommendation that cannabis and cannabis resin be removed from “Schedule IV of the 1961 Single Convention on Narcotic Drug”. The recommendation was passed 27-25 with one abstention. There are 53 current member nations in the UNCND but the recommendations are binding on all UN members. India voted for removal.

Schedule IV asks for strict control of drugs, which are particularly liable for abuse and harm. Even medical research into such drugs is discouraged. The list includes heroin, fentanyl, etc. The removal of cannabis indicates there is likely to be more focussed medical research. The drug is also more likely to be legalised for recreational use in various jurisdictions.

In its recommendation, the WHO noted cannabis can have adverse effects and cause dependence. But it also cited the drug’s benefits in reducing pain and nausea, as well as easing symptoms in anorexia, epilepsy, cancer, and multiple sclerosis. Importantly, it noted cannabis is not associated with a significant risk of death.

The gradual American legalisation of marijuana (which is also known as ganja, grass, hashish, bhang, cannabis, dagga, etc., in its various incarnations and formats) strikes a blow against racism. American jails contain a disproportionately high number of people of colour (PoC), and a very large percentage of the PoC in jail are there for marijuana-related offences.

There’s eight years of data from the US, where some states started the process of legalisation of recreational usage in 2012. In states where marijuana is legal, the exchequer has gained substantially from taxes out of legal sales. Corruption and ancillary crime has dropped; law enforcement is no longer being bribed by dealers, and gangs are not fighting to control distribution. There are profitable, listed cannabis producers on the US and Canadian stock exchanges.  

The EU has seen similar experiences. Holland profits from ganja tourism, and the tulip growers of that land have developed potent strains. Open borders have meant grass being transported into other EU nations. And crime has not spiked anywhere as a result.

In India, there has been a deep-seated hypocrisy about ganja consumption since the late 19th century. On the one hand, lakhs of Naga sanyasis pull their chillums enthusiastically. On the other, actors are arrested in witch-hunts.

The hypocrisy about ganja is a British import. It was exacerbated by US hysteria in the 1960s. Back in the 1960s, the US made the ban of hashish (cannabis resin, also called charas) more or less a precondition to food aid via the PL480 Program. A further idiocy was perpetrated with the legislation of the Narcotic Drugs and Psychotropic Substances 1985, which treats grass on par with heroin.  

Indians have been using ganja for millennia, in traditional medicine, recreationally, and in religious ceremonies. Ganja, meaning the dried flower used to be sold legally from government shops until the 1980s. Bhang, meaning the leaf, is still sold legally — even ganja is still sold legally in a few states. Just like Darjeeling Tea and Champagne wines, variants such as Manali hashish, Malana hash-oil, and Kerala seedless deserve Protected Geographical Indications as “goods with a specific geographical origin, possessing qualities or a reputation that are due to that origin”.

The global market for cannabis (legal and illegal, medical and recreational) is estimated to be in the range of $350 billion. This UN decision, and the easing of attitudes in the US, will go a long way towards growing the market, as well as legitimising illegal revenues. India has a natural advantage. If it legalises grass, and decides to grab market share, it could easily dominate the global trade.