Prohibition, regulation or laissez faire: The policy trade-offs of cannabis policy

Link to article:



Røgeberg, Ole




International Journal of Drug Policy

vol 56, 153-161


Trade-offs are central to the cannabis policy debate. Prohibition and strict regulation may help reduce the physical, mental and social harms of cannabis consumption, but at the cost of increasing the harms from illegal markets and reducing consumption benefits. An economic model clarifies how these costs and benefits relate to policy and connects them to observable prices and tax-levels given the assumptions of the analysis. These model- based arguments are related to the ongoing academic policy debate. While some arguments from this literature modify the interpretation of the model (e.g., due to dependence, cognitive biases and market structure), the literature often fails to appropriately account for the magnitude of the policy costs and benefits identified. Taking various caveats into account, the framework indicates that a strict regulation would likely be preferable to prohibition given current estimates of excess harms (externalities and internalities) from cannabis use. While cannabis prohibition appears difficult to justify within an economic regulatory framework, risks from industry influence, policy ratchet effects, and human “decision-making flaws” speak to the need for caution and strong regulation when implementing legal regimes.


Cannabis, Drug policy, Cost-benefit analysis, Economic theory, Regulation, Illegal markets


Oppdragsgiver: Norges forskningsråd
Oppdragsgivers prosjektnr.: 240235
Frisch prosjekt: 4143 - Values, beliefs and policy options: Beyond prevalence-centric prohibitions