This article discusses the possible outcomes surrounding the implementation of the ‘weed pass’ in The Netherlands. The weed pass is a pass that allows Dutch citizens of 18 years and older to buy cannabis legally in coffee shops. However not all are equally happy with the introduction of this pass, because the matter of the fact remains, The Netherlands is an attractive country for tourists which is mostly based on the legal consumption of cannabis. In this article the positive and negative effects of the legal cannabis market will be analyzed from the perspectives of the stakeholders.
With the consumption of cannabis the most commonly question remains, is it bad for you? In the western culture consumption of cannabis wouldn’t necessarily be associated with health problems, but it would rather depict a users personality to many people. Commonly associated personalities of cannabis consumers are; being lazy and slacking on work. While it cannot be measured till what extent this is true, it should be considered a social cost of consumption. The social cost of consuming cannabis is generally seen higher than the private cost of consuming cannabis. When a situation such as this occurs there is no potential welfare gain, as a matter of fact, there is a potential welfare loss. This is best illustrated by the usage of the graph shown in Figure 1. It shows that when the MSC is higher than the MPC at any given point there is a loss in welfare as highlighted in the graph. A potential loss in welfare often results in market failure.
One of the striking elements in this article is that due to the newly implemented legislation around the consumption of cannabis the demand will tremendously depreciate. Not only will tourists be unable to purchase weed legally, also, as the article states, only an estimated 10 percent of the people that visit a coffeeshop regularly would be willing to register as official members. Translated into economic terms this would mean that while the supply would at first stay the same, the demand curve would shift to the left. But however would be likely to become more inelastic, simply explained by the fact that the people that would be registered for the weed pass are most likely the ones that come in on a regular basis. Those are the people that may have a certain need for the consumption of cannabis and will likely buy the cannabis at any price within reason.
The element that attracts most concern and which depicts the functionality of the implementation of the weed pass is the potential black market. Which cost is greater, the cost of society if the pass wouldn’t be implemented, or the cost of suppressing the black market is it would be? As the last paragraph of the article depicts, 386 people have been arrested for purchasing or selling cannabis illegally. If those 386 people could’ve been able to buy their cannabis legally, all 386 people most likely would have. Other than the income from taxes, the government would have to spend money to prosecute the illegal cannabis traders, money that could otherwise be used efficiently elsewhere. Besides the cost for the government, also, when the weed pass is implemented, there is a social cost to it. The social cost of implementing the weed pass is the black market of cannabis. As the article states, 386 people in Limburg, the southern part of Holland, close to the Belgian boarder. Many Belgians cross the boarder on a daily basis, this simply used to enable them to buy cannabis legally. But in the past month, the police caught 386. Those 386 people must’ve bought their drugs from a dealer somewhere. When something like this occurs you can assume that it brings violence along because the law does not bind this industry because they are an illegal market already. The question remaining is whether the potential loss in welfare here is greater than when the weed pass isn’t applicable.
To determine whether the implementation of the weed pass and its regulations surrounding it is a good or a bad thing, all perspectives from the stakeholders should be taken into account. There can be noticed that only the government and society have big externalities, both positive and negative. The government will lose money on the taxes and the prosecution of illegal dealers. But however they will get rid of most of the drug tourists going to Holland. The society will be affected both positively as well as negatively. There are less drug tourists, which may bring more ease to some lives, but however will recognize the increase in the black market and will be affected by this. To discuss whether the weed pass should be implemented entirely depends on whether the negative externalities of the black market can weigh up to the ones of the consumption of cannabis.