Fentany and Cannabis: Reducing Costs and Exploding Consumption
Analysis shows that cannabis and fentanyl production prices have fallen by as much as 95%. This very low cost implies an explosion in consumption and a major change in the place of drugs in Western societies.
The legalization of cannabis and the advent of non-medical fentanyl are fundamentally changing the drug markets in North America. Much of this change has to do with the ability to produce large quantities of drugs at low cost, which has reduced wholesale drug prices and lower retail prices for cannabis.
Drastic drop in the cost of cannabis and opioids
A new analysis explores the effects of these changes on usage. The analysis concludes that sharp reductions in the costs of producing cannabis and opioids could significantly reduce the price per dose for consumers in order to change patterns of use and dependence. The analysis, carried out by a researcher at Carnegie Mellon University (CMU), is published in the International Journal of Drug Policy.
“Historical analogies suggest that very sharp price cuts can have effects on usage that go beyond simply expanding traditional consumption patterns,” says Jonathan Caulkins, professor of operations research and public policy at Heinz. College of CMU, which wrote the analysis. “The overall situation with cannabis and fentanyl may look more different in 2040 than it is today, just as it is today compared to 2000.”
Caulkins focused on the motivations behind the use of these drugs, factors that appear poised to change. He also took into account market factors, noting that the fundamental relationships between production costs, prices and consumption have been maintained in markets over the centuries. And he looked at wildcards such as cultural, sociological, and political changes that might be just as influential.
An explosion in drug use
Caulkins started with two key economic ideas: First, prices in competitive markets fall to match the marginal cost of production. For example, the cost of producing cannabis in North America has fallen by as much as 95%. Second, when prices fall, consumption increases. This has happened with cannabis, although to date there is no indication that the production of fentanyl has reduced retail prices of opioids, but it is difficult to monitor retail prices of opioids.
As a result, lower prices affect consumption, but the effects of precipitous declines may not simply be a larger version of the effects of modest price declines. Other factors to consider include the elasticity of demand, including how the degree of responsiveness to price changes varies from context to context and from outcome to outcome. In short, for many products widely used by society (eg, lighting and electricity, computers, cigarettes), Caulkins explains, their meaning changed as production costs fell dramatically.
“Liberalizing cannabis policy and reducing production costs can fundamentally change the place of cannabis in society,” notes Caulkins. Consider, for example, that cannabis operations are listed on the NASDAQ and the Toronto Stock Exchanges, legalization has led to a wide range of products such as edibles and vaping, and advertising for the product has skyrocketed. More changes are likely, he suggests.
A major change in society
Significant drops in wholesale opioid prices could also have far-reaching and unexpected effects, predicts Caulkins. Among them: reducing the value of cross-border smuggling by criminal organizations and making distribution less violent.
“We don’t know what the future holds,” he adds, “but I predict that if someone in 2040 lists the main changes in the drug, consumption and addiction markets that have taken place. produced since 2020, there will be items on this list that relate to the reductions in production costs brought about by the legalization of cannabis and the spread of synthetic opioids. ”
Based on this prediction, Caulkins concludes: “It is not too early to invest more in market surveillance to stay abreast of the various ramifications that can flow from these drastic reductions in production costs.”
The analysis is based only from an economic point of view. But on the addiction front, it’s a disaster. Because on the one hand, a fall in prices leads to an explosion in consumption and therefore, more and more drug addicts in society with very few structures to take care of them. In addition, the decrease in crime related to legalization is more of a myth than anything else.
What really happens is that when a criminal sector is legalized, mafias and gangs slip through the cracks and gradually take control of legal markets, not to sell drugs, but for money laundering. The term nonmedical fentanyl is sweet to ears, but in reality it means that opium is spreading widely in society without any regulation.
But after all, drugging people is just another way to stupefy them and completely depoliticize them.