Issue #35 May 2024
[This issue includes a modified and updated excerpt from “Buzz Kill: The Corporatization of Cannabis”. NOW AVAILABLE at https://blackrosebooks.com/products/buzz-kill-michael-r-devillaer or at your local independent bookstore. They could really use the support.
The immediately previous issues of this newsletter addressed the harms from drug use: personal and social disruption, physical injury, illness, and sometimes death. This issue addresses some similarities between legal and illegal drug trades as an introduction to consideration of the costs of drug use to the Canadian economy. First, we must acknowledge that drugs are a major part of our economy, generating revenues that sustain some of the most financially successful industries worldwide. Alcohol, tobacco, and pharmaceutical industries create many jobs in research, manufacturing, marketing, distribution, and retail. There are also many spinoff industries that manufacture and retail a wide assortment of drug-using accessories, paraphernalia, and swag. Substantial portions of enforcement and justice staffing budgets are directed towards drug use. Law firms also prosper from their consultative services to drug industries. At the time of cannabis legalization in Canada law firms arose that declared cannabis law as one of their areas of specialization. Law firms also increasingly represent drug companies or plaintiffs when companies face civil and criminal lawsuits. Just ask the tobacco and pharmaceutical industries. And let us not exclude jobs for industry lobbyists. Like a drug molecule through a fully permeable membrane, they move effortlessly between employment in government regulation and industry. In the early days of legalization, former politicians and senior government bureaucrats elbowed their way to belly up to the cannabis lobbying trough.
A portion of revenue from the sales of products from drug industries goes to government through taxation. These taxes are used to help fund many public services which include universities, hospitals, and drug treatment and prevention programs, all of which employ a lot of people – including me – for my entire professional career.
The trade in illegal drugs is also big business whose annual global revenues have been estimated at half a trillion dollars. Not all these illicit revenues stay in a bubble, separate from the legal economy. Illegal drug traders make mortgage and car payments and buy engagement and wedding rings, furniture, groceries, and toys for their children and pets. They frequent restaurants, bars, cafes, frozen yogurt shops, hardware stores, and cinemas. They support local sports teams, live theatre, the symphony, and charitable organizations. They may also buy tacky lawn ornaments and sketchy Paltrow products. More discerning traders may buy books on cannabis legalization.
Most customers of the illegal trade earn their money through the legal economy. While people may have misgivings about revenues from illegal drug sales, and laundering, much of the revenue begins in, and eventually returns to, the mainstream economy. The unlicensed drug trade’s hold on a significant portion of its assets is only a temporary one.
Of course, the existence of an illegal drug trade is not ideal. We should continue to try to contain it as much as possible. But it is more complex than most people imagine and has been going through some interesting transformations.
Those of you who have attended one or more of my presentations might recall that my second slide (after the title slide) is titled “All-inclusive Disclosure” in which I declare that I have not had funding from, nor do I hold any stock in, any of the following drug industries: alcohol, tobacco, pharmaceutical, cannabis, and illegal drug cartels.
I originally added illegal drug cartels to inject a bit of wry humour at the beginning of what might be an otherwise gloomy presentation. Then I came across the work of Dr. Rodrigo Canales with the Yale School of Management. Dr. Canales is not your typical business school academic. He studies the business practices of illegal drug cartels, and his research has surfaced some fascinating findings. He reported that the cartels were trying to counter their reputations for unfettered violence. They were hiring consulting firms to help them with their branding, public relations, and marketing strategies. The cartels were engaging communities and supporting local charities. In other words, they were beginning to behave more like legal drug companies. Of course, the more violent cartels still occasionally arrange for their competitors or critics to be abducted and transported to a remote location for execution. But the trend is towards outsourcing these less brandable aspects of their mission statements.
So, with such transformations afoot, perhaps it was not so far fetched that drug cartels might want to finance drug education initiatives after all. Sometimes, life can mimic fiction.
Of course, we are horrified by the violent tactics that prevail in some illegal drug trades. However, I want to introduce the subversive idea that we are much more hospitable towards our legal drug industries when they sacrifice lives for profit. Both tobacco and pharmaceutical companies have branded themselves as laudable organizations and have supported charitable causes while they marketed their cigarettes and opioids in ways that they knew were killing large numbers of people. And they repeatedly denied what they were doing. No one in either industry has yet to confess guilt, take responsibility, or to issue an apology. The alcohol industry is not much better, just less overt.
And just recently (May 2024) TD Bank in the United States was being investigated for facilitating the laundering of illegal drug trade money. TD is also facing fines for the same activity in Canada. Canadian banks, CIBC and RBC, have already been fined. As of this writing, police armed with military ordnance have yet to smash down doors at the homes of any banking executives in the middle of the night.
Interestingly, as legal businesses earn money illegally, they too must find ways to launder it. The difference between licensed and unlicensed drug trades is not as profound as drug policy orthodoxy has led us to believe. The notion that legalizing a drug trade ensures that the trade occurs within the bounds of the law is a simplistic and discredited axiom of that orthodoxy. That notion is long past its expiry date.
The unsettling practices of the illegal drug trades have occasionally been used strategically by political parties. Sometimes the stories are exaggerated and even fabricated. This was certainly the case during The Liberal Party of Canada’s cannabis legalization campaign. The strategic demonization of the unlicensed cannabis trade and the deification of a legal trade arose repeatedly in the Liberal Party narrative. My book, “Buzz Kill: The Corporatization of Cannabis” provides a detailed account of the misrepresentation of the unlicensed trade and of the criminality in the legal cannabis industry. The later is placed within the context of the culture of regulatory indifference and criminality that has prevailed in its elder sibling drug industries for many decades. Why would anyone expect the cannabis industry to be any different?
In the next issue, I will address the costs of drug use to the Canadian economy. It’s not cheap.
Mike DeVillaer
Hamilton Ontario Canada
May 26 2024