Exploring the Structure of the Illegal Market for Cannabis

Summary

This paper explores the middle and retail levels of the illegal market for cannabis in New Zealand using national household drug survey data. Those who reported purchasing half or full ounces of cannabis were defined as middle level market participants, while those who purchased smaller weights or merely used cannabis were defined as retail level participants. Those who had purchased cannabis were then further categorised as either cannabis ‘buyers’ (i.e. those who only purchased sufficient cannabis for their own consumption needs) or cannabis ‘dealers’ based on whether the surplus of cannabis they had, after their own personal consumption was deducted, exceeded the legal definition of cannabis dealing (i.e. possession of 28 g of cannabis or more). Nine per cent of those who had purchased cannabis in the previous year were categorised as middle level participants with 69% of these defined as middle level dealers and 31% as middle level buyers. Middle level cannabis dealers were projected to earn, on average, $2927 (NZD) net annual profit from selling surplus (rate of return of 34%). There was a wide variation in the projected net earnings of the middle level cannabis dealers with the majority earning only modest incomes (bottom 50% – $260 per year, top 10% – $25000  per year). Participants at all levels of the market commonly reported receiving cannabis for ‘free’ and this is likely to reflect the social sharing of cannabis during group consumption and non-cash payments for cannabis. This barter and gift giving tradition may provide cannabis users with a degree of insulation from any price increases for cannabis brought about by law enforcement activity. Cannabis selling creates a convenient source of income for heavy cannabis users to finance their own personal cannabis consumption, which may also dampen the impact of any rise in price brought about by law enforcement success.