Abstract
Title II, the Controlled Substances Act (CSA), of the Comprehensive Drug Abuse Prevention and Control Act of 1970 (CDAPCA) created the present system of drug scheduling and regulation. This paper illustrates how the CSA created the incentives for induced ‘malnovation’ (innovation intended to circumvent legislation, and thus foil policymakers’ intended ends) into drug markets, namely “designer drugs.” As a result of this induced malnovation, drug markets have not only increased in the variance of products available that are often sold under similar street names, but there is also a tendency towards creating more dangerous drugs in an attempt to stay outside of the regulation.
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Notes
An important unintended consequence that is not addressed in this paper relates to the various rationales for specific drug prohibition. Griffin (2012) offers an interesting look at how paternalism v. Mill’s Harm Principle factor into these decisions.
Kirzner states the following of “wholly superfluous discovery” in “The Perils of Regulation” in Discovery and the Capitalist Process: “Whether intended by the regulatory authorities or not and whether suspected by them or not, the imposition of regulatory restraints and requirements tends to create entirely new, and not necessarily desirable opportunities for entrepreneurial discovery… This regulation-induced alteration in the pattern of market discovery is closely related to the often noticed circumstance that regulation may result in a different set of equilibrium market consequences. Such consequences… may be wholly undesired by [the authorities]… The imposition of regulatory constraints necessarily results, therefore, in a pattern of consequences different from and, most plausibly, distinctly less desirable than what would have occurred in the unregulated market” (1985: 144–145). Given this explanation of wholly superfluous discovery, “induced malnovation” might best be understood as a specific manifestation of unintended consequences resulting from drug scheduling policies. However, without a suitable counterfactual of drug markets in the absence of the CSA and CSAEA after 1970, it is not clear if the drugs and patterns outlined in this paper are indeed wholly superfluous.
“(a) Except as authorized by this title, it shall be unlawful for any person knowingly or intentionally—(1) to manufacture, distribute, or dispense, or possess with intent to manufacture, distribute or dispense, a controlled substance; or (2) to create, distribute, or dispense, or possess with intent to distribute or dispense, a counterfeit substance. (b) Except as otherwise provided in section 405, any person who violates subsection (a) of this section shall be sentenced as follows: (1)(A) In the case of a controlled substance in schedule I or II which is a narcotic drug, such person shall be sentenced to a term of imprisonment of not more than 15 years, a fine of not more than $25,000, or both… (B) In the case of a controlled substance in schedule I or II which is not a narcotic drug or in the case of any controlled substance in schedule III, such person shall be sentenced to a term of imprisonment of not more than 5 years, a fine of not more than $15,000, or both… (2) In the case of a controlled substance in schedule IV, such person shall be sentenced to a term of imprisonment of not more than 3 years, a fine of not more than $10,000, or both… (3) In the case of a controlled substance in schedule V, such person shall be sentenced to a term of imprisonment of not more than one year, a fine of not more than $5000, or both” (Controlled Substances Act 1970: 1261).
“(e) A defendant is a special drug offender for purposes of this section if– (1) the defendant has previously been convicted in courts of the United States or a State or any political subdivision thereof for two or more offenses involving dealing in controlled substances, committed on occasions different from one another and different from such felonious violation, and punishable in such courts by death or imprisonment in excess of one year, for one or more of such convictions the defendant has been imprisoned prior to the commission of such felonious violation, and less than five years have elapsed between the commission of such felonious violation and either the defendant's release, or parole or otherwise, from imprisonment for one such conviction or his commission of the last such previous offense or another offense involving dealing in controlled substances and punishable by death or imprisonment in excess of one year under applicable laws of the United States or a State or any political subdivision thereof; or (2) the defendant committed such felonious violation as part of a pattern of dealing in controlled substances which was criminal under applicable laws of any jurisdiction, which constituted a substantial source of his income, and in which he manifested special skill or expertise; or (3) such felonious violation was, or the defendant committed such felonious violation in furtherance of, a conspiracy with three or more other persons to engage in a pattern of dealing in controlled substances which was criminal under applicable laws of any jurisdiction, and the defendant did, or agreed that he would, initiate, organize, plan, finance, direct, manage, or supervise all or part of such conspiracy or dealing, or give or receive a bribe or use force in connection with such dealing” (Controlled Substances Act 1970: 1267–1268).
“A controlled substance analogue shall, to the extent intended for human consumption, be treated, for the purposes of this title and title III as a controlled substance in schedule I… ‘(32)(A) Except as provided in subparagraph (B), the term “controlled substance analogue” means a substance—‘(i) the chemical structure of which is substantially similar to the chemical structure of a controlled substance in schedule I or II, ‘(ii) which has a stimulant, depressant, or hallucinogenic effect of the central nervous system that is substantially similar to or greater than the stimulent [sic], depressant, or hallucinogenic effect on the central nervous system of a controlled substance in schedule I or II… ‘(B) Such term does not include—‘(i) a controlled substance; ‘(ii) any substance for which there is an approved new drug application… ‘(iv) any substance to the extent no intended for human consumption before such an exemption takes effect with respect to that substance’” (Controlled Substance Analogue Enforcement Act 1986: 13–14).
Two cases have discussed the lack of clarity surrounding this law. United States v. Damon S. Forbes, et al. in 1992 and the United States v. Washam in 2002. In the U.S. v. Forbes et al., the district court of Colorado did not uphold the CSAEA. Judge Babcock stated: “I hold that the definition of controlled substance analogue as applied to AET under the unique facts here is unconstitutionally vague. Without doubt, it provides neither fair warning nor effective safeguards against arbitrary enforcement” (U.S. v. Forbes et al. 1992). In U.S. v. Washam (2002), the CSAEA was upheld by the U.S. Court of Appeals, eighth circuit—“The Analogue Statute is no void for vagueness as applied to 1,4-Butanediol because Congress provided adequate notice of the proscribed conduct and prevented arbitrary enforcement through the terms of the statute. Therefore, we affirm the district court.”
There is no evidence that Shulgin was involved in the sale and mass distribution of any of these substances. However, his book thoroughly outlines the chemical structures, experiences, and side effects of many of these drugs.
From the evidence presented in King and Kicman (2011), the legal high phenomenon in Europe and the designer drug phenomenon in the United States are quite similar.
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I would like to thank Benjmain Powell, Adam Martin, Edward Stringham, the attendees of the Mercatus Center’s Adam Smith Fellowship Paper Workshop (June 2015), the attendees of the Graduate Student Paper Workshop at the Free Market Institute (February 2015), and three anonymous referees for their helpful comments and suggestions on previous drafts. Any remaining errors are my own.
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Redford, A. Don’t eat the brown acid: Induced ‘malnovation’ in drug markets. Rev Austrian Econ 30, 215–233 (2017). https://doi.org/10.1007/s11138-016-0341-4
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DOI: https://doi.org/10.1007/s11138-016-0341-4
Keywords
- Induced malnovation
- Comprehensive Drug Abuse Prevention and Control Act of 1970
- Controlled Substances Act
- Designer drugs