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|Major Studies of Drugs and Drug Policy|
|Canadian Senate Special Committee on Illegal Drugs|
|Volume 2 - Policies and Practices In Canada|
Chapter 18 - Observations on practices
economic and social costs <![if !supportFootnotes]><![endif]>
In 1996, the Canadian Centre on
Substance Abuse published the first study on costs related to alcohol, tobacco
and drug abuse in Canada.<![if !supportFootnotes]><![endif]> Estimating costs raises difficult technical
questions: what should be included, and
how should each element be measured? The very analysis of public drug policies
is predicated on the assumption that a number of the associated social costs
can be reduced, if not eliminated altogether. These costs are of two major
types: those associated with public policy, primarily the cost of prevention
and suppression, as well as those of administering the policy; and the costs
that would be avoided if the problems stemming from substance abuse were
eliminated–the so-called “counter-factual” scenario. In these, the effects of
drugs are treated as social costs, that is, as a diminution of the collective
well-being. This amounts to saying that all the costs of drug abuse are social
costs, or what economists call “externalities” or “spill-overs” – secondary
rather than primary consequences.
Moral considerations aside for the
moment, there is no doubt that use of drugs can have certain benefits–albeit
short-term and to some extent non-rational ones–for the users, and even for
those around them. Hyperactive individuals calmed by cannabis, those whose
productivity is enhanced by the use of cannabis or whose mental or physical
suffering is attenuated, or those who smoke a joint in the evening to relax or
help them sleep and are in better shape to work the next day as a result, are
just a few examples. And they are not unusual cases.
another point of view, the underground drug economy, not trafficking on a major
scale, but small-scale neighbourhood supply, whether in poorer or wealthier
areas, generates certain economic benefits and even some capacity to integrate
socially. Entire families are supported by small-scale dealing. Houses, cars,
travel and luxury clothing are financed by drug sales. The amount of the wealth
they generate can be illustrated by the example of British Columbia. In this
province alone the cannabis-based economy is estimated to be worth $6 billion
annually. It can be assumed that a major part of this revenue, let us say half,
goes to people who are otherwise well integrated socially and are not part of
the criminal culture.
The analysis of social costs based
only on externalities does not take into account the drug economy.
Ultimately it rests on another hypothesis, equally difficult to defend, which is that the money saved if the social costs of drug use were reduced could be invested elsewhere; in economic theory these costs are known as “opportunity costs”. However, money saved on enforcement of cannabis laws would probably be redistributed within the police organization; other social costs might also arise from the substitution of other substances.
Having set out these caveats,
Single’s study produced the following table<![if !supportFootnotes]><![endif]>.
Total cost of alcohol, tobacco and illegal drugs in Canada, 1992
An examination of these data
In 1992, the costs
associated with all illegal drugs were $1.4 billion, compared with
$7.5 billion in the case of alcohol and $9.6 billion in the case of
Expressed as a
percentage of the gross domestic product, the total costs for all substances
was 2.67%. Of this, 0.2% was for illegal drugs, 1.09% for alcohol and 1.39% for
The cost of public
policies, or opportunity costs, represent about 33%.
Previous studies conducted in British Columbia (1991), Ontario (1988) and Quebec (1988), using different methodologies, established costs of $388 millions, $1.2 billion and $2 billion respectively, for a total cost of $3.5 billion for these three provinces alone.<![if !supportFootnotes]><![endif]> These figures demonstrate the extent to which such estimates can vary, according to the methodology selected and the availability of data.
Nevertheless, with the CCSA study
taken as the standard, two comments must be made. First, loss of
productivity–the major cost–is measured in mortality ($547 million) and
morbidity ($275 million). Except in the case of traffic fatalities,
cannabis is not a cause of death and involves none of this type of social cost.
Morbidity corresponds to losses attributed to problems caused by drug use as
measured by the difference between the average annual income of users and of
the population in general. Here, two further observations about cannabis should
be noted. A large proportion of cannabis users are young people who are not yet
part of the workforce; and cannabis use involves none of the addiction and
attendant problems that follow from heroin or cocaine use. It is, therefore,
the costs that can be attributed to cannabis in this regard are likely minimal.
If one accepts the methodology of the authors, cannabis in itself entails few externalities, which are the main
measures of the social cost of illegal drugs.
However, it should also be noted that the study did not calculate the costs of substance-related crime. Alcohol is well known for its frequent association with crimes of violence (at least 30% of all cases), as well as with impaired driving , which results in major social and economic losses. Crime related to illegal drugs is of several types: organized crime, of course; crimes against property committed in order to pay for drugs, true mainly in the case of heroin and cocaine; and crimes of violence committed under the influence of drugs. With the exception of organized crime and driving under the influence, cannabis involves few of the factors that generate criminal behaviour.
Secondly, according to Single’s
study, the main cost of illegal drugs, after loss of productivity, is the cost
of law enforcement, which the study estimates at approximately
$400 million. In Chapters 14 and 15, we noted that police and court costs are
certainly much higher than this figure, and probably total between
$1 billion and $1.5 billion. As Single et al state, these are costs that “are incurred as a conscious
decision by policy makers, as opposed to those costs imposed on the treatment system
and on industry as a result of substance-related morbidity and mortality.”<![if !supportFootnotes]><![endif]> The proportion of these costs attributable to
cannabis is, obviously, impossible to determine for certain. But, insofar as
77% of all drug-related offences involve cannabis, and of these 50% involve simple possession, and given that
about 60% of incidents result in a charge, of which some 10% to 15% of cases
the accused receives a prison sentence, it is clear that a considerable proportion
of the drug-related activity addressed by the penal justice system is concerned
with cannabis. While admitting this to be a very rough estimate, we suggest
that about 30% of the activity of the justice system is tied up with cannabis.
On the basis of our estimates and the lowest cost of law enforcement, or
$1 billion, it costs about $300 million annually to enforce the
In effect, the main social costs of cannabis are a result of public policy choices, primarily its continued criminalization, while the consequences of its use represent a small fraction of the social costs attributable to the use of illegal drugs.
Next to this, the costs of prevention and research pale into insignificance. Single estimates them at approximately $42 million in 1992, at the height of Canada’s Drug Strategy – a strategy that ceased to be funded after 1997. Far from increasing since then, it is probable that expenditures for prevention and research have decreased as a proportion of the total social cost of drugs.
At several points in this report, we
have spoken about the Canadian Centre on Substance Abuse, pointing out both its
lack of visibility and legitimacy and its lack of resources the two being
related. The economic and social costs of illegal drugs alone on the order of
$1.5 billion (which in light of our estimate of the costs of suppression
alone is certainly the floor), the annual budget of the CCSA represents a mere
0.1% of them! Considering that the CCSA's mandate is to facilitate everything
we have just been discussing, and to serve as a clearing-house for information,
practical experience and best practices, there is good reason to wonder whether
successive governments have not in their approach to the drug
issue. The social costs of alcohol, a substance that also falls within the
CCSA’s purview, have not even been included in this calculation, though they
are at least seven times greater than those of illegal drugs! This is why it is
imperative to raise the proportion of funding to the CCSA from 0.1% to 1%–a
drop in the bucket for the federal government that would produce inestimable
<![if !supportEmptyParas]> <![endif]>
For an excellent discussion of these analyses and for some of the best
studies on the subject, see the report prepared for this committee by Jackson,
A.Y. (2002) Costs of drugs and drug
policy. Ottawa, Library of Parliament, report
produced for the Senate Special Committee on Illegal Drugs, available online at
Single, E. et al, (2002) The
Costs of Substance Abuse in Canada: a cost estimation study. Ottawa, Canadian Centre on Substance Abuse.
<![if !supportFootnotes]><![endif]> Single, E. et al (1996) op. cit.
Single, E. et al, op.cit., page 15.
Ibid., page 57.
Schaffer Library of Drug Policy
Major Studies of Drug and Drug Policy
Marihuana, A Signal of Misunderstanding - The Report of the US National Commission on Marihuana and Drug Abuse
Licit and Illicit Drugs
Short History of the Marijuana Laws
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Congressional Transcripts of the Hearings for the Marihuana Tax Act of 1937
Frequently Asked Questions About Drugs
Basic Facts About the Drug War
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Guide to Heroin - Frequently Asked Questions About Heroin
LSD, Mescaline, and Psychedelics
Drugs and Driving
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Drug Abuse Treatment Resource List
American Society for Action on Pain
Let Us Pay Taxes
Marijuana Business News
Reefer Madness Collection
Medical Marijuana Throughout History
Drug Legalization Debate
Legal History of American Marijuana Prohibition
Marijuana, the First 12,000 Years
DEA Ruling on Medical Marijuana
Legal References on Drugs
GAO Documents on Drugs
Response to the Drug Enforcement Agency
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