Many unregistered RCTs give undue attention to under powered, post hoc subgroup analyses. Those with for-profit sponsors may be analyzed and publicized in a way that is beneficial to the sponsor’s goals. Therefore, the presence of a large-scale RCT should be seen as a necessary but not sufficient condition to determine whether a drug is safe and effective, and regulators should still be responsible for overseeing the validity of trials.The vast majority of influential evidence regarding the safety and efficacy of medical cannabis is observational, with virtually all the rest coming from preclinical or early clinical trials. Researchers have highlighted several examples where medical marijuana companies have used weak research to convey unsubstantiated health claims or advocate for commercially advantageous policy . For example, ecological studies have often been used to market cannabis and cannabis derived products as a solution to the opioid epidemic , while observational survey and clinical studies have been used to inappropriately market that cannabis products are effective for the treatment of diseases like HIV/AIDS and Parkinson’s Disease . A recent study found that 90% of medical claims on popular websites were not based upon appropriate cause-and-effect evidence . Only two cannabis-derived compounds for four indications have received sufficient support from large-scale RCTs to be approved by pharmaceutical regulators ; no other compound or indications have received such supporting causal evidence. While 33 US states have legalized medical cannabis for conditions such as post-traumatic stress disorder, depression, chronic pain, and glaucoma, there is no evidence from largescale RCTs to support any cannabis-derived compound’s safety or efficacy for most any of these conditions .
For example, many have speculated on the therapeutic effects of cannabidiol for pain and anxiety disorders, and cannabidiol and other cannabis-derived products are frequently recommended for these conditions. However, even though a large-scale RCT of cannabidiol for these conditions would be feasible and relatively straightforward, results from no such trials have been published.For some time, it could be argued that reliance on observational studies was a necessity of cannabis research. Regulatory restrictions on cannabis grow lights research made it challenging for researchers to get approval to conduct a large-scale RCT, and institutional investors willing to finance the trials were rare. Even in these restrictive circumstances, some pharmaceutical companies managed to conduct large-scale RCTs of cannabis derived compounds. In recent years, however, many of those restrictions have been lifted. The 2018 Hemp Act allows for research on hemp derived CBD in the US, and Canada’s Cannabis Act legalized cannabis nationwide, including for research purposes. There are several highly profitable “Big Marijuana” companies with valuations over $1 billion USD that could, if willing, finance these large-scale RCT. Despite these changes in circumstance, the field has stagnated in observational research. A central reason underlying the field’s stagnancy is regulatory leniency surrounding medical marijuana marketing. Because medical marijuana companies have been free to advertise and market the health effects of their products without substantiating evidence, they have little incentive to invest in expensive large-scale RCTs . Further, a naturally curious public and generally supportive media have given marijuana companies a vehicle to tilt public opinion without clinical evidence.
Researcher and regulatory insistence on large-scale RCTs could compel Big Marijuana companies to invest in robust research that could move the field forward. The US experience with hydroxychloroquine should remind cannabis researchers of the importance of large-scale RCTs and convince the field to move from a primarily observational discourse to a primarily clinical discourse. This is likely easier said than done for the same reason that enforcing rigorous science related to hydroxychloroquine has proven difficult: cannabis research is not a dispassionate field, which has added a new set of incentives to the drug research process. Many in the public and, indeed, many researchers have preconceived notions about the safety and efficacy of cannabis, and there is no shortage of powerful political and financial interests willing to incentivize studies that reinforce those notions through the most efficient means possible – in this case, observational studies rather than large-scale RCTs. Indeed, Big Marijuana companies, the companies that should be financing large-scale trials, routinely publicize and sponsor weak research to advance their marketing efforts rather than investing in large-scale RCTs that could meaningfully advance the field . Large-scale RCTs are expensive and time-consuming ; with the same resources required to complete one large-scale RCT, a researcher may be able to produce perhaps a dozen observational studies. Because the public often mistakenly assigns large-scale RCTs and observational studies the same value, the incentives inherently favor observational research. However, if researchers and journal editors recognize the external forces informing the medical cannabis debate, admit to and publicize the limitations of observational research, and insist on prioritizing large-scale RCTs, we may uncover the true risks and value of medical cannabis.
The thesis of this essay is that sharp declines in production costs for cannabis and opioids could dramatically reduce the price-per-dose for consumers in ways that alter patterns of use and dependence, first in North America but perhaps also on other continents. It is important to acknowledge that speculating about the future cannot be done with the same degree of certainty as can the reporting of findings rooted in experimental data. As Yogi Berra said “Prediction is very hard, especially about the future”, and experts’ long-run predictions are often inaccurate, sometimes terribly so . In an earlier drug futuring exercise I participated in, the futuring experts suggested focusing on drivers, maintained assumptions, and wildcards . Drivers are fundamental factors that appear set to change, in this case, production costs. The maintained assumption is that drugs are ultimately consumer goods that are produced, distributed, and sold in markets . Hence, it makes sense to draw on economists’ wisdom concerning fundamental behaviors of markets. In particular, some basic relationships between production costs, prices, and consumption have held up in market after market over centuries. Those market considerations are the focus here, which is not to say that cultural, sociological and political changes will not be equally influential, e.g., as a source of wildcards. I draw on two key ideas from economics. The first is that prices in competitive markets fall to match the marginal cost of production. The logic for this is simple. If everyone else is charging more than the cost of production, then a firm can profitably offer a lower price. Customers will shift to the supplier offering the lower price, so that firm’s sales increase, but the price is still higher than the cost of production, so the firm profits. Seeing that, someone else will bid lower. Then another firm can undercut that price and so on, until price has fallen to equal the cost of production. By and large the markets for the major illegal drugs, including cannabis and opioids, are competitive in economists’ sense of the term . Journalists may speak informally of drug “cartels” but true cartels are the exception not the rule. Even the famous Medellin and Cali cocaine cartels presided over falling prices , the opposite of what one would expect if they truly could block entry and maintain artificially inflated prices. Markets appear to have become even more fragmented since then . The second key idea is that when prices fall, consumption rises; in elementary economics, this idea is captured by a downward sloping demand curve.
Some might question whether that pattern applies to psychoactive drugs. However, an abundant empirical literature finds that consumption of drugs does increase when prices fall and vice versa. Pacula and Lundberg examine the evidence for cannabis. Gallett provides a classic review for all drugs. Payne, Manning, Fleming, and Pham recent review suggests that a 10% change in price can trigger a 9% change in consumption. It is important to note that many studies in that literature assess effects on use-related harms not just use per se, so declining prices can push up population-level use-related harms, not just consumption. Having sketched the basic logic, the next section reviews evidence for declines in production costs for cannabis grow tent and, more briefly, opioids. It seems likely, that those declines will percolate through to lower retail prices, at least for no-frills versions of the drugs. This should lead to greater consumption, but with declines in production cost that are so large, the effects may go beyond just an uptick in use. That idea is illustrated by reference to historical analogies, and I close by speculating about some possible consequences of the substantial price declines.Cannabis policy in North America has been liberalizing for over 20 years, at least since California’s Proposition 215 or Compassionate Use Act. There is an important distinction, though, between reducing or eliminating penalties for people who use drugs, or even small-scale growing for personal use, and giving a green light to large-scale production. The latter began in earnest in the U.S. with a series of memos issued by the U.S. Justice Department under the Obama Administration, starting with the Ogden Memo in 2009. These were interpreted as saying that federal law enforcement would not interfere with cannabis production or sale that complied with state laws. Canada’s steps toward legalizing supply began later, with the election of Justin Trudeau in 2015, but have gone farther, with federal legalization of supply taking effect in October, 2018. One of the myths about legalizing cannabis supply was that production would continue more or less as before, just without the arrests. In reality, the structure, conduct, and performance of the cannabis industry had been heavily shaped by prohibition, so much has been changing rapidly since legalization. That has manifest in various ways, including a proliferation of product forms, but perhaps the clearest effects have been on production costs and wholesale prices. The wholesale price of sinsemilla in California in 2010 was $2000 – $6000 per pound , and generally higher in other parts of the U.S. . Given inflation, $4000 per pound then is equivalent to $4650 per pound in 2019 USD. By November 2019, Cannabis Benchmarks reported a U.S. spot index price of $1428 per pound. That 70% fall is equivalent to an average annual decline of 12%. The price per unit of THC has fallen even faster because potency has risen . ElSohly et al. , p. 613 report that nationwide “the potency of illicit cannabis plant material has consistently risen … from approximately 4% in 1995 to approximately 12% in 2014″. That is the year state-licensed recreational stores opened in Colorado and Washington. Those stores were soon selling flower with average potency over 20%, and extract-based products with potencies exceeding 60% .
Since California’s sinsemilla in 2010 had a potency of about 14% , the 70% decline in price per pound over 9 years becomes an 80% decline in the price per unit of THC.There are multiple reasons why a licensed for-profit industry can produce at much lower cost than criminal producers could during prohibition. Elimination of the enforcement “tax”: Arrest, incarceration, and seizures impose costs on drug producers and distributors that are passed along to consumers as higher prices . People facing the risk of criminal sanction may demand higher compensation than people performing similar tasks in other industries, a principle called “compensating differentials” in economics. For example, Caulkins notes that circa 2008 people growing cannabis paid unskilled and semi-skilled labor far more than other agricultural workers were paid. Economies of scale: For various products, unit production costs decline as the scale of production increases. This can be measured as an elasticity of cost with respect to scale. An elasticity less than 1.0 means that cost increases less than proportionally, so cost per unit declines as production scale increases. Hawken and Prieger assumed that economies of scale in cannabis production would be modest, suggesting an elasticity of 0.913 as midway between Schumacher and Marsh’s estimate of 0.827 for greenhouse floriculture and no economies based on Kislev and Peterson’s arguments about farming generally. That might seem insignificantly below 1.0 until one recognizes the enormous changes in scale that have occurred. The average size of the 186 firms in Hawken and Prieger’s sample was just under 1000 square feet, but multiple Canadian firms operate 1000,000 square foot grows , and Aurora had plans for a 1600,000 square foot facility.1 Fig. 1 shows that even with an elasticity of 0.913, a thousand-fold increase in scale implies unit production costs fall by almost half, and Schumacher and Marsh’s estimate of 0.827 would imply a decline of 70%.