Until Wednesday, when Colorado became the first state to allow the sale of marijuana for recreational usage, the Netherlands has had the most liberal laws governing marijuana. Here are a few lessons Colorado can learn from the Dutch experience.

1. Legalization does not necessarily mean increased usage.

The map below is from the United Nations Office on Drugs and Crime. I have added a convenient arrow to locate the Netherlands. Cannabis usage in the Netherlands is smaller than in the United States and Canada. The Netherlands also does not stand out in comparison with other European countries. Now, it may be that usage in European countries close to the Netherlands has increased due to Dutch policies (as policy makers in states close to Colorado may fear). On the other hand, there is not much evidence that proximity to coffee shops matters for drug use (although this study does find an effect).

One plausible reason is that production restrictions in the Netherlands keep prices of legal marijuana quite high. Moreover, marijuana is readily available in markets where it is not legal, perhaps because it is relatively easy to grow and does not need to be imported. It remains to be seen how this will work in Colorado. On the one hand, the law provides for the licensing of production facilities. On the other hand, production remains a crime under federal law, which would increase the risk and thus the cost of production. There will surely be a flood of drug tourists coming to Colorado to experience public and open usage. This will include some individuals who would not try marijuana as long as it is illegal. Yet, it is difficult to speculate on what the overall effect on drug usage will be.



2. Colorado and Washington (and perhaps a few others) may well remain the outlier states for some time.

There is a general perception that other states will follow swiftly once Colorado (and Washington) have successfully legalized. As Ruth Marcus puts it:

Colorado and Washington are apt to be the vanguard states, not the outliers.

It is likely that Colorado will reap the benefits of being the first to legalize in terms of increased tourism and tax revenues. Yet, there will also be a cost, including the nuisance caused by those drug users. And there will be accidents caused by drivers under the influence of marijuana. Those costs might give other states pause. While some make the analogy with booze, the better analogy may be gambling in terms of regulation. While we see some expansion there, it takes a while and has to overcome much resistance. Nevada continues to have a competitive advantage.

The Dutch experience has not led other European countries to move toward legalization. This is despite the fact that there are open borders between the Netherlands and its neighbors in the European Union. Indeed, the opposite has occurred: France (especially) and Germany continuously press the Netherlands to eliminate its drug policy.

This leads me to the third lesson:

3. Once legalization has been in place, it will be hard to change.

The various nuisances associated with the Dutch coffee shops have led local and national politicians to propose a variety of changes to make it more difficult to sell marijuana to foreigners. This has proven to be very difficult, albeit not totally unsuccessful. There are two key reasons for this.

First, the creation of a new market also creates vested interests with a stake in continuing the policy. This applies not just to those who sell and produce cannabis but also to the tourism industry, which views the Dutch policy as a major attraction (especially in Amsterdam, less so in the smaller border towns where foreigners just purchase marijuana and leave).

Second, once marijuana usage becomes normalized, fewer people believe it makes any sense to throw someone in jail for marijuana usage. Once you reach that position, it is very difficult to support a ban, even if you are unhappy with the consequences of easy access to pot.