Yes, I'm inhaling. Photographer: Miguel Rojo/AFP/Getty Images
Yes, I'm inhaling. Photographer: Miguel Rojo/AFP/Getty Images

Uruguay's decision last year to legalize marijuana was sold to the country's citizens as a way to defeat the criminal gangs responsible for almost all of the 22 tons of pot that are grown or smuggled into the country every year.

The trouble is that the latest rules, as designed, suggest that the country may end up undermining the law’s intended goal.

First of all, Uruguay's government will function as a marijuana monopolist, claiming the power to regulate the seeds used to grow pot, while limiting the amounts allowed for planting at home. In effect, Uruguay is trying to have it both ways: It is legalizing marijuana while imposing a limit on consumption. This combination of monopoly and rationing, as in most economic activities, almost always leads to market distortions and unforeseen consequences.

Up in Smoke

The government’s thinking is a muddle: At the same time that it bets on the free market to help undermine drug kingpins, it refuses to trust markets to allocate resources. Regulating the use of pot seeds may be better than fighting drug lords, but it’s a poor use of the state’s means and may only foster demand for non-approved weed.

The government also seems to distrust consumers. It turns out Uruguay will force legal consumers -- those age 18 or older -- to register as buyers and will limit their purchases to 40 grams a month. Signing up may not be something every marijuana user wants to do, and dictating marijuana consumption is as bad as banning it in the first place and it probably won't work.

Uruguay’s decision to price state-approved marijuana at $1 a gram may be competitive with the current black market rate, but the state’s tight rules will only prompt consumers to supplement their legal pot consumption with the illegal kind.

The government’s attitude is a clear signal that its objective is as much to control use as to defeat the criminals. Consider President Jose Mujica’s recent remarks: “This isn’t a policy that seeks to expand marijuana consumption. What it aims to do is to keep it all within reason, and not allow it to become an illness."

Clearly Mujica doesn’t get it. Legalizing marijuana should be about finding a new way to defeat the scourge of drug running, not about forcing people to behave in a certain way. Trying to ensure that people consume amounts the government considers reasonable is as futile as Uruguay’s expectation that its rules will stop tourists from consuming the drug. As a seasoned politician, Mujica should understand this.

Launching campaigns to discourage consumption and funding addiction treatment with tax money derived from the pot business is a sensible thing to do. And to be fair, polls show that most Uruguayans oppose an experiment that could turn their country into the pot capital of Latin America. But half-way measures probably will prove ineffective in ending drug trafficking.

On its face, opening up the pot business in Uruguay is a good first step in dealing with the illegal drug trade. Yet it may take another generation for Uruguay to recognize that drug consumption, like alcohol use, is largely a matter of personal choice that can't easily be curbed by government decree.

To contact the author of this article: Raul Gallegos at rgallegos5@bloomberg.com.

To contact the editor responsible for this article: James Greiff at jgreiff@bloomberg.net.