Away from Cannabis Leniency
Kim Moeller, Centre of Alcohol- and Drug Research, University of Aarhus, Denmark
Background and Objectives
In the past seven years, Denmark has moved away from thirty years of lenient cannabis policy. The leniency
extended to users and in practice retail markets as well. In the context of the current international
discussions on cannabis control policy, this makes for an interesting case study, inasmuch as Denmark is
unique in moving away from leniency, towards stricter control, both in the written policy and in the
implementation thereof. This paper is part of an impact study on the effects of this cannabis policy change
and is inspired by the five areas of unintended consequences in the Commission on Narcotic Drugs (2008)
Making drug control ‘fit for purpose’: Building on the UNGASS Decade. The following analysis focuses on
the questions of crime displacement and black market organisational structure.
Timeline: legislation and police crackdowns
2001
“Hashclublaw(s)”. Bill no. 471 of June 7. 2001, Bill no. 447 of June 7. Police were given access
to administratively close down fixed storefront locations used as cannabis retail outlets.
2003
“Law against Biker-crime and other organised crime”. Bill no. 436 of June 10. The purpose
was to improve the police’s investigative capabilities by allowing the use of undercover
agents in less serious drug cases. A reversed burden of proof in asset forfeiture from drug
crimes was introduced.
9 month video surveillance of Pusher Street in Christiania begins.
2004
Crackdown on Pusher Street March 16.
“Stricter Effort against Drugs”. Bill no. 445 of June 9. Up-penalized possession of cannabis,
defined as amounts less than ten grams, from a warning to a fine of 75 Euros.
2005
6 months video surveillance of Lithuania’s Square and subsequent arrests of participants.
2007
“Increased fine levels in drug cases”. Bill no. 526 of June 6. 2007. Possession fines were
increased to 350 Euros.
Data and method
Two hypotheses are formulated using theories on law enforcement interaction with retail drug distribution
(Curtis and Wendel 2000, 2007), drug market cost structure (Caulkins, Johnson, Taylor and Taylor 1999;
Kleiman 1989), and crime displacement (Shephard and Blackley 2007).
The first hypothesis is tested using criminal- and police statistics. This data is publicly available.
The second hypothesis is tested using data from police surveillance, undercover investigation, and court
transcripts of witness testimony, from the cases against participants in two street-level retail markets:
Pusher Street in Christiania and Lithuania’s Square (LS). This data was acquisitioned from Copenhagen
police.
Policy Displacement
The declared ambition of the change in Danish cannabis policy was to deter sellers and buyers at the retail
level. This focus is obvious in the development in the relation between amounts of cannabis confiscated
and number of confiscations, shown in figure 1.
Figure 1
While the amounts annually confiscated declined from 2.9 tonnes in 2000 to less than a ton in 2007, the
number of confiscations doubled was between 2000 and 2006.
Shepard and Blackley (2007): The Impact of Marijuana Law Enforcement in an Economic Model of Crime
suggests that:
“…drug enforcement may increase nondrug crime…The results suggest that marijuana arrests are
associated with increases in homicides, burglaries, motor vehicle thefts, and larcenies along with
subsequent increases in hard drug arrests.”
Hypothesis 1
The increased law enforcement focus on cannabis arrests between 2000 and 2008 has diverted police
resources and indirectly lead to an increase in homicides, burglaries, motor vehicle thefts, larcenies, and
hard drug arrests.
Analysis
Since 2000 there has been an absolute drop in most of the non-drug crimes examined, except for
homicides/attempted homicides up 20 % from 213 in 2000 to 256 in 2008. All the other forms of crime
examined are down, notably motor vehicle theft is down 35 %.
Figure 2
In the same time period there has been an overall drop in charges for penal code violations of 6.5 %. Is the
decline in the above examined types of crime relatively smaller?
Figure 3 below illustrates that the combined level of examined crimes is stable.
Figure 3
Thus, figures 2 and 3 indicate that the increased enforcement of cannabis has not resulted in a crime
displacement towards motor vehicle theft, larceny, and burglary. Perhaps the significant increase in
homicides and attempted homicides is partly attributable to cannabis market conflicts, but that question
remains speculative at present.
Hard drug arrests have not been included in the above figures because Danish crime statistics do not
distinguish between the various drugs. Police drug confiscations are used as a proxy for hard drug arrests in
figure 4 below.
Figure 4
The relative increase in number of confiscations of hard drugs between 2000 and 2007 was 73 %. Where
figure 1 showed that the increase in number of cannabis confiscations was accompanied by a decline in the
total amount, indicating a shift of enforcement focus from the wholesale to the retail level, this is not the
case for amphetamine, heroin, and cocaine. Total amounts confiscated increased by 68 % from 2000 to
2007, as shown in figure 5 below.
Figure 5
Analysis and results
Judging by the proxies for hard drug arrests, figure 4 and 5, there has been a significant increase in both
numbers and magnitude of confiscations of hard drugs. This increase has not been paralleled by an overall
increase in burglaries, larcenies, motor vehicle theft, and homicides, contrary to what Shepard and Blackley
(2007) found in their analysis. The declared intention of shifting enforcement focus towards retail level
cannabis distribution without requiring further police resources has been implemented without an increase
in the other categories of crimes examined above.
Hypothesis 1 is disconfirmed.
Black Market Cost Structure
The proclaimed intention of the move away from cannabis leniency was to make retail level distribution
riskier, less overt and less profitable. To date there has been two court cases against distributors from retail
markets in Copenhagen. The cannabis retail selling operations in Pusher Street and on Lithuania’s Square
(LS) were identical in their “technical organisation”, with both being open street markets, but their “social
organisation” differed (Curtis and Wendel 2000, 2007). Christiania has had more than thirty years of
experience with cannabis distribution and a dominant market share (Møller, forthcoming). According to
Kleiman (1989, 58) this should make the distribution more cost efficient than in the “in-experienced” high
cost sector of a street market, such as LS.
Caulkins, Johnson, Taylor and Taylor (1999) described four types of sellers in NYC retail crack markets and
the share of revenue they retained:
1. Entrepreneurs who own the drugs they sell retain the largest share (about 50 percent)
2. Independent consignment sellers retain less (about 25 percent)
3. Consignment sellers who operate within fixed locations or ‘spots’ retain still less (10 percent), and
4. Sellers who were paid hourly to sell from spots retained the smallest proportion (3 percent).
Firstly, do these ratios also apply to street level cannabis distribution in Copenhagen? And secondly, what
are the differences in cost structure specifically the earnings of the seller?
Hypothesis 2
It is less profitable to be a seller in LS than Christiania because of the social organisation and higher
expenses.
Pusher Street: Social Organisation
The social organization of Pusher Street was similar to a “socially bonded business” (Curtis and Wendel
2000, 133-6). The “extra economic social ties”, were based on the participant’s integration in the
neighborhood via the circulation of profits and a set of formal conduct norms that prohibited the sale of
hard drugs. The cannabis distribution was an accepted part of the community (Curtis and Wendel 2007,
Møller 2008).
Analysis and results
Based on qualitative descriptions in the court transcripts, the seller’s role in Christiania is reminiscent of an
“Entrepreneur” or an “Independent consignment seller”. Close ties between the wholesale distribution
level and retail sales, makes the distinction between the two seller types in Christiania a matter of
individual position in the hierarchy of selling locations.
The calculations (see Appendix 1 and 2) are based on the model introduced by Caulkins, Johnson, Taylor,
and Taylor (1999).
The expenses of running a Booth in Christiania around the clock are estimated at somewhere between
8,196 – 15,396 kroners (Danish currency, about 1/7.5 of a Euro), depending on how many runners were
employed and how big the hourly “tax” to the Hells Angels was (Kilderapport).
The expenses associated with selling in Christiania constituted a substantial share of the retail price at 13 %
- 24 %, compared to 2.3 % in Caulkins et al (1999, 327). These expenses were borne by the sellers in
Christiania, which means that the seller retains “only” 41 % - 52 % of the daily revenue. The Markup is
defined as the “ratio of sales revenue to the amount the dealer paid to acquire the drugs”, i.e. excluding
the expenses, was 3.5 in Christiania.
Compared to the results found by Caulkins et al (1999, 329-331) this puts the sellers in Christiania safely
among the “Entrepreneurs” regarding the percentage of revenue retained. In practice their seller “type”
resembled more of an independent “consignment seller” since most didn’t own the drugs they sold (Police
evidence, IOUs). Compared to the consignment sellers NYC selling cannabis in Christiania was very
lucrative.
Lithuania’s Square: Social Organisation
Everyday from 11 pm to 11 am, 15 people shared the duty of running a cannabis “spot” (Curtis and Wendel
207, 876). A Dealer, a runner, and two look-outs were working in conjunction with an “Administrator”
based in nearby locale. In the calculations (Appendix 2) it is assumed that the Administrator bought the
drugs on consignment from intermediate level wholesalers.
Analysis and results
The social organization of LS resembles a “corporate style” distribution with divisions between ownership,
management, and labor (Curtis and Wendel 2000), i.e. the intermediate levels wholesalers, the
Administrator and the group of sellers, lookouts, and runners.
Each day an amount of hash and 200 pre-rolled joints were delivered to the “spot”.
The labor roles were interchangeable, and everyone worked for an hourly salary.
The role of the seller in LS was not clear cut according to Caulkins et als (1999, 324) description. The most
important characteristic is that the seller in LS was paid by the hour, similarly to the least independent and
least profitable seller type no. 4: “Sellers who were paid hourly to sell from spots retained the smallest
proportion (3 percent).” On the other hand, the social organisation of the crew and their link to
management through the Administrator carries characteristics similar to type 3 sellers, who work on
consignment, and retain 10 % on average.
The sellers in LS retained approximately between 8 % and 10 % (Appendix 2) of the daily net revenue. The
difference is that the seller on LS worked for an hourly wage, and resembled more of a type 4 seller and
therefore would be expected to retain a smaller share.
The known expenses resemble the level in Christiania at 13 % – 17 %, but there was no information on a
“tax” for using the spot.
The markup was very steep at 5.4 – 6.8.
An explanation for the steep markup and profitability of the “spot” in LS is the low purchasing expenses of
the joints. Most of the labourers on LS would also work 12 – 15 hours a week rolling joints, at an hourly
salary of between 23 and 52 kroner. Had this not been the case the purchasing price of the 200 daily joints
would double up to the level of purchasing price found in Christiania at 18 kroner a piece. Unfortunately
the distribution of work for the individual labourers between selling at 200 kroner an hour and rolling joints
at 23 to 52 kroner an hour is not known. The increase in purchasing price would actually increase the sellers
retained share, were he not to participate in the joint rolling production. Since it appears from the court
transcripts that all of the participants at the labour level took part in all the tasks, the above estimate of the
seller retaining between 8 % and 10 % is too high.
A comment on expenses. Note that the hash content is suspiciously identical to the average of the joints
sold on Pusher Street as measured by the Forensic Institute, but significantly lower than what the
Administrator supplied for the purpose, 0.33 gram as opposed to 0.5 gram. The hourly salary for the people
producing the joints was estimated at less than minimum wage, after taxes, in Denmark, which could
indicate either a non-formal compensation for the low wages or a hidden expense in the form of cannabis
use during the production.
Discussion
Despite of the obvious differences in time, place and drug, the characteristics of the technical and social
organisation of the market and the relationship between the seller’s role in the distribution and his
retained share was similar to those described by Caulkins, Johnson, Taylor and Taylor (1999), in both cases.
Hypothesis 2 is confirmed, with some qualifications listed below.
According to Kleiman’s (1989) Learning Curve Hybrid Theory, the sellers in Christiania will have low
operating costs due to the social circumstances of its organisation as well as thirty years of experience in
distributing cannabis. Conversely the market in LS won’t have these advantages and the seller’s role will be
less profitable. In this light it seems improbable that the relative share of expenses to the daily turnover
were lower in LS than in Christiania. Beyond the low purchasing price of the joints the lack of information
on “tax” is a factor. In Christiania the pooling of expenses for lookouts was more cost efficient.
The sellers in Christiania retained a much larger share of – a much larger – revenue, due to working on
consignment as opposed to being paid by the hour.
In both instances of the results of drug enforcement has been to harvest “the low-hanging fruit of the
markets” (Curtis and Wendel 2007, 885). In neither case was anyone arrested from the wholesale level. The
changing role of the Seller can perhaps be seen as a strategic move from the drug distributors to avoid
further asset confiscations from sellers, by making sure that a majority of the profits go to the whole-sale
level, which is protected from surveillance operations. This is unintentional but in accordance with the
declared intentions of the policy shift, to make it riskier and less profitable to be a seller. It has become
riskier in two ways, the increased level of enforcement and secondly the increases in associated penalties.
Whether it has become less profitable to be a seller is complicated by the provisions on reversed burden of
proof in the bill on Organised Crime from 2003. In the short run it has become less profitable if you are
selling in a corporate style distribution, rather than a socially bonded business. In the longer run it will
primarily be a question of avoiding detection by law enforcement, which indicates that a prolonged law
enforcement effort directed at the retail market will push distribution towards more hidden arrangements.
Whether cannabis distribution in Copenhagen has become less overt is open for discussion. On the one
hand it is no longer as visible in Christiania, but on the other hand is has become more visible in the rest of
the city (Københavns Kommunes rapport 2005). If police maintain the enforcement pressure on cannabis
distribution in the coming years it could well be development towards more covert forms of selling, as
describes by Curtis and Wendel (2007).
The declared ambition of the move away from leniency was to increase risks for street-level dealers and
buyers, in that sense the intentions have been met, and a reversal (Asmussen 2007) is an appropriate
description of the difference between the traditional Danish cannabis policy and the current one.
References
Asmussen, Vibeke og Jepsen, Jørgen (2007): Dansk narkotika-kontrolpolitik – aktuelt og historisk. I
Pedersen, Jacob Sejer (red.): Ret og samfund 2007. [Danish Drug Controlpolicy – Current and Historical. In
Pedersen, Jacob Sejer (Ed.): Law and Society 2007]
Caulkins, Jonathan P.; Johnson, Bruce; Taylor, Angela; Taylor, Lowell (1999). What Drug Dealers Tell Us
About Their Costs of Doing Business. Journal of Drug Issues. 29 (2), 323-340.
Commission on Narcotic Drugs (2008) Making drug control ‘fit for purpose’: Building on the UNGASS
Decade.
E/CN.7/2008/CRP.17
Curtis, Ric; Wendel, Travis (2007). “You’re Always Training the Dog”: Strategic Interventions to Reconfigure
Drug Markets. Journal of Drug Issues. 37 (4), 867-892.
Curtis, Ric; Wendel, Travis (2000). Toward the Development of a Typology of Illegal Drug Markets. In
Natarajan and Hough (Eds). Illegal Drug Markets: From Research to Prevention Policy. Crime Prevention
Studies, vol. 11. Monsey, NY: Criminal Justice Press.
Kleiman,Mark (1989). Marijuana – Costs of Abuse, Costs of Control. Greenwood Press, New York.
Københavns Kommune (2005). Spredning af hashmarkedet I København.[Copenagen Municipality (2005).
Dispersal of the Cannabis Market in Copenhagen]
Københavns Politi (2004). Kilderapport [Copenhagen Police (2004). Undercover Police Report]
Møller, Kim (2008). Regulating Cannabis Markets in Copenhagen. In: Asmussen, Bjerre, and Houbourg
(Eds.). Drug Policy. University if Aarhus Press.
Møller, Kim (forthcoming). Hvordan måler man mørketallet for en offerløs forbrydelse [How to Measure
the Dark Figure of a Victimless Crime]. Aarhus University Press.
Shepard, Edward M.; Blackley, Paul R. (2007). The Impact of Marijuana Law Enforcement in an Economic
Model of Crime. Journal of Drug Issues. 37 (2), 403-424
Appendix 1: Cost structure on Pusher Street
The data used is an estimated average, between all 41 booths, and are therefore subject to considerable
individual variation.
Indsert photo.
All calculations are in the Danish currency Kroner, equivalent to 1/7.5 of a euro, and are based on an
The purchase prices are based on known quantities, i.e. a kilo and 380 joints, but the distribution “cycle”
(Caulkins et al 1999, 328) is put at 24 hours to make the calculation of sellers percentage retained possible.
Quantity purchased
1 kilo
380 (340-420) joints
Purchase price
18.4 kr./gram
18 kr./joint
Avg. size of sale
4.3 gram hash
2.3 joints (of 0.33 g each)
Selling price
(midpoint)
75 kr. hash
50 kr. joint
Number sales per purchase
233 (hash)
165 joints
Dealer’s gross revenue
75.000 (per kilo hash)
19.000 (per 380 joints)
Deals per day
241.5 (53.76 % hash; 44.10 % joints; 2.2 % unknown, Police
surveillance)
Daily through-put
558 grams; 458 joints, 5 deals of unknown content
Daily net revenue exc. exp.
Hash =
31603
Joints =
14659
Unknown =
842
Total =
47.104
Expenses
Hourly salary for runners, 1 – 2 per booth
100 – 150
Salary for lookouts, 17 pooled between 41 booths
100
Lookout expenses per booth per 24 hours
1133
Lookout expenses booth/hour
41.5
“Tax” to Hells Angels per hour (Police Agent report)
200 – 300
Total hourly expenses per booth
341.50 – 641.50
Daily expenses
8,196 – 15,396
Daily expenses relative to retail price
13 % - 24 %
Daily net revenue minus expenses
31,700 – 38,900 kr.
Markup without expenses
3.5
Mark up after expenses
2.7 – 3.1
Seller retains
41 % - 52 %
Errors
The estimated number of daily deals and thus hourly earnings are based on an average from booths no.: 1
and 11. Both of which are well placed, i.e. at the entrance of Pusher Street. Actual average per booth is
likely significantly lower.
Appendix 2: Cost structure in Lithuania’s Square
Quantity purchased daily
200 pre-rolled joints.
Between 350 – 500 grams hash. Police found records of 500
grams daily sale, but the Courts convicted on 350 grams, to let a
reasonable doubt benefit the accused. 350 and 500 are used as
the minimum and maximum daily turnover.
Purchase price
18.4 kr./gram hash. Midpoint wholesale price of hash in
Copenhagen, gathered from Christiania intelligence.
9.8 kr./joint. The production of joints was an integral part of the
drug selling operations on LS. It is assumed that the purchase
price of joints is identical to the production expenses. Note that
this is half of the estimated wholesale purchase price from
Christiania.
Known Production costs per joint in kr.
Minimum
Maximum
Grams of hash per joint
0.33
0.5
Hash expenditure
6.1
9.2
Cigarette expenses.
1.45
1.6
Salary/storage rent /month
12,000
15,000
Hourly salary
23
52
Production costs pr. Joint
7.5
12.1
Midpoint cost pr. Joint
9.8
Daily purchase price:
Avg. size of sale
8398 - 11158
20 % of deals were: 1.1 gram hash (Byretsdom s. 45/59)
80 % of deals were joints, whereof 75 % 1.5 and 25 % 5.
Average joint sale = 2.375
Rough estimate, based on testimony from the accused.
Selling price
1 gram 80
1 joint 50 ; 5 for 200.
Num. of sales per purchase
402 - 539
Gross revenue
45.000 – 57.500
Net revenue
Known expenses per 12 hour day
Runner: Hourly salary 180 kr. Six hour work days =
2160
Seller: 250 kr. an hour. Four hour shifts =
3000
Lookouts (2): 100 kr. an hour. Six hour work days =
2400
Total expenses =
7560
Daily net revenue
29.542 – 38.782
Mark up
5.4 – 6.8, depending on the composition of daily hash sale to
200 joints.
Seller retains
8 % - 10 %