June 25, 2012 8:49AM

Free Trade in Marijuana?

Juan Carlos Hidalgo posted recently about Uruguay's proposed law legalizing the production and sale of marijuana. He points out that production will come only from a state-owned monopoly. As a trade policy person, what I took from this is: No imports, and someday maybe a trade dispute. Of course, as of today, no one else has legalized production, so there won't be any (legal) trade. But imagine that, say, the Netherlands legalizes marijuana production in the coming years, and is less restrictive about who can produce it. If their producers decide they would like to export to Uruguay, they may lobby for a trade complaint against the ban on imports. Now, there are various defenses that Uruguay can invoke, and success on the complaint is far from certain. Nevertheless, the GATT and WTO have a long history of complaints about "sin" products, such as tobacco and alcohol, and perhaps marijuana will join that distinguished list someday.