As the COVID-19 crisis started to develop in mid-March, many countries decided to close their “non-essential” stores. However, the reaction of Dutch citizens may put in question what many countries think of as “essential.”
By Juan Pablo Rossi
During international emergencies such as the COVID-19 pandemic, governments are able to reach decisions swiftly due to pre-existing guidelines and regulations that have been set by several health authorities many years ago. For example, the World Health Organization (WHO) has many resources instructing nations on effective courses of action to be taken during global pandemics, which can severely reduce the number of infected people. These instructions are updated every couple of years, but sometimes fail to capture structural changes in certain economies due to new or altered markets. One of such regulations, which has been adopted by almost every country during the Novel Coronavirus health crisis, is the closure of “non-essential” businesses, in order to promote social distancing among citizens and to protect various workers of risking their lives for “non-essential” reasons. In the United States, the only types of stores that should be operating are grocery shops, pharmacies, and restaurants with takeaway options. However, the situation that occurred in the Netherlands when these “essential store” guidelines were put in place should be used as an example of structural changes in patterns of consumer spending behavior once new markets are created in the country.
On Sunday, March 15, the Netherlands announced its decision to follow the “essential businesses” policy that many other European countries were adopting at the time, effective on Monday, March 16. The public announcement regarding this policy was made in the late afternoon, and by the early evening, there were hundreds of citizens lining up in front of stores. However, instead of huge lines forming outside of businesses that sell groceries, such as we saw outside Costco in the United States, the lines were forming outside various coffee shops in all cities around the country. In the Netherlands, coffee shops are some of the few retail stores that are legally allowed to sell soft drugs, such as marijuana or hash. Given that these stores were deemed “non-essential” by the new social distancing measures, thousands of citizens got out of their houses on Sunday evening to buy as many grams of weed as they possibly could. Given that each store could only sell a maximum of 5 grams of soft drugs to each customer due to government regulations, many consumers went to the store with multiple friends to hoard the goods. This prompted the formation of immense lines outside all coffee shops with some customers willing to wait multiple hours in line in order to purchase weed.
By Tuesday, March 17, there started to be multiple reports of Marijuana-related crimes around the country, most of which involved illegal markets. As the law of demand and supply indicates, high demand for certain goods which have a restricted quantity offered for sale will lead to the creation of illegal markets. The problem is exacerbated when the good in question has an extremely low price elasticity of demand, which means that for a given change in price, there is a less than proportional change in quantity demanded. Given that marijuana is a price inelastic product to its regular consumers, these illegal markets would not only be breaking the law but would also be dissatisfying the customers, who will undoubtedly have to pay higher prices.
Prompted by all these negative externalities of the “essential businesses” measures, the Dutch government decided to add coffee shops to the list of stores that could operate on a takeaway basis, starting on Wednesday, March 18. This swift government response mitigated the negative side-effects of the usual “stay at home” policies, but it shed light on the shifting priorities of modern consumers. The legalization of soft drugs in the country has made weed a good that many citizens prefer to consume on a regular basis, in a way similar to regular consumption patterns of alcohol consumptions in countries such as the US. On the note of alcohol, the World Health Organization has recommended all countries to suspend or restrict it’s sale during the time of pandemic lockdown, with many countries taking it off from its “essential businesses” list. However, the United States has decided to disregard this advice.
In other countries where recreational cannabis has been legalized, online sales have surged by up to 250%, and while some consider it to be an “essential business” as well, they do not allow brick and mortar stores to operate during the pandemic. It is interesting to observe the spillover effects of the soft-drug laws in a market that has solidified itself over time, and it should certainly be noted by all countries which wish to change their drug-related laws in the future. □
- Image source
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