Legalising drug has given rise to ugly spectacle on supply side.

It is still hard to believe New Zealand legalised cannabis last July. The Psychoactive Substances Act applies only to chemical creations of the drug but these are said to be more potent than the plant. If synthesised cannabis can meet a reasonable safety test, it becomes only a matter of time before the leaf will be legal too.

No other country is doing this, though many are watching our experience. It is turning out to be quite a lesson.

Legalisation, when it is carried out by public health officials, does not mean a free market. They argue for legalisation on the grounds that it will enable them to take control of a harmful substance, check its content, limit its outlets, license its suppliers, regulate it more effectively than police can do when prohibition drives it underground.

This all looks fine on paper - sensible, moderate, liberal, enlightened and progressive, much better than criminalising people who are harming nobody, possibly not even themselves.

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It looks fine on paper but it is looking ghastly in reality. Television has been filming queues of hooded youths lining up for their synthetic cannabis supply first thing in the morning. John Campbell did a particularly good piece of spontaneous reporting on Thursday night when he went with Associate Health Minister Peter Dunne, the principal architect of this liberalisation, to a newly licensed outlet in the Naenae shopping centre.

Clearly neither Campbell nor Dunne knew what they would see, though another Campbell Live reporter had been there earlier and recorded the helpless dismay of residents and other shop owners.

As Campbell and Dunne approached the cannabis shop its proprietor hurriedly locked up. The two of them stood outside and looked around. It was just awful, Campbell said. Dunne agreed. The camera could not show how awful but a few shots of wretched looking characters around the children's play area gave us the drift.

The shop soon re-opened and a steady clientele mooched past the TV crew. Campbell tried to interview a few, Dunne just looked lost and querulous. Remembering how neat and clean this policy had looked on paper, he reminded Campbell of its achievements so far.

"We have reduced the number of outlets by 95 per cent and cut the number of drugs on sale by a third," he said. And it's true. There were between 3000 and 4000 outlets in the country this time last year and about 200 brands of synthetic cannabis on sale. Since July the number of outlets nationwide has been reduced to just 147, selling 42 brands that have been given interim licences pending clinical trials.

When Dunne made this point on the Naenae footpath neither he nor Campbell made the connection between the figures and the squalor before their eyes.

This time last year, the sad lads who like synthetic cannabis could buy it at dairies, service stations and liquor stores besides their usual haunts of video parlours, sex shops, tattooists and body piercers.

The regulators in their wisdom have now banned sales from dairies, service stations and liquor stores, which probably accounted for most of the 3000-4000 outlets. When you cut that number to just 147 you can expect long queues first thing in the morning.

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And you will make the trade more visible. Prohibition might simply drive the drug trade "underground" but underground has something to be said for it. Sellers and buyers tend to be more discreet. When dealing and using, they take extreme care not to be seen.

Now it is in your face, though only if you live in a poorer part of town. The Psychoactive Substances Act has given councils the task of licensing outlets and both applicants and councils will pick the path of least resistance.

This drug trade was socially fairer when it was completely unregulated. The dairies, service stations and liquor stores were everywhere. Now buyers have to travel further, they congregate in visible numbers and the outlets are more likely to be unsavoury.

The video parlours, sex shops and the like, are among the permitted licensees. The Naenae shop used to stock "other" goods, according to TV3's reporter, but now it sells only synthetic cannabis. No wonder. The regulators have created a gold mine for a lucky few.

The lesson here may be that there are no half-measures in drug policy. If stuff is truly harmful, ban it. If it is no worse than alcohol, let a market match its supply to the demand.

Dunne's officials are still working out a reasonable test of harm. They acknowledge that low risk does not mean no risk. But they need to rethink their regulation of the supply side. When it comes to deciding who, where and how many can sell the stuff, a market would be fairer than councils. Ask Naenae.