Analysis of 1907-1918 Punjab data found that when hashish prices rose, opium consumption increased, demonstrating that consumers treated these drugs as substitutes.
Read this if you're interested in whether cannabis and opioids are substitutes or complements in drug markets.
Cross-price elasticity of 0.14: hashish price up, opium use up
What the researchers found
Researchers analyzed a unique historical dataset from the Punjab province of British India (1907-1918), where both opium and cannabis were legal and taxed. Using econometric models, they found that opium and hashish (charas) functioned as economic substitutes: when hashish prices increased, opium consumption rose.
The cross-price elasticity was 0.14, meaning a 10% increase in hashish price led to approximately a 1.4% increase in opium consumption. Opium consumption also showed properties of addiction, with past consumption predicting future consumption (habit persistence coefficient of 0.47-0.49).
Interestingly, opium and bhang (cannabis leaf, a milder preparation) were not substitutes, suggesting that the substitution relationship was specific to more potent preparations. Opium demand was slightly responsive to its own price but relatively inelastic, consistent with addictive substances.
Why it matters
The substitution between cannabis and opioids has major implications for drug policy. If restricting access to one substance pushes users toward a more dangerous alternative, prohibition policies could backfire. This historical natural experiment provides rare evidence from a legal dual-use regime.
The numbers in context
Data from 1907-1918 (n=252). Cross-price elasticity: 0.14 (hashish-opium substitution). Habit persistence: 0.47-0.49. Own-price elasticity: -0.34 to -0.35. Wage income elasticity: 0.15.
How the study worked
Econometric analysis using generalized method of moments (GMM) dynamic panel data models. Analyzed 252 observations from Punjab province, British India (1907-1918), examining opium consumption as a function of its own price, prices of two cannabis forms (bhang and charas), and wage income.
What this study cannot tell us
Data is over 100 years old from a specific cultural and economic context. The potency and forms of cannabis and opium available then differ from modern substances. Price data may not capture black market dynamics. The findings may not generalize to contemporary settings.
How to read the evidence
Econometric analysis of historical data from a legal dual-use regime. Unique dataset but limited modern applicability.
When this study was published
Published in 2015 using data from 1907-1918 British India.
The bigger picture
Modern debates about whether cannabis legalization reduces or increases opioid use echo patterns observable more than a century ago. This study from a rare legal dual-use period suggests that when cannabis is less available or more expensive, some users shift to opioids.
Questions still open
- Do modern legal cannabis markets show similar substitution effects with opioids? Would the relationship hold for contemporary cannabis and prescription opioids? Does the substitution effect depend on the potency of available cannabis?
Common questions
Do people substitute opioids for cannabis?
Why does this historical data matter today?
Read the original research
Do consumers substitute opium for hashish? An economic analysis of simultaneous cannabinoid and opiate consumption in a legal regime.
Drug and alcohol dependence, 156, 170-175
Citation
Chandra, Siddharth; Chandra, Madhur. (2015). Do consumers substitute opium for hashish? An economic analysis of simultaneous cannabinoid and opiate consumption in a legal regime.. Drug and alcohol dependence, 156, 170-175. https://doi.org/10.1016/j.drugalcdep.2015.09.015