Costs and revenues in street-level cannabis dealing Kim Moeller Published online: 15 November 2011 # Springer Science+Business Media, LLC 2011 Abstract Cannabis is the most widely used illicit drug in the western countries, but only little is known about the supply-side of distribution because most transactions occur indoors between peers. However, in Copenhagen, Denmark, an exception to this in the form of several flagrant street-level markets thrived as a byproduct of a lenient policy towards possession and retail sale offences. In 2004, this policy was reversed and a series of police crackdowns ensued. Transcriptions of police surveillance prior to the crackdowns provide insights into the particularities of the street-level drugs economy: salaries of ancillary staff, number and frequency of sales, and purchase prices of cannabis. This study applies transaction cost reasoning to explore and compare revenues, costs and governance structures in two Copenhagen cannabis markets. It is found that the quantifiable net revenues for the proprietor of the drugs in both markets were substantial and surprisingly similar considering the variations in scale and scope. A set of unquantifiable uncertainties and risks of law enforcement intervention were more prevalent in the smaller of the two markets. Keywords Cannabis market . Transaction cost economics . Drug law enforcement . Denmark Introduction For the past 30 years cannabis retail sales in Copenhagen, Denmark, have been quite flagrant particularly in an open-air market in an area known as The Free Town of Christiania. This market has been begrudgingly tolerated by authorities as part of an overall harm reduction policy aimed at separating cannabis sales from other drugs. Over time this market expanded beyond the initial small-time retailing and by the Trends Organ Crim (2012) 15:31–46 DOI 10.1007/s12117-011-9146-9 K. Moeller (*) Center for Alcohol and Drug Research, Aarhus Division, Aarhus University, Jens Chr. Skous Vej 3, 8000 Aarhus C, Denmark e-mail: km@crf.au.dk