Cannabis legalization could net Australia $28 billion, federal figures show

The Australian government could make more than $30 billion over a decade by legalizing and taxing cannabis, according to new estimates from the Parliamentary Budget Office (PBO).

PBO figures released by the Greens this week show that a legal cannabis industry could generate $28 billion in government revenue over a decade if taxed at 15 percent, or $36 billion at 25 percent.

According to green proposal, a new federal agency would regulate cannabis prices and act as an intermediary between producers and a new, tightly regulated retail industry. Like many countries around the world, Australia has an evolving relationship with cannabis, which was first banned by Canberra in 1926.

ACT's big step

Amazingly, nearly a century after that ban, Canberra in 2020 became the first place in Australia to broadly decriminalize cannabis, with residents allowed to grow plants for their own home use.

The Greens argue that cannabis should be legalized and regulated at the federal level, thus following in the footsteps of nations like Canada or Thailand, once abolitionist towards this drug.

According to Greens Senator David Shoebridge, the billions in tax revenue from cannabis legalization could be used to raise the minimum wage by $40 a week or build 88000 new public housing units nationwide.

“When we legalize cannabis, we take billions away from organized crime, the police and the criminal justice system,” Shoebridge said this week.

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"We can then spend it on schools, housing, hospitals and social welfare."

Governments are “getting more creative”.

Richard Holden, professor of economics at the University of New South Wales, said the tax has become a bigger part of the push for drug law reform around the world, with state governments and federal governments “becoming more creative” to deal with unprecedented public budget pressures.

"It's about taking something that's on the black market that isn't making money, and making money out of it," he said.

Deloitte estimates suggest that Canada gained $15,1 billion in direct and indirect tax revenue from Cannabis legalization between 2018 and 2021.

In Thailand, which once had some of the most extreme punishments for drugs, cannabis was legalized last year, grabbing global headlines and giving its post-COVID tourism industry a boost.

Professor Holden said existing models of alcohol and tobacco taxation were already generating billions of dollars in taxes a year in Australia.

However, he added that a large part of this tax revenue offsets the public health costs associated with the consumption of these drugs.

The type of legislative reform also matters, Professor Holden noted, because a decriminalization approach like Canberra's is very difficult to tax.

"If it's all the people growing drugs in their garages, you're going to have a hard time taxing it," he said.

A blow to organized crime

The Greens also predict that a legal cannabis market would drive organized criminals out of business, with illegal cannabis sales amounting to €1,5 billion.

“The Greens model creates a right for adults to grow up to six plants at home without being taxed and without having to pay. This costing takes that into account,” Senator Shoebridge said.

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“It also secures business opportunities for local cooperatives and entrepreneurs to grow and sell cannabis, including through regulated cannabis cafes. »

Australia has already created a fast-growing medicinal cannabis market, which now records half a billion in annual revenue and has attracted more than $2 billion in investment, according to the Pennington Institute, a private body that campaigns for drug law reform.

In fact, a recent University of Sydney survey of 1600 medicinal cannabis users found that 27% now source their supplies from legal prescriptions rather than illegal markets, up from just 5% in 2018. .

Professor Nicholas Lintzeris of the University of Sydney, an expert in addictive drugs, said the results demonstrate the growth of the Australian cannabis industry, which now benefits from "high quality production standards".


“If we really want to regulate it, well that means we need a source of supply. Who is authorized to buy it? What are the conditions ? What are the quality standards? And so on,” Prof Lintzeris said.

 "In fact, we now have an industry that is capable of supplying cannabis if Australia opts for a regulated model."

However, Prof Lintzeris said Australia must proceed with caution and ensure that any recreational industry does not compromise medical uses.

"The legalization of cannabis would most certainly be done with a distribution model where people go to a seller, it's good to have advice from people who know what they are doing," he said. .

The University of Sydney survey found that only 24% of legal order holders found the system "simple" and "easy to negotiate".

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The author weedmaster

Media broadcaster and communications manager specializing in legal cannabis. Do you know what they say? knowledge is power. Understand the science behind cannabis medicine, while staying up to date with the latest health related research, treatments and products. Stay up to date with the latest news and ideas on legalization, laws, political movements. Discover tips, tricks and how-to guides from the most seasoned growers on the planet, including the latest research and findings from the scientific community on the medical qualities of cannabis.