Economic report shows New Zealand will be better off under legal cannabis

Two economic reports commissioned by the Ministry of Justice to inform the development of the Cannabis Legalisation and Control Bill were released under OIA today. The reports, by economic thinktank BERL, analyse the current illicit market and how a new legal model would benefit New Zealand.

“The BERL reports show a clear picture of how a legally regulated cannabis market would add more funding into health and education, reduce convictions and costs to the justice system, and improve health and social justice outcomes. This analysis proves New Zealanders would be significantly better off with a legal cannabis market,” said Ross Bell, the Drug Foundation Executive Director.

“The scenarios modelled in the BERL report should give voters confidence that a yes vote in the referendum is the right decision.”

The reports model various scenarios, which each show broad positive impacts across justice, health, social development and the economy. The model favoured by BERL, which was ultimately adopted in the Government Bill, is designed to reduce cannabis use over the medium term. According to the modelling, this could mean:

• Up to 5000 new jobs in the legal cannabis sector
• $335 million income from GST
• $440 million income from the harm reduction levy
• $640 million from excise tax
• Up to 5,900 fewer cannabis consumers with long-term health conditions; and as many as 7,800 fewer cannabis consumers with mental health diagnoses
• 3000 fewer cannabis convictions each year
• 1400 fewer young people leaving school each year without a qualification.

“These reports show the Government has structured the legal cannabis market in a way that makes sense economically while also improving health and social equity outcomes,” said Ross Bell.

“For example, the Government has adopted proposals to license cannabis production from seed to sale, impose a cap on the total market size, with quotas allocated so that no one producer will hold more than 20 per cent of the total market. Under this model we can move people into legal, tax-paying jobs, and bring much needed income to provincial New Zealand.”

“The Government’s model also puts a levy on cannabis sales to fund drug education, prevention and health care. This is a win for all New Zealanders. The financial windfall provided by cannabis legalisation comes at a good time for New Zealand as we face the impact of Covid-related job losses.”

“New Zealanders can be confident that the Bill they will be voting on is based on rigorous analysis. The Bill passes every test of strong public-health focused legislation.”

Read more: Recreational cannabis regulation and harm reduction, BERL advice to the Ministry of Justice,  8 September 2020