Legalising cannabis in Australia could generate $230m in tax revenue annually

So the Greens reckon legal weed could make the country over $230 million a year in tax revenue. But what will it cost?

This week the Greens announced a “fully costed” plan for legalising cannabis in Australia. Their figures show a budget of $700 million over three years, based on costing done by the Parliamentary Budget Office – so in theory, it makes the plan legit.

They estimate it will cost $11.20 per gram, with a 10% GST, bringing the total to $12.32 per gram. Add another 15% excise – similar to what we do with alcohol and tobacco – and the total comes to just over $14 per gram.

There is also an estimated saving of $16.6 million a year to Medicare, as people switch from medical cannabis to recreational. However, that’s about as much as the report goes into when it comes to the “social cost” – the overall impact of the substance on society.

In the 2015–16 financial year, cannabis cost Australian taxpayers $4.5 billion. More than half of that – over 54%, or around $2.4 billion – was due to crime-related expenses. This leaves approximately $2.1 billion attributable to cannabis-related drug treatment services, emergency medical events, workplace injuries, lost productivity, and even cannabis-related car crashes.

Even with these costs, cannabis causes far less social harm than opioids, which have an impact of around $15.76 billion, and it’s certainly not as bad as alcohol (over $66 billion) or tobacco (a whopping $136 billion).

But even if cannabis becomes legal, will people still buy it illegally? Initially, the Greens’ report reckons 52% of weed would be bought legally, with that number growing to 80% over 10 years – based on trends seen in the United States.

Greens Senator David Shoebridge says it’s the eventual billions of dollars in revenue that could benefit mental health, drug programs, and education. He adds that legalising would take money out of the hands of gangs and organised crime. Shoebridge argues that if adults can be trusted to responsibly enjoy a beer, why not an infused smoothie or a fresh-baked brownie?