A leaked Treasury report claims that legalising and taxing cannabis could raise hundreds of thousands of pounds a year and save the justice system a fortune.
The Institute for Social and Economic Research (ISER) estimated that legalising and licensing cannabis could help reduce the UK budget deficit by up to £1.25 billion per year.
The Treasury responded to this figure to argue that it was probably over-optimistic, but it conceded that legalising the substance could “generate notable tax revenue” and “lead to overall savings to the criminal justice system”.
The Home Office has said that it has no plans to change the law prohibiting the use of cannabis, which remains a Class B illegal drug.
Tax and other revenues
The street cost of cannabis in the UK is in the region of £10 per gram. Prices vary depending on the dealer, the quality of the product, and the area. If the substance was legal the price would fall, due to there being more supply available to meet the demand. However, the minimum it is likely to be sold at by authorised stockists would be about £5 per gram.
Let’s take a look at what sort of tax revenue could be generated using that price as a guide.
The study reports that around 216 tonnes of cannabis are consumed in the UK every year, by a wide age group of the population. If 216 tonnes were sold at only £5 per gram, that would still mean a street value of approximately £1.1 billion pounds.
Aside from that, VAT levied on cannabis would also raise about £220 million, based on those figures. An additional Cannabis Duty, that used Tobacco Duty on cigarettes as a blueprint, at a rate of 16.5%, could raise a minimum of an extra £181.5 million, plus a fixed sum for every purchase made.
That’s a total of well over £300 million. The £1.25 billion figure from the leaked report is perhaps, as the Treasury suggests, a stretch.
But there are other sums of money to be considered
Additional to generated tax revenue, a Treasury study agrees with ISER that regulating cannabis would save the state up to £200 million in court and police costs each year. Along with reducing the cost, it would also do away with what the Liberal Democrat health spokesman Norman Lamb called the “ludicrous criminalisation” of users.
Putting criminals out of business
Legalisation would reduce costs of production and transport, as dealers have to find ways to move drugs around without getting caught – and can suffer huge losses in profit when police seize their product.
Therefore, legalisation could actually cause a drop in the price of marijuana, when farmed under legally licensed conditions. This would result in scope for extra tax to be levied without alienating users by driving the price of their drug of choice out of their budget.
Calculations by the Transform Drugs Policy Foundation (Transform), report that the drugs market has an annual turnover of $320 billion worldwide – easily outstripping criminal profits in counterfeiting ($250 billion), human trafficking ($32 billion) and cybercrime ($1 billion). The charitable think tank, which has campaigned for the legal regulation of drugs since its formation 1997, argues that prohibition simply hands money to criminals.
What about the dangers?
The Home Office made a statement to say that there “is clear scientific and medical evidence that cannabis is a harmful drug which can damage people’s mental and physical health, and harms individuals and communities” but the same can also be said of alcohol and nicotine.
Transform says of the issue, that “any harm would be reduced by a legalised licensed system, which would prevent children getting their hands on drugs, and also make sure that drugs reaching users would not be mixed with potentially dangerous adulterants that have been known to cause fatalities.”
Speaking during a TEDMED Talk in 2014, he argued that some common ‘facts’ about drugs simply aren’t true. You can watch his talk for free on the TED website.
Dr Carl Hart is a neuroscientist who has spent 16 years studying substance abuse and addiction. Whilst on 'The Joe Rogan Experience', Dr Hart also said that there are relatively few people who really understand what drugs do and don’t do, and said that none of the groups who “control the narrative of drugs” such as parents and law enforcement “are uniquely qualified to speak to this issue, but they have dominated the conversation”.
While there are understandable concerns about the harms of drug use, many have been exaggerated by the media, and for political means. If the result of a legalised system is less harm and more tax, is it not a reasonable goal?