A group better known for its views on inflation targeting and GDP growth says New Zealand should move "sooner rather than later" to legalise marijuana which would generate a net gain of $300 million for government accounts.

Drawing on Treasury research which found that legalising marijuana could reap $150 million in new government revenue and reduce spending on drug enforcement by around $180m, New Zealand Institute of Economic Research (NZIER) principal economist Peter Wilson concludes that legalisation, combined with heavy taxation, regulation and education would be a better way of reducing social harm from the drug.

"The result should be less use, considerable fiscal savings to the government and the removal of a valuable source of revenue for criminals," he writes. "Prohibition of marijuana, just like prohibition of alcohol before it, has been a costly failure."

Wilson argues that legalisation and taxation of the sale, as opposed to decriminalisation, would have the advantage of allowing to regulators to push the legal price higher than what it is now.

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But he notes that the current wave of marijuana policy reform offers New Zealand the chance to take a good look at which approaches are working best.

"We suggest New Zealand move sooner rather than later to implement
effective policies based on that evidence," Wilson says.

The NZIER report (which can be read here) follows a call from a horticultural expert for New Zealand to grab the economic opportunity of law reform.

Horticulture expert Mike Nichols, writing in the latest issue of the horticulture magazine, NZGrower, said New Zealand could miss out in much the same way as it did with the opium poppy trade which is now dominated by Tasmania.

"The value of a kilogram of medicinal cannabis compared with a kilogram of Pinus radiata is a clear example showing that New Zealand should be producing, and exporting, high-value and low-volume products," Nichols said.

Last week a Drug Foundation poll found that most New Zealander's support some sort of reform to marijuana laws.