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Home / New Zealand

Claire Trevett: Cannabis referendum 'stoners tax' could be golden haze for the Government

Claire Trevett
By Claire Trevett
Political Editor, NZ Herald·NZ Herald·
8 May, 2019 05:00 PM4 mins to read

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A cannabis shop in Poland. Photo / Getty Images

A cannabis shop in Poland. Photo / Getty Images

Claire Trevett
Opinion by Claire Trevett
Claire Trevett is the New Zealand Herald’s Political Editor, based at Parliament in Wellington.
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OPINION:

If anybody needs the wellbeing-inducing properties of marijuana right now, it is the party proposing to make it legal – the Green Party.

As far as the "year of delivery" goes, this week has apparently been allocated to the Green Party's bits of the support agreement.

First off the mark was the decision on the referendum to legalise cannabis.

Then came the Zero Carbon Bill, which pleased neither Greenpeace nor farmers and so is possibly a workable and pragmatic compromise that has a chance of getting somewhere.

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The same could not be said of the so-called "binding" cannabis referendum.

Legalising cannabis is one of the Green Party's founding policies. This was the chance to deliver on it.

The Greens had rather naively hoped that by supporting NZ First's waka jumping law against their own principles, NZ First would return the favour by swallowing a binding referendum on marijuana.

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They had some grounds for believing this.

The agreements of both NZ First and the Greens state they cannot block something that is written in the other party's agreement.

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Then there was the fact that on December 17, 2018, Cabinet did indeed agree to hold a binding referendum on the topic.

The Greens would have been quite entitled to assume they had it in the bag at that point.

It may or may not be noteworthy that the party's leader Winston Peters was in the US for that Cabinet meeting.

However, by the time of the next Cabinet decision on how to deliver that binding referendum, things had changed somewhat.

The Greens had wanted legislation passed prior to the referendum, but which would automatically come into effect if the referendum result was a "yes".

What seems likely is that NZ First realised it would have to vote in favour of that legislation to legalise cannabis rather than treat it as a conscience issue.

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That is something many of its MPs would not easily stomach.

It also noticed the Greens' agreement did not promise a binding referendum, but simply a referendum. Words matter, as Peters constantly says.

So what was delivered was the promise of draft legislation which may or may not be pursued in the next term.

Little and the Greens did their utmost to insist that this still amounted to being binding, just not in the usual sense.

It was by virtue of agreement by NZ First, Labour and the Greens that they would go ahead with the legislation if the referendum result was a yes.

It was binding by way of a pinky promise, rather than law.

If the public say no, all of this referendum process could be a big waste of money.

Then again, if the public say yes it could prove worth its weight in green, so to speak, for the Government.

Having lost out on a capital gains tax, the Government could find a handy replacement in a stoners tax.

Those who are championing the legalising of marijuana thinking it will make it cheaper and easier to get should be careful what they wish for.

Legalisation means regulation – and heavily regulated products also tend to be expensive.

Sure enough, it is not too far down the Cabinet paper that the topic of tax comes up.

Other countries have taxed both retail sales, and the cultivation of marijuana based on the weight of flowers and leaves.

The Cabinet paper envisages that revenue would contribute to harm reduction measures, such as rehabilitation, mental health and education.

The unanswered question is what rate that tax would be and exactly what would be taxed. That portion of the Cabinet paper was redacted.

But it would seem perverse to some if cannabis was taxed at a lower level than tobacco, for example. Taxes now make up more than 65 per cent of the price of a pack of cigarettes even before GST is included.

Imposing such high levies on cannabis would do little to incentivise the existing black market to take the steps to become legal vendors. It would also do little to encourage users to buy from those licensed sellers at a higher price.

Restricting the places products could be sold at too much would also inevitably result in continued black markets in areas that did not have a local shop.

The Government's current solution to this is to allow people in those areas to grow their own, using Government-approved seeds.

Such scenarios illustrate the tricky issues in legalisation of what is, like it or not, a harmful substance.

But an economic study commissioned by the Drug Foundation last year estimated a legalised marijuana market could rake in $240 million in tax a year.

That is a golden haze indeed for the Government.

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