Wednesday, 17 August 2022
Meet the JournalistsPremiumAucklandWellingtonCanterbury/South Island
CrimePoliticsHealthEducationEnvironment and ClimateNZ Herald FocusData journalismKāhu, Māori ContentPropertyWeather
Small BusinessOpinionPersonal FinanceEconomyBusiness TravelCapital Markets
Politics
Premium SportRugbyCommonwealth GamesCricketRacingNetballBoxingLeagueFootballSuper RugbyAthleticsBasketballMotorsportTennisCyclingGolfAmerican SportsHockeyUFC
NZH Local FocusThe Northern AdvocateThe Northland AgeThe AucklanderWaikato HeraldBay of Plenty TimesHawke's Bay TodayRotorua Daily PostWhanganui ChronicleStratford PressManawatu GuardianKapiti NewsHorowhenua ChronicleTe Awamutu Courier
Covid-19
Te Rito
Te Rito
OneRoof PropertyCommercial Property
Open JusticeVideoPodcastsTechnologyWorldOpinion
SpyTVMoviesBooksMusicCultureSideswipeCompetitions
Fashion & BeautyFood & DrinkRoyalsRelationshipsWellbeingPets & AnimalsVivaCanvasEat WellCompetitionsRestaurants & Menus
New Zealand TravelAustralia TravelInternational Travel
Our Green FutureRuralOneRoof Property
Career AdviceCorporate News
Driven MotoringPhotos
SudokuCodecrackerCrosswordsWordsearchDaily quizzes
Classifieds
KaitaiaWhangareiDargavilleAucklandThamesTaurangaHamiltonWhakataneRotoruaTokoroaTe KuitiTaumarunuiTaupoGisborneNew PlymouthNapierHastingsDannevirkeWhanganuiPalmerston NorthLevinParaparaumuMastertonWellingtonMotuekaNelsonBlenheimWestportReeftonKaikouraGreymouthHokitikaChristchurchAshburtonTimaruWanakaOamaruQueenstownDunedinGoreInvercargill
NZ HeraldThe Northern AdvocateThe Northland AgeThe AucklanderWaikato HeraldBay Of Plenty TimesRotorua Daily PostHawke's Bay TodayWhanganui ChronicleThe Stratford PressManawatu GuardianKapiti NewsHorowhenua ChronicleTe Awamutu CourierVivaEat WellOneRoofDriven MotoringThe CountryPhoto SalesNZ Herald InsightsWatchMeGrabOneiHeart RadioRestaurant Hub

Advertisement

Advertise with NZME.
Politics

Election 2020: Legalising weed could see $675m a year spent on health interventions - report

8 Sep, 2020 03:21 AM6 minutes to read
New Zealanders will vote on October 17 about whether to legalise cannabis for personal use. Photo / Jason Oxenham

New Zealanders will vote on October 17 about whether to legalise cannabis for personal use. Photo / Jason Oxenham

Derek Cheng
By
Derek Cheng

Senior Writer

VIEW PROFILE
Vote2020

A legal cannabis market for recreational use could generate $675 million a year for the Government to spend on reducing cannabis-related harm, new economic modelling shows.

Two reports by Business and Economic Research Ltd (Berl) also say that legalisation would see an initial spike in cannabis use, accompanied by more cannabis-related hospitalisations.

But this would recede in the longer term and, with excise tax revenue put towards effective health interventions, cannabis users would have improved health outcomes while the justice system would save $11.4 million a year.

READ MORE:
• Premium - Reeferendum: Don't like weed? Why that shouldn't be a factor in how you vote
• Legal cannabis has potential to reduce harm, but many unknowns: PM's chief science adviser
• Reeferendum: Proposed big fines for cannabis corporates, 'help not handcuffs' for young cannabis users
• Reducing harm, 'systemic racism' and overseas comparisons: The experts on legalising cannabis

Advertisement

Advertise with NZME.

Berl's modelling was done for the Ministry of Justice in the lead-up to next month's referendum on legalising cannabis for personal use.

It was going to be published after the referendum in case it might unduly influence voters, but it has been released today following Official Information Act requests.

Justice Minister Andrew Little has so far been coy about the value of any levy on legal cannabis products, which would be ring-fenced for health services such as therapy or addition treatment.

But Berl estimated the level of excise tax based on the current price of cannabis and three different levels of potency of THC - the psychoactive ingredient in cannabis.

It estimated the tax would net the Government $640 million per year.

Adding the revenue from licensing fees minus the cost of administering the scheme, Berl says there would be $675m a year that could be used for health services.

Related articles

New Zealand|Politics

Reeferendum: Full details of how legal cannabis market would work revealed

30 Apr 11:00 PM
New Zealand|Politics

Analysis: Don't like weed? Why that shouldn't be a factor in your cannabis vote

03 May 05:00 PM
New Zealand|Politics

Reducing harm, 'systemic racism' and overseas comparisons: The experts on legalising cannabis

06 Jul 11:00 PM
New Zealand

Cannabis referendum raises questions over its medicinal use

06 Sep 11:57 PM

The Government would also net $181m in GST and $40m in income and company taxes.

Health interventions would see the number of cannabis users drop, as well as reduce the amount of cannabis used, assuming the interventions were effective.

Advertisement

Advertise with NZME.

"There is a lack of data or research to determine the extent of the success that may arise from any particular interventions," Berl says.

Subscribe to Premium

A recent report from an expert group, led by chief science adviser to the PM Juliet Gerrard, noted that many users didn't currently seek help given the stigma of using cannabis and the fear of prosecution.

Modelling of short-term and longer-term impacts of legalisation, including the effects of effective health interventions. Source / BERL
Modelling of short-term and longer-term impacts of legalisation, including the effects of effective health interventions. Source / BERL

Successful interventions could see the number of cannabis users with long-term health conditions drop by between 4600 and 5900, and a reduction in the number of users with mental health diagnoses of between 6500 and 7800.

That would see fewer cannabis-related hospitalisations, fewer users leaving school without qualifications, and an increase in employability along with a $280 to $380 increase in annual incomes, Berl says.

Drug Foundation executive director Ross Bell said the report supported the potential of a legal market to reduce harm compared to the status quo.

"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," Bell said.

Advertisement

Advertise with NZME.

"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, taxpaying jobs, and bring much needed income to provincial New Zealand."

Berl's modelling assumed that a legal market would displace about two-thirds of the black market.

To meet that demand - 49.7 tonnes of cannabis a year - Berl says New Zealand would need 134 retail stores, 59 licenced cannabis cafes, and 227 combined stores; 207 retail stores would be based in six major cities, including 125 in Auckland.

The legal industry would employ 5000 people fulltime, creating $210m a year in salaries and wages and boosting GDP by $440m a year.

Berl's reports paint a sobering picture of current cannabis use in New Zealand, which currently exists in a black market given the illegal status of cannabis.

Advertisement

Advertise with NZME.

There are 74 tonnes of it consumed a year by 557,000 users aged 15 and over.

"An assumed price of $20 per gram suggests this market has a retail value of $1.5 billion," Berl says.

"Consumption is heavily dominated by daily users, with this group accounting for 62 tonnes of the total annual figure.

"The distribution of consumption is skewed towards those aged from 20 to 30 years old, especially for those of European ethnicity. There is also significantly large consumption by Māori 15 to 20 year olds."

Cannabis consumption by age group and ethnicity. Source / BERL
Cannabis consumption by age group and ethnicity. Source / BERL

And it's mostly consumed in deprived communities, Berl says.

"Consumption by those in the most deprived quintile accounts for 40 per cent of the total."

Advertisement

Advertise with NZME.

Cannabis users, Berl says, are less educated, earn lower incomes, and have fewer job opportunities, longer-term health issues and worse mental health compared to non-users.

Currently there are about 1115 hospitalisations a year related to cannabis use, costing taxpayers $14.7 million, while police issued 3245 warnings issued in 2018, which saw 1650 charges and 1250 convictions.

"These incurred annual fiscal costs for justice and corrections of, respectively, $2.6 million and $11.3 million," Berl says.

Assuming the price in a legal market would mirror that in the $20-a-gram price in the black market, Berl estimated a short-term spike of a 30 per cent rise in cannabis consumed and 25 per cent more users if it was legalised.

That was based on what had happened in the states of Colorado, Massachusetts, Washington and the District of Columbia.

"Data from Colorado and Washington, indicate a substantial decline in use rates since legalisation, suggesting that this initial effect may tail off over a period of three to five years," Berl says.

Advertisement

Advertise with NZME.

The spike would be accompanied by 300 more hospitalisations a year, costing $4m more a year, but there would be 1930 fewer police warnings, 1200 fewer police charges, and 940 fewer convictions, saving almost $10 million in justice and corrections costs.

Justice outcomes would improve to $11.4m in savings a year over the medium-term, Berl says, assuming demand eventually reverted to what it currently is and the legal market replaces two-thirds of the black market.

Health outcomes only improved with the use of interventions.

Advertisement

Advertise with NZME.

Latest from New Zealand

New Zealand

Severe flooding hits Golden Bay

New Zealand|PoliticsUpdated

Watch live: Ardern and Sharma haven't spoken since suspension

17 Aug 01:34 AM
New Zealand

Death on the mountain: 'Different decisions and she may have survived'

17 Aug 12:59 AM
New Zealand

Insurance costs could increase massively as climate risk rises - modeller

17 Aug 12:15 AM
Kahu

'Scummy little Māori ... I thought they had rung the wrong number' - academic targeted in racist call

17 Aug 12:12 AM

Most Popular

Premium
NZ's highest paid CEO: Fletcher boss takes home $6.58m
BusinessUpdated

NZ's highest paid CEO: Fletcher boss takes home $6.58m

17 Aug 01:04 AM
NZ's low literacy rate is bad news for the economy
Education

NZ's low literacy rate is bad news for the economy

16 Aug 08:12 PM
Chlöe Swarbrick: We can choose to rewrite the rules again
New Zealand|Politics

Chlöe Swarbrick: We can choose to rewrite the rules again

16 Aug 05:00 PM

Advertisement

Advertise with NZME.
About NZMEHelp & SupportContact UsSubscribe to NZ HeraldHouse Rules
Manage Your Print SubscriptionNZ Herald E-EditionAdvertise with NZMEBook Your AdPrivacy Policy
Terms of UseCompetition Terms & ConditionsSubscriptions Terms & Conditions
© Copyright 2022 NZME Publishing Limited
TOP