Plan to legalise cannabis in Australia: ‘Bring in tens of billions of dollars’

The Greens in Australia want to legalise cannabis and argue it could create revenue for the government. Photo / Supplied

Legalising cannabis could generate AU$28 billion in taxes, according to the Australian Parliamentary Budget Office, and allow the government to increase the dole by AU$80 a week.

The Greens in Australia have commissioned the PBO to war game the revenue that could flow from legalisation, a path embraced by Canada, where marijuana can be bought by adults at government-run stores and licensed private retailers.

It remains a crime in Canada to grow more than four plants at home, smoke in public, carry more than 30 grams or sell to anyone aged 18 or under.

Under the Greens’ plan you could grow six plants in Australia, but it would remain a crime to sell pot to anyone underage, such as teenagers.

Figures obtained by the Greens from the PBO show that the legalisation of cannabis would generate more than AU$28 billion in government revenue in the first decade after legalisation.

Greens Senator David Shoebridge, the party’s justice spokesman, said the money generated could be used to raise the rate of JobSeeker and the Youth Allowance by AU$80 a fortnight.

Alternatively, it could be deployed to build more than 88,000 additional public housing units over the next decade to give 250,000 people a home.

“We know that legalising cannabis reduces harm by keeping people out of the criminal justice system, this report shows how it will also bring in tens of billions of dollars of public revenue as well,’’ Shoebridge said.

“With the revenue generated from legalised cannabis we can build new public housing for a quarter of a million people or lift JobSeeker by AU$80 a fortnight. This is an opportunity for some serious investment in social justice.”

While the assumption is that drugs law remains a state issue, the Greens have advised that cannabis could be legalised via federal powers.

The Greens believe legalising cannabis could make Australia an international tourism hotspot for dope-smokers. Photo / Jason Hosking

The pathway to legalising cannabis, according to the Greens, is through the Commonwealth’s power to regulate plant variety rights under section 51 of the constitution.

“Legal cannabis makes enormous social and economic sense. When we legalise cannabis we take billions away from organised crime, police and the criminal justice system and we can then spend it on schools, housing, hospitals and social support,” Shoebridge said.

The Greens believe it could also make Australia an international tourism hotspot for dope-smokers, with up to 10 per cent of sales coming from tourists.

The revenue would flow from slapping the GST on sales, in addition to a company tax and a 15 per cent cannabis sales tax.

However, if a 25 per cent cannabis sales tax were applied, revenue over the decade would rise to AU$36 billion.

Under the plan, Australia would legalise the production and sale of recreational cannabis through a tightly regulated model, and by establishing a Cannabis Australia National Agency (CANA).

The cannabis agency would oversee the legalisation and regulation of recreational cannabis, act as the sole wholesaler between producers and retail outlets, and set the wholesale price of cannabis – which would be based initially on the Australian street price of cannabis, and then fluctuate according to market forces.

It would also be responsible for issuing production licences to cultivators and sale licences to private retail outlets.

Sales of recreational cannabis would attract the GST as well as an excise of 25 per cent on GST-inclusive sales.

“It’s a fact that almost half of adult Australians have at one time or another consumed cannabis. Laws that make almost half of the country criminals don’t pass the pub test,’’ Shoebridge said.

“When you legalise cannabis you can properly regulate the market, provide consistent health and safety advice and make the product safer. Right now the only ‘safety regulators’ for the cannabis market are bikie gangs and organised crime and that doesn’t make much sense.

“This costing from the PBO shows the incredible opportunity legal cannabis creates to not just reduce harm but to generate revenue that could be invested in health, education and public housing.

“The Greens’ model creates a right for adults to grow up to six plants at home without being taxed and without having to pay. This costing takes that into account.

“It also guarantees commercial possibilities for co-operatives and local entrepreneurs to grow and sell cannabis including through regulated cannabis cafes.”

“The costing assumes 10 per cent of the cannabis sold under the scheme would be sold to tourists", Shoebridge says.

Under the plan the commercial cultivation of cannabis plants would start up from July 2023 to ensure the establishment of supply chains ahead of sales of Australian-grown cannabis, which would be expected to commence in 2024-25, although the application for production and retail licences would commence in 2023-24.

Both indoor and outdoor production methods would be adopted.

The Australian Federal Police (AFP) would retain the current cannabis-related resources to combat the black market and associated crimes after legalisation, though the Greens have noted that most resources currently directed at cannabis law enforcement lie within state level jurisdictions.

“The costing assumes 10 per cent of the cannabis sold under the scheme would be sold to tourists, with the potential this could grow. This green gold could become the life blood of many regional areas currently struggling for viable local industries,’’ Shoebridge said.

“The community has been waiting decades for cannabis legalisation. It’s time for the parliament to catch up, and this report provides another 28 billion reasons to get on with it.”