Marijuana Legalization Would Improve New Zealand's Economy

New Zealand would be better off overall with legal marijuana according to a duo of economic reports informing the Cannabis Legalization bill.

Two reports commissioned by the Ministry of Justice to inform the development of the Cannabis Legalisation and Control Bill demonstrate a clear picture of how a legally regulated cannabis market would add tremendous benefits to New Zealand.

Conducted by BERL, the reports were commissioned by the Ministry of Justice in early 2019 to support the development of an evidence base to inform the proposed regulations for a legal market for recreational cannabis in New Zealand. Producing two supporting documents, BERL has provided modelling to construct an estimate of the New Zealand illicit market, and the current extent of harms or benefits associated with cannabis use in New Zealand.

Following this BERL shared modelling of a legal market in New Zealand, including structure, production, processing, retail and the associated policy recommendations to regulate a legal recreational cannabis market.

Ross Bell, the Drug Foundation Executive Director said the reports show legalising marijuana would result in increased funding into health and education, reduce convictions and costs to the justice system, in addition to improving health and social justice outcomes.

The analysis proves, as many American states are now showing, that legal weed makes you better off overall.

Both reports model various scenarios each demonstrating "broad positive impacts across justice, health, social development and the economy."

As reported by the NZ Herald, a legal recreational cannabis market could generate $675 million a year for the Government to spend on reducing cannabis-related harm.

This analysis proves New Zealanders would be significantly better off with a legal cannabis marketRoss Bell, the Drug Foundation Executive Director

The adopted model for the Cannabis Legalisation and Control Bill could add up to 5000 new jobs in the legal cannabis sector. With a forecasted GST income of $335 million, in addition to $440 million income from the harm reduction levy and $640 million from the excise tax, there's a lot of money that could be spent.

"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," said Bell.

Aiming to reduce cannabis use over the medium term, regulations could result in up to 5,900 fewer cannabis consumers with long-term health conditions. Coupled with an expected reduction of 7,800 cannabis consumer with mental health diagnoses, legalisation could take immense pressure off hospitals and general practitioners nationwide.

According BER, the presence of cannabis results in an estimated 354 hospitalisations per year at a fiscal cost of NZ$25.7 million.

Police should also be happy about legalisation, with 3000 fewer cannabis convictions each year, which could even lead to 1400 fewer young people leaving school each year without a qualification. The report shows that the annual costs for justice and corrective services cost New Zealanders $2.6 million and $11.3 million in 2018 respectively.

This is a win for all New Zealanders. The financial windfall provided by cannabis legalisation comes at a good time for New Zealand as we face the impact of Covid-related job lossesRoss Bell, the Drug Foundation Executive Director.

Inside the Evidence to inform a regulated cannabis market report estimates the current size of the cannabis market at a total of 74 tonnes consumed per year across a total of over 557,000 users aged 15 years and above. Assuming a price of $20 per gram BERL suggests this market has a retail value of $1.5 billion.

In order to challenge the demand of the black market, Berl's modelling assumes a legal market would displace about two-thirds of the black market. How much weed are we talking? 49.7 tonnes of cannabis a year. That's 134 retail stores, 59 licenced cannabis cafes, and 227 combined stores; with 207 retail stores based in six major cities, including 125 in Auckland alone.

Coming just ahead of October's referendum, originally scheduled for September, New Zealand will soon go to the polls to decide the gate of marijuana down under.

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Elliot Nash
Elliot Nash

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