Legalising marijuana would pack billions into Budget cone

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By Leith van Onselen

MB has argued repeatedly in favour of legalising marijuana on the following grounds:

  • It would bring marijuana into line with alcohol and tobacco, which are both legal and regulated despite being more dangerous to health;
  • It would guarantee purity of supply;
  • It would reduce profits to organised crime; and
  • It would provide a useful revenue stream for the government.

Regarding the last point, after the US state of Colorado legalised marijuana in 2014, the government has now collected more than $1 billion in tax revenue from just over $6 billion of sales. From CNBC:

Colorado has now generated more than $1 billion in total state revenue from the legal marijuana industry, another milestone for the state that legalized cannabis in 2014…

The state’s legal marijuana sales revenue doubling from the $500 million mark to $1 billion ($1,017,120,136 exactly) took under two years, while getting to $500 million took close to three and a half years. Since July 2017, Colorado total monthly tax and fee revenue from marijuana sales has never dipped below $20 million. In February 2014, the first month with sales tracking data, total state revenue was $3.5 million…

At CNBC’s recent Net Net event held in Denver on May 1, Colorado Gov. Jared Polis said, “It’s going very well. … It’s creating tens of thousands of jobs, tax revenue for the state, filling up buildings for landlords and reducing crime…

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Eleven states across the US now have legalised marijuana for recreational use, whereas more than 30 have legalised it for medical use.

Recreational cannabis also became legal in Canada in October, and is expected to raise $400 million a year for federal and provincial governments while also taking profits away from organised crime and criminals:

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Australia’s Parliamentary Budget Office also recently estimated that the Greens’ plan to legalise and tax marijuana could be worth around $1 billion a year to the Budget, through a combination of additional revenue and savings being made by law enforcement agencies such as the Australian Federal Police

It’s only because of historical accident that marijuana is illegal, while alcohol and tobacco aren’t. Australia should follow the other Anglosphere nations and legalise marijuana.

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About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.