Legalising the sale of cannabis in specialist shops would generate £1bn a year in tax revenue and reduce the harm done to users and society, according to the most detailed plans ever drawn up for the liberalisation of UK drug laws.

The study, which was carried out by a panel of experts including scientists, academics and police chiefs, calls for the UK to follow the lead of some US states and allow the sale of cannabis to over-18s in licensed retail stores.

The report’s conclusions will form the basis of a new drugs policy being drawn up by the Liberal Democrat Party, which is expected to debate the issue at its spring conference later this week.

Under the plans proposed by the expert panel:

Adults would be able to buy cannabis from licensed single-purpose stores modelled on pharmacies, like the marijuana dispensaries operating in Oregon and Colorado.

Home-cultivation of cannabis would also be legal for personal use and small-scale licensed cannabis social clubs could be established. However, branding, promoting or advertising cannabis products would be banned.

The price, potency and packaging of all sold cannabis would be controlled by the Government with a new regulator established to oversee the market. The price would disproportionately rise for higher-strength cannabis to discourage sales of the most harmful forms of the drug.

Both drug production and sales would be taxed, raising, the panel claims, between £500m and £1bn a year. However, unlike some countries that have legalised cannabis, the panel does not come out in favour of ring-fencing the revenue for drug treatment, prevention and harm reduction.

A new regulator would be established to oversee the market, possibly modelled on Ofgem and Ofwat.

The experts behind the study say legalisation would reduce drug-related crime and mitigate the harmful effects of the drug on users.

The panel was set up last year by the former Liberal Democrat health minister Norman Lamb and has been chaired by Steve Rolles, from the Transform Drug Policy Foundation.

The report's key recommendations Allowing the sale of cannabis to over-18s from specialist, licensed stores. The report proposes allowing home-cultivation for personal use and small-scale licensed cannabis social clubs.

A new regulator to oversee the market.

Regulation around the price, potency and packaging of cannabis from retailers, with policy informed by best practice in tobacco and alcohol regulation.

Single-purpose outlets to sell cannabis modelled on pharmacies.

Cannabis to be sold over the counter by licensed vendors, in plain packaging with clear health and risk reduction information.

Other panel members include Mike Barton, the Chief Constable of Durham Constabulary, Professor David Nutt, the former chair of the Advisory Committee on the Misuse of Drugs, and Niamh Eastwood, executive director of the drugs charity Release. In the report, the authors say that while they do not dispute that taking cannabis is harmful – legalisation and regulation is a better way to mitigate the risks.

“Drug policy to date has (almost) always been driven by political and ideological agendas that have ignored scientific, public health and social policy norms,” they write.

“We are fully aware of the health harms associated with cannabis use, but contend that a rational policy must pragmatically manage the reality of use as it currently exists, rather than attempt to eradicate it using punitive enforcement.”

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This, they said, was an approach that, “however well intentioned, has historically proved to be ineffective and counterproductive”.

Mr Rolles said the reality was that millions of people used cannabis anyway, and there was “a pressing need for Government to take control of the trade from gangsters and unregulated dealers”.

“Legal regulation is now working well, despite the fear-mongering, in Colorado and Washington, and will roll out across the US over the coming years,” he said.

Where cannabis is and isn't legal Show all 10 1 /10 Where cannabis is and isn't legal Where cannabis is and isn't legal UK Having been reclassified in 2009 from a Class C to a Class B drug, cannabis is now the most used illegal drug within the United Kingdom. The UK is also, however, the only country where Sativex – a prescribed drug that helps to combat muscle spasms in multiple sclerosis and contains some ingredients that are also found in cannabis - is licensed as a treatment Getty Where cannabis is and isn't legal North Korea Although many people believe the consumption of cannabis in North Korea to be legal, the official law regarding the drug has never been made entirely clear whilst under Kim Jong Un’s regime. However, it is said that the North Korean leader himself has openly said that he does not consider cannabis to be a drug and his regime doesn’t take any issue with the consumption or sale of the drug MARCEL VAN HOORN/AFP/Getty Images Where cannabis is and isn't legal Netherlands In the Netherlands smoking cannabis is legal, given that it is smoked within the designated ‘smoking areas’ and you don’t possess more than 5 grams for personal use. It is also legal to sell the substance, but only in specified coffee shops Getty Where cannabis is and isn't legal USA Although in some states of America cannabis has now been legalised, prior to the legalisation, police in the U.S. could make a marijuana-related arrest every 42 seconds, according to US News and World Report. The country also used to spend around $3.6 billion a year enforcing marijuana law, the American Civil Liberties Union notes AP Photo/Ted S. Warren Where cannabis is and isn't legal Spain Despite cannabis being officially illegal in Spain, the European hotspot has recently started to be branded, ‘the new Amsterdam’. This is because across Spain there are over 700 ‘Cannabis Clubs’ – these are considered legal venues to consume cannabis in because the consumption of the drug is in private, and not in public. These figures have risen dramatically in the last three years – in 2010 there were just 40 Cannabis Clubs in the whole of Spain. Recent figures also show that in Catalonia alone there are 165,000 registered members of cannabis clubs – this amounts to over 5 million euros (£4 million) in revenue each month Getty Where cannabis is and isn't legal Uruguay In December 2013, the House of Representatives and Senate passed a bill legalizing and regulating the production and sale of the drug. But the president has since postponed the legalization of cannabis until to 2015 and when it is made legal, it will be the authorities who will grow the cannabis that can be sold legally. Buyers must be 18 or older, residents of Uruguay, and must register with the authorities Getty Where cannabis is and isn't legal Pakistan Despite the fact that laws prohibiting the sale and misuse of cannabis exist and is considered a habit only entertained by lower-income groups, it is very rarely enforced. The occasional use of cannabis in community gatherings is broadly tolerated as a centuries old custom. The open use of cannabis by Sufis and Hindus as a means to induce euphoria has never been challenged by the state. Further, large tracts of cannabis grow unchecked in the wild Getty Where cannabis is and isn't legal Portugal In 2001, Portugal became the first country in the world to decriminalize the use of all drugs, and started treating drug users as sick people, instead of criminals. However, you can still be arrested or assigned mandatory rehab if you are caught several times in possession of drugs Getty Where cannabis is and isn't legal Puerto Rico Although the use of cannabis is currently illegal, it is said that Puerto Rico are in the process of decriminalising it RAUL ARBOLEDA/AFP/Getty Images Where cannabis is and isn't legal China Cannabis is grown in the wild and has been used to treat conditions such as gout and malaria. But, officially the substance is illegal to consume, possess and sell Getty

But other drug experts were less enthusiastic. Harry Shapiro of the charity DrugWise, said that while there was a case to decriminalise cannabis and make possession of small quantities of the drug a civil offence like a parking fine, any further moves should only go ahead with caution.

“There is a strong case to be prudent and see what happens elsewhere before making decisions in this country,” he said.

However, the paper is likely to prompt the Liberal Democrats to become the first British political party to come out in favour of legalisation.

At the last election, the Green Party advocated setting up a Royal Commission to review currently controlled drug classifications, within a legalised environment of drug use.

Tim Farron, the Liberal Democrat leader, said he was now convinced that the prohibition of cannabis had “failed”. “We need a new, smarter approach and I welcome this report ahead of the debate at spring conference,” he said.

“It is waste of police time to go after young people using cannabis and ludicrous to saddle them with criminal convictions that can damage their future careers.

“A legal market would allow us to have more control over what is sold, and raise a considerable amount in taxation.