Forty per cent of proceeds from cannabis sales could go towards the community and drug treatment if the drug was legal, a new paper suggests.

Non-profit societies could sell cannabis in the same way as the regime that runs pokie machines, a Massey University research paper has suggested.

The report's author said gambling machines had been run in New Zealand for over 20 years by trusts, which last year paid out $260 million to the community, and the same could be done if recreational cannabis was legalised.

Associate Professor Chris Wilkins said he envisaged the societies would wholesale cannabis to licensed retail outlets.

PETER MEECHAM/FAIRFAX NZ Drug researcher Dr Chris Wilkins says a purely commercial model for legal cannabis could create an aggressive marketing drive.

Wilkins, who leads the drug research team at Massey's college of health, said there was a "commonly expressed concern" that if cannabis was legalised as a purely commercial market, the cannabis companies would hone in heavy and younger users with their marketing.

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Profit-driven companies in alcohol and tobacco spent heavily on marketing, "relentlessly oppose restrictive regulation" and downplayed the health risks of their products".

But New Zealand's public health approach to the "vice" of gambling took some of the steam out of that market, diverting 40 per cent of the gross proceeds.

"While some aspects of the gaming machine regime remain unsatisfactory, it has been effective over the past 10 years at controlling the growth of gaming machine gambling [and] empowered local government authorities to cap the number of gambling venues and gaming machines," Wilkins said.

Under his model, cannabis societies would be required to pay a fifth of the sales revenue to drug treatment, a fifth to community groups, and a fifth to the Government in levies.

Independent grant committees would allocate grants to drug treatment and community groups, and there would be a requirement to distribute the grants in the regions where the sales were made

A further 10 per cent would be paid to fund research into the health risks of cannabis

Wilkins said under this model, advertising of cannabis would be restricted to the retail outlet only, and no internet sales would be allowed.

More potent cannabis products would be taxed at a higher rate, based on their THC levels, and a minimum level of CBD, the non-psychotic compound in cannabis, would be required in all cannabis products

Local councils would have the power to determine the number of cannabis retail outlets in their areas. They would also be able to control where stores went in relation to sensitive sites like schools and playgrounds, and what their opening hours were.

A key part of Wilkin's model was to set the legal minimum price of cannabis, which need only to be around the higher black market price to be effective.

"As a general rule most people prefer to follow the law, even if only to avoid the (remote) risk of legal penalties," he said.

"Consequently it is reasonable to believe the majority of consumers will be naturally inclined to want to purchase legal cannabis, particularly if the legal market offers safer and more innovative products."

Ross Bell, executive director of the New Zealand Drug Foundation, said community-based trusts were one way of regulating cannabis.

"I think an easier way, which [Associate Health Minister] Peter Dunne has also said, is to use the kind of controls that already exist under the Psychoactive Substances Act."

While it was true that cannabis could raise a lot of fund for the community and the Government, Bell said money wasn't the reason he believed it should legalised.

"The main reason that you would want to change your drug law is to stop criminalising young people and Maori for something I think we all agree is a health issue.

"Because at the moment we have high rates of use under the current system."

Bell believed any legalisation should be done with heavy regulation and an age restriction, and with doctors now able to prescribe medicinal marijuana, he felt the political winds were shifting in recreational marijuana's favour.

"The thing we're all doing now is not talking about should we regulate cannabis or not, the conversation's moved to what would that reform look like.

"Political parties haven't come to an agreement yet but I think most others of us with half a brain have realised that the current approach is not working."