Legalising cannabis would raise £1bn in tax revenues, according to the Liberal Democrat manifesto, which backs a regulated market for the drug.

The document calls the war on drugs “a catastrophic failure” in which billions were flowing into organised crime rather than the Treasury’s coffers.

The Lib Dems said a legal, regulated market for cannabis would bring in £1bn for the government, based on Treasury figures commissioned by Nick Clegg while he was deputy prime minister.



How popular are the Lib Dems? The Lib Dems’ poll rating has been stubbornly low, occasionally slipping below 10%, hardly encouraging for a party styling itself as the voice of the 48%. Local election results saw the party lose seats – but also an increase in projected national vote, up 7% from the general election to 18%, though local elections are not always a reliable indication. They increased their vote share in constituencies where they hope to win seats, including Oxford, Cambridge and St Albans. But outside urban areas there’s no concrete sign that June will see a yellow wave of Lib Dem revival. Jessica Elgot



The Treasury’s report, commissioned before the 2015 election, was based on research from the University of Essex’s Institute for Social and Economic Research, combined with evidence from the recent legalisation of cannabis in Colorado, Washington state and Uruguay.

The ISER model said the estimates varied depending on the popularity of legalised cannabis and the potency of the cannabis, but it found aggregate annual government benefits would be between £750m and £1.05bn.

A report by the Adam Smith Institute has estimated a legal cannabis market could be worth £6.8bn to the economy annually, potentially raising between £750m and £1.05bn in tax revenues and reduced criminal justice costs.

The Lib Dems’ manifesto pledge would allow the sale of cannabis to over-18s from specialist, licensed retail stores, home cultivation for personal use and licensed cannabis social clubs.

It would also create a new regulator which would set limits on price, potency and packaging of the drug. Cannabis would be in plain packaging, with health warnings, the party said.

The Lib Dem health spokesman, Norman Lamb, who compiled a report for the party on cannabis legalisation in March last year with a panel of experts including serving and former chief constables, said the existing system was “doing untold harm on health grounds and on justice grounds”.

The Lib Dem health spokesman, Norman Lamb. Photograph: Linda Nylind/The Guardian

He said leaving the cannabis market in the hands of criminals “puts people’s health at risk, and criminalises people, blighting their careers”.

Lib Dem policy chiefs said they estimated their model would generate revenues and savings at the higher end of the IESR range.

The party said the latest estimates of the size of the cannabis market were slightly larger than those used by the Treasury in the 2015 study, and increased the potency of what would be available legally compared with what the Treasury had modelled.

The manifesto policy would cap the maximum THC content at 15% rather than the 10% modelled by the Treasury and IESR. The average THC content of street cannabis is 16.2%, according to a 2008 Home Office study. The drug would be taxed based on its potency, though the party has not released any concrete pricing figures.

The Lib Dems have also pledged to replaceimprisonment for possession of illegal drugs with civil penalties and to repeal the Psychoactive Substances Act, which banned a slew of previously legal highs. The party said it would also move responsibility for drugs policy from the Home Office to the Department of Health.