Almost £1.5 billion in duty and savings could be raised by legalising cannabis, say the Liberal Democrats, as they made a manifesto pledge to decriminalise use of the drug.

Announcing their manifesto today, the Lib Dems would aim to follow models from the US and Canada by legalising the sale of cannabis through licensed shops.

They claim it would break the grip of criminal gangs although it would remain illegal for those under the age of 18 with licensed outlets only allowed to sell it to adults. There would also be limits on potency.

People caught by police in possession of drugs purely including heroin and cocaine would be diverted into treatment rather than being prosecuted provided it was for personal use. They would face civil penalties rather than imprisonment.

The policy is, however, likely to be criticised by Conservatives and Labour who are opposed to legalisation on the grounds that it could provide a gateway to other harder drugs and damage people’s health.