Parliamentary Budget Office rates fiscal benefits of Greens’ push to legalise, licence and tax marijuana • Sign up to receive the top stories every morning

This article is more than 2 years old

This article is more than 2 years old

Legalising cannabis would reap the Australian economy almost $2bn a year, the Parliamentary Budget Office has found.

The Greens plan to not only decriminalise cannabis but also legalise it for adult use is the latest case study of political differences, with both Labor and the Coalition looking into legalising it for medicinal use, but going no further.

But claiming that the “war on drugs had failed”, the Greens leader, Richard Di Natale, last week proposed the full legalisation of cannabis, which would allow adults to grow up to six marijuana plants for personal use.

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Under the policy, cannabis would be taxed and regulated by the government, in the same way alcohol and tobacco are.

And that could create a potential pot of gold for the government. The PBO estimates the Greens plan would raise $3.6bn over four years from July 2019, based on a 25% excise, as well as GST.

Law and order agencies would also be able to redirect resources spent on policing cannabis, to other illicit drugs, Di Natale said.

The PBO based its estimates on production licence fees of $3,500 an application, with annual fees varying up to $2,300, depending on the size of the operation.

However, the PBO also warned its estimate was hampered by the limited information available to judge cannabis consumption and its market price.

Using Australian Institute of Health and Welfare statistics, the Greens estimate 35% of Australians have used cannabis.

The PBO assumed the average recreational cannabis user purchased three grams a week for its analysis.

Di Natale said the PBO estimate showed the budding plan was not only socially responsible, it made economic sense as well.

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“The Greens’ plan to legalise cannabis for adult use will bring in billions of dollars in public revenue that would fully fund drug education and treatment programs and provide a much needed funding boost for our hospitals and Medicare,” he said.

“We need to get real about cannabis. Almost 7 million Australians have used cannabis despite currently risking a criminal record for doing so.

“As a drug and alcohol doctor, I’ve seen the ‘tough on drugs’ approach causes enormous harm. It drives people away from getting help when they need it and exposes them to a dangerous black market.

“The Greens’ plan will raise billions for our healthcare system and focus law enforcement resources into where they’re needed most.”

The government has ruled out backing the Greens policy. The health minister, Greg Hunt, last week labelled cannabis a “gateway drug”, while the Labor leader, Bill Shorten, accused the Greens of angling for “political clickbait”.

Canada has committed to legalising cannabis this year, and nine states in the US have already done so, along with Spain and Uruguay.