What Cannabis Could Do For The New Zealand Economy

What Cannabis Could Do For The New Zealand Economy

Cannabis in a container.

Legal cannabis could open a whole new, multi-million-dollar industry in New Zealand

New research suggests the New Zealand Government could be hundreds of millions of dollars better off as a result of stimulation economic activity and savings from the criminal justice system if cannabis is legalised.

The research, commissioned by the NZDF (New Zealand Drug Foundation) and conducted by leading economist Shamubeel Eaqub from Sense Partners, has shown significant economic benefit to both decriminalising and legalising cannabis.

Ross Bell from the New Zealand Drug Foundation, an organisation pushing for legalisation, says that 50 percent of New Zealanders have tried cannabis. Mr. Bell is among many citizens questioning the punitive approach to cannabis legislation that is currently in favour, highlighting the fact that the existing laws allow control by the black market and does not offer harm reduction policies or help for addicts, that legalisation can provide.

Soon after legalising medical cannabis for terminally ill patients last December, New Zealand’s justice minister, Andrew Little, announced the cannabis referendum decision. The referendum means New Zealanders could vote for or against recreational cannabis legalisation during the 2020 general elections.

The decision has garnered overwhelming support from the country’s citizens, political parties, and economists. A new survey of more than 6,000 New Zealanders shows that 81 percent of people want to see cannabis legalised.

This new research highlights the benefits aside from forwarding social liberty. New Zealand could expect to realise significant economic benefits as a result of cannabis legalisation. For example, most would agree that the costs fighting misdemeanors regarding cannabis, such as small-scale possession, would be better utilised for more economically sound agendas. Further, legalisation will result in job creation, along with revenues from taxes on the crop. Further economic benefits could be seen from export policies surrounding legalisation if any policies were to be added.



Here’s a more in-depth look at what cannabis could do for the New Zealand Economy



Immeasurable benefits of cannabis legalisation for New Zealand’s economy

The NZDF (New Zealand Drug Foundation) supports a Portugal model on decriminalising cannabis for recreational use. Portugal decriminalised recreational use of cannabis in 2001, along with all other illegal drugs, but growing and selling your own is still illegal. Also, anyone caught with an amount of cannabis above the threshold must deal with the courts. This approach has allowed Portugal police to spend more time on production and distribution rather than focusing on minor possessions.

Whatever approach the New Zealand Government takes regarding legalising recreational cannabis use, the economic benefits will be positive. They extend to several sectors that are beneficial to the country and its citizens. To name a few, tax revenue, job opportunities, and savings in law enforcement and court costs are some of the benefits expected, as these benefits have been witnessed in countries where legalisation has occurred.


  1. Tax revenue

The latest research finds that the legal growing and selling of cannabis would generate tax revenues of between $185m and $240m annually.  In the United States of America (U.S.), Colorado, which has a similar population and geographical size to New Zealand, legalised cannabis in 2012. The state received $199 million in tax revenue in 2017 from $1.3 billion in marijuana sales. The legal cannabis industry created over 18,000 new full-time jobs in 2015 and generated $2.4b in economic activity.

Abe Gray, a member of the Opportunities Party, says New Zealand could benefit from an annual $1 billion legal medical cannabis market and an annual $5 billion legal recreational market after legalisation. He says the country is already missing huge revenues by not legalisingthis globally important agricultural commodity.


  1. New job opportunities

Consider Canada and the U.S. as the best examples when analysing the effects of cannabis legalisation on New Zealand’s job market. The U.S. cannabis industry is expected to create 250,000 new jobs in the next year. In 2017, the number of job openings in the cannabis industry rose by 445 percent, according to ZipRecruiter. The fastest-growing careers in a legal cannabis market include budtender, director of cultivation, dispensary manager, master extractor, master grower, extraction technician marijuana courier, and many more.

Another report finds that legal cannabis is responsible for a surge in the number of job postings in Canada’s cannabis industry. According to Statistics Canada, 55 licensed marijuana producers employed 2,400 people as of December 2017. A report from Indeed.ca, a leading job-posting site, found that the number of cannabis jobs on the site tripled in July 2017, and searches for cannabis-related terms quadrupled compared with July 2016. Job opportunities have increased in all countries that have legalised cannabis, and New Zealand could experience the same.


  1. Saved money on law enforcement

New Zealand will save the justice sector between $6m and $13m as a result of legalisation. This will be a direct result of freeing up the police and courts to focus on more serious crimes, rather than prosecuting cannabis possession and supply offenses.

Cannabis harm and intervention costs remain higher than other drugs.

Cannabis harm and intervention costs in 2014-2015 in New Zealand. Source

Prohibition on cannabis has come at a hefty price in New Zealand. New Zealand Police spent 598,000 hours enforcing the cannabis laws in 2006 at an estimated cost of more than $100 million. According to a Drug Harm Index (DHI) released in 2016, the New Zealand police were spending nearly $90 million annually on cannabis-related offences, with another $109m of costs in the courts and the justice system.

Legalising cannabis would reduce the costs of cannabis-related law enforcement. This has been the case in other countries and U.S. states, where the drug has been legalised. Fewer court cases involving marijuana would go to trial, leading to fewer incarcerations and more money saved.



Final words

Ending cannabis prohibition will have several economic benefits for New Zealand. By observing other countries that have legalised the drug, New Zealanders are now aware of the potential that legalising cannabis can have on the New Zealand economy. However, the government should also consider health concerns and the social well-being of New Zealanders, while debating cannabis legalisation. The issue is complex, with rational arguments on both sides, and so legalisation of the drug must be implemented with balance, and full consideration of all facets of the debate. As a template has been created by other countries and U.S. states, perhaps that balance will be easier to find. The alcohol and tobacco industries also provide a framework of how to successfully manage a substance that has the potential for harm.  The key here will be to implement legislation that maximises the economic benefits that are certain to occur while minimising any potentially harmful effects on the people of New Zealand.