Legalising cannabis ‘would raise 1bn tax’

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Image caption The legality of recreational use is not up for debate, the government has said

Legalising cannabis would raise £1bn a year in tax for the UK, a think tank has estimated.

The report from the Institute of Economic Affairs has valued the UK’s black market in cannabis at £2.6bn.

Legalising the class B drug would also lead to savings for public services including the police, it said.

It comes after former Conservative leader Lord Hague called on the government to consider legalising cannabis for recreational use.

The government has promised to review the use of medicinal cannabis following two high-profile cases involving severely epileptic children.

But the Home Office stressed that the drug will remain banned for recreational use.

According to the drugs advice service Frank, cannabis is the most widely-used controlled substance in Britain.

Anyone found in possession of the drug can be imprisoned for up to five years while supplying it can be punished with a 14-year jail sentence or an unlimited fine.

In its report, the Institute of Economic Affairs estimates that around three million people in Britain used a total of 255 tonnes of cannabis last year.

The average cannabis user consumes an average 82.5g of the drug per year, or 1.6g per week, the think tank said. One gram is currently worth £10.

If the drug was legally available, it would generate sales of £2bn – twice the size of the cider industry.

The think tank said that VAT, excise duty, plus new streams of business and income taxes, would lead to a “windfall” for the Treasury of £1bn.

And savings to the NHS would work out at around £300m a year, the IEA said.

It added that legalisation would “virtually eradicate” the black market, although previous studies have indicated the illegal market would still continue, with dealers selling more potent types of the drug.

Legalisation “is a win-win-win”

Chris Snowdon, head of lifestyle economics at the IEA, said: “Canada and the USA are showing the way.

“Done properly, the legalisation of cannabis is a win-win-win: criminals lose a lucrative industry, consumers get a better, safer and cheaper product, and the burden on the general taxpayer is reduced.”

Canada passed a law legalising cannabis earlier this month. Uruguay became the first country to legalise the sale of cannabis for recreational use in December 2013, while a number of US states have also voted to permit it.

In its report, the IEA said licensed sales would lead to safer cannabis replacing the more dangerous strains – like high-strength “skunk” – and make it more difficult for under 18s to access the drug.

“Legalisation would also create new jobs and businesses in the legitimate, tax-paying economy, as well as savings in the criminal justice system,” the IEA added.

The debate around legalising cannabis was reignited after the cases of Billy Caldwell, 12, and Alfie Dingley, 6, who wanted to use a banned type of medicinal cannabis to treat their epilepsy.

Lord Hague – who is now the most high profile political figure to support legalising cannabis – said the debate about Billy was “one of those illuminating moments when a longstanding policy is revealed to be inappropriate, ineffective and utterly out of date”.

He said the war on cannabis had been “irreversibly lost” and a change of policy was needed.

Cannabis is not recognised as having any therapeutic value under the law in England and Wales and anyone buying or using it can be arrested or jailed.

Only one cannabis-based medical product – Sativex – can be legally prescribed in limited circumstances usually to help alleviate the symptoms of multiple sclerosis and the government is open to further applications.

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Image caption William Hague was Tory leader between 1997 and 2001

The Royal College of Psychiatrists makes clear that legalisation for recreational and medicinal use are distinct issues.

It says cannabis carries significant mental health risks but it supports the medicinal use of approved cannabis products.

Campaigners against legalisation argue that it would normalise the use of drugs among children and lead to greater addiction and health problems.

Prime Minister Theresa May last year vowed to continue the “war on drugs,” saying “the incredible damage [drugs] can do to families and the individuals concerned”.