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New Zealand government coffers could raise $490m annually from cannabis crop if it’s legalized

The Beehive,Wellington, New Zealand

The latest cannabis news reveals that up to $490 million in annual revenue could go to the New Zealand government’s strongbox if the crop is legalized. 

According to the data shared by the NZ Institute of Economic Research (NZIER), the legal cannabis industry has the potential to generate nearly $490 million in tax revenue, GST included. The New Zealand government will conduct a referendum in September to decide on cannabis legalization in the country.

Cannabis tax revenue 

Researchers calculated the tax on legal cannabis industry at 25 percent. Peter Wilson, the lead economist at NZIER stated that the probable tax-take on cannabis was only an approximation of what might happen in New Zealand if the government legalizes cannabis. 

According to Wilson, New Zealand currently has scanty information on cannabis use. However, he said NZIER worked with specific data from Colorado and Canada, which provided detailed information on the actual numbers of people who consumed cannabis. 

The key insight from that is that heavy users do actually consume a lot of this product. We assumed that our use and distribution is the same as Colorado, scaled that for population, and said that if that is the case then how much would sell in a legal market and we came up with the round number of 1100 tones. To achieve the full $490m per year in tax revenue, our modelling assumes that legal cannabis will need to displace the illegal market entirely, Wilson said.

A win for the government 

The researcher said a legal market could eliminate illegal cannabis business, based on the experiences of Colorado and Canada, saying this was possible under a well-regulated market that provided quality products for customers.

It may take some time to achieve that, but if legal cannabis is safe and the price reasonable, findings from countries that have legalized cannabis tell us that people will make the switch, he added. 

The predicted tax-take, according to the researcher, was a win for the government. He added that higher regulatory costs and taxes could cause an illegal market to resurface and claim market share. 

Calgary issues court summons for illegal selling of cannabis

Meanwhile, in related cannabis news, the City of Calgary has issued a court summons to a marijuana dealer who allegedly sold to the public illegally. The undisclosed southwest Calgary-based cannabis store was accused of operating without valid licenses and permits. 

Upon investigation, officials found plant-growing equipment, fertilizers, cannabis seeds, and assorted cannabis items for sale. In a press release on Monday, the City of Calgary stated:

This serves as a reminder that business owners must obtain all AGLC and city permits and licenses prior to operating a cannabis store, said Michael Briegel, Calgary’s chief business license inspector. 

Before starting a cannabis store in Calgary, operators require building permits and development permits. They must have a municipal business license and a retail cannabis license issued by the Alberta Gaming and Liquor Commission (AGLC).

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