Cannabis legalization: additional income for the German state

Cannabis plants

Legalization would result in billions in revenue for the state.

(Photo: AP)

Berlin Legalizing cannabis could bring the state more than 4.7 billion euros in additional funding. This is shown in a new study by the competition economist Justus Haucap from the Institute for Competition Economics (DICE) at the University of Düsseldorf. Decisive for this are not only additional tax revenues and social security contributions from the legalized business with the drug, but also savings in law enforcement and the judiciary.

The debate about the legalization of cannabis had recently picked up speed again with the likely formation of a traffic light coalition. In their election manifestos, the SPD, Greens and FDP criticized the current legal situation, according to which possession of cannabis is a criminal offense, and they spoke out in favor of the regulated legal sale of cannabis – albeit in different ways. So far, cannabis can only be sold for medicinal purposes.

In the election manifesto of the Social Democrats it was said, for example: “Bans and criminalization have not reduced consumption, they stand in the way of effective addiction prevention and protection of minors and tie up enormous resources in the judiciary and police.” Chancellor candidate Olaf Scholz also did not rule out the legalization of cannabis last week.

When presenting his study, Haucap also said: “The cannabis ban policy has failed and could not contain drug consumption.” State regulation of the market is therefore more sensible. This not only increases consumer protection because the quality of the cannabis can be ensured. Authorities and the state budget would also be relieved.

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According to the study, around 1.8 billion euros could flow into the state coffers through a cannabis tax based on the model of the alcohol or tobacco tax. In addition, there would be sales tax, trade and corporation tax as well as wage tax, so that the additional tax income would even add up to around 2.8 billion euros, according to the study.

Billions in savings for justice

The authors of the study estimate the additional social security income from legalized cultivation and distribution to be a further 526 million euros. Legalization could create a completely new branch of the economy with around 27,000 jobs, for example in production, processing or sales.

In addition, legalization could save around 1.4 billion euros in costs for the police, the judiciary and the penal system, because they would no longer have to prosecute crimes relating to cannabis possession. The study is based on comparative data from countries where cannabis has already been legalized.

The managing director of the German Hemp Association, Georg Wurth, said the ban on cannabis was harmful and expensive. Billions of euros would be thrown out the window for senseless police operations. “The money would be used much more effectively for education, prevention and aid.” It is time for legalization.

In 2018, in a study, Haucap came to a significantly lower tax revenue of two billion euros per year. There are various reasons why the economist now estimates the income to be more than twice as high.

Legalization controversial

Cannabis use has increased since then. The higher consumption leads to more jobs and thus to higher tax revenues. In addition, the production of cannabis has become cheaper, which means that the cannabis tax per gram can be increased. In addition, the costs that can be saved in the judiciary were included in the new study for the first time.

However, the revenue for the tax authorities is not the reason why the traffic light parties are in favor of legalization. They believe it is wrong to criminalize millions of cannabis users. In addition, legalization would make it easier to control sales and make addiction prevention more effective, so the hope is.

Nevertheless, legalization is controversial. Opponents fear that the consumption of cannabis could continue to increase after legalization and the inhibition threshold for the consumption of harder drugs such as cocaine and heroin will be lowered.
With agency material

More: “Made in Germany”: Domestic hemp is now conquering pharmacies

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