With the legalization of cannabis, the state’s revenues would increase by 56 million and expenses by 10 million euros, new jobs would be created and the cost of law enforcement would decrease, while the number of homeless people and prisoners would increase, it appears from the results of a study completed as part of a thesis defended at the Estonian Academy of Security Sciences.
According to Sofija Fiser, who recently defended her thesis titled “The Social Benefits and Costs of Legalizing Cannabis in Estonia” at the Academy of Security Sciences, the research problem for the thesis was how
the legalization of cannabis might affect Estonian society from an economic perspective.
“At the same time, it must be emphasized right away that the legalization of cannabis has many other and more far-reaching consequences than just the impact on the state budget. Other consequences are often difficult to measure financially. Thus, there are many other aspects that need to be taken into account when deciding whether to legalize cannabis, which are not covered in this study,” she added.
The study was prompted by the fact that since 2013, more countries have moved towards full legalization of cannabis and more than half of Europeans are in favor of it.
“Proponents stress the economic benefits of legalizing cannabis and the need for more effective regulatory control of the cannabis market, while opponents express concerns about the potential negative impacts on society and public health,” Fiser said.
Based on research relying on the experiences of countries that have already legalized cannabis, it was found that the legalization of cannabis in Estonia with an excise tax rate of 15 percent could bring the country a total income of approximately 56 million euros per year. This would include VAT, excise duty on cannabis as well as the social tax and income tax of new jobs to be created. Direct additional tax revenue would be estimated at 46 million euros per year. The decreasing workload of the legal system is also included in the income, which would free up, for example, the working time of the police and courts in the extent of a total of about 10 million euros.
Based on the experience of other countries, the legalization of cannabis in Estonia would probably lead to an increase in homelessness, the use of harder drugs, traffic deaths and the number of prisoners. Measured in money, it would mean an additional cost of around 10 million euros for the state.
“However, it should be taken into account that the long-term effects of cannabis legalization have not yet been studied. Preliminary data from countries that have legalized cannabis indicate that healthcare costs will probably start to increase, and monitoring the legal cannabis market will also require money. Some studies have even identified a connection that real estate becomes more expensive after the legalization of cannabis in a country,” Fiser said.
The study was conducted using the method of quantitative analysis based on secondary data. It was the first study on this topic in Estonia.
Source: BNS
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