The Australian Parliamentary Budget Office (PBO) recently released a proposal exploring two options on how to approach cannabis legalization. It was commissioned to explore what legalization could look like through the request of Sen. David Shoebridge (described on his Twitter page as “the devil’s lettuce daddy of Australia”) and the Australian Greens Party (also referred to as the Greens).
According to the PBO’s report, the first option would establish the creation of the Cannabis National Agency (CANA), which would act as the sole wholesaler between producers and retailers, set wholesale prices on cannabis, and issue licenses to potential cannabis business owners. Ideally, the agency would be funded completely through the fees required to apply for production and retail licenses.
This option would legalize cannabis for anyone 18 and older, specifically with no restriction on the amount that an individual can purchase. This approach would also create penalties for selling to underage individuals, which is similar to how the country manages sale of alcohol to minors. Recreational cannabis would be available to “oversea visitors,” and residents would be allowed to cultivate up to six plants. Finally, recreational sales would “attract the Goods and Services Tax (GST) as well as an excise of 25% on GST-inclusive sales.”
The second option contains all provisions from the first option, except for the final recommendation, which would change the excise tax to 15% instead of 25%.
The report explains that this approach would be similar to Canada’s law on cannabis. In Canada, residents may only cultivate up to four plants at home, cannot smoke publicly, and are limited to possession of 30 grams or less.
The PBO projects that the country could collect up to AU$28 billion in cannabis tax revenue during the first decade of legalization.
According to The New Zealand Herald, Sen. Shoebridge suggested that the tax revenue could also be used to raise rates provided by JobSeeker, the government’s job finding service, and raise financial aid provided by the job service Youth Allowance. He also suggested that cannabis tax revenue could help build more than 88,000 public housing units in the next decade, which could give more than 250,000 people a home.
“This costing from the PBO shows the incredible opportunity legal cannabis creates to not just reduce harm but to generate revenue that could be invested in health, education and public housing,” said Shoebridge. “The Greens’ model creates a right for adults to grow up to six plants at home without being taxed and without having to pay. This costing takes that into account. It also guarantees commercial possibilities for co-operatives and local entrepreneurs to grow and sell cannabis including through regulated cannabis cafes.”
He also explained that legalization just makes sense. “Legal cannabis makes enormous social and economic sense. When we legalise cannabis we take billions away from organised crime, police and the criminal justice system and we can then spend it on schools, housing, hospitals and social support,” Shoebridge said.
Furthermore, he added that legalization reduces the harm caused by criminal injustice, and that overall, polls have revealed that most Australians support and consume cannabis regularly. “It’s a fact that almost half of adult Australians have at one time or another consumed cannabis. Laws that make almost half of the country criminals don’t pass the pub test,” Shoebridge said. “When you legalise cannabis you can properly regulate the market, provide consistent health and safety advice and make the product safer. Right now the only ‘safety regulators’ for the cannabis market are bikie gangs and organised crime and that doesn’t make much sense.”
Commercial cultivation could begin in Australia as early as July 2023 if the PBO’s plans are adopted, which would ensure that the cannabis supply is well ahead of the demand. Applications for production and retail licenses could begin as early as 2023 or 2024, with an expectation of launching sales by 2024 or 2025.