A legal cannabis market for recreational use could generate $675 million a year for the Government to spend on reducing cannabis-related harm, new economic modelling shows.

Two reports by Business and Economic Research Ltd (Berl) also say that legalisation would see an initial spike in cannabis use, accompanied by more cannabis-related hospitalisations.

But this would recede in the longer term and, with excise tax revenue put towards effective health interventions, cannabis users would have improved health outcomes while the justice system would save $11.4 million a year.

Berl’s modelling was done for the Ministry of Justice in the lead-up to next month’s referendum on legalising cannabis for personal use.

It was going to be published after the referendum in case it might unduly influence voters, but it has been released today following Official Information Act requests.

Justice Minister Andrew Little has so far been coy about the value of any levy on legal cannabis products, which would be ring-fenced for health services such as therapy or addition treatment.

But Berl estimated the level of excise tax based on the current price of cannabis and three different levels of potency of THC – the psychoactive ingredient in cannabis. [Read more @ NZ Herald]