Billions in the balance: the economic impact of cannabis regulation in Victoria

Penington Institute has been engaged in a long-term effort to research and report on cannabis policy in Australia. Our research has shown that regulated cannabis markets can improve and protect community health and safety by providing lawful access to quality-controlled products within a strictly controlled framework, taking profits away from criminal syndicates while also generating economic benefits for Australians.

This report spotlights the concrete economic benefits of creating legal, regulated adult-use cannabis markets. It draws on global evidence and international case studies that reveal the diverse benefits of managing cannabis through these systems. The findings prompted Penington Institute to commission experts to quantify the economic benefits of a hypothetical regulated cannabis market in Australia.

Economic modelling was conducted by independent economic advisory firm Sapere Research Group (Sapere). Victoria served as the case study, but the social and economic benefits of cannabis regulation would apply to other states and territories across Australia. Estimates for the first 10 years of a legal and regulated cannabis industry show an array of benefits:

• $18.2 billion in direct and flow-on economic activity.

• $10 billion in gross state product.

• 3,125 full-time equivalent jobs created in the first year, and a total addition of 17,000 ongoing full-time equivalent jobs over 10 years.

• $3.4 billion in new wages and salaries.

• $1.9 billion in cannabis-specific fee revenue and payroll tax government revenue, equating to nearly 1% of Victoria’s total tax revenue for FY 2023-24.

• 52.5% of direct economic benefits would accrue to non-metropolitan areas.