Light legalisation could save Germany a billion euros

Germany's approach to cannabis legalisation

Germany's approach to cannabis legalisation has been a topic of intense discussion. The country is considering a 'light legalisation' model, which could have significant economic implications. According to a study by renowned economist Dr. Justus Haucap, this model could save the state a billion euros each year.

The economic impact of light legalisation

In 2018, Dr. Haucap presented a study commissioned by the German Hemp Association, which calculated the potential savings and earnings for the German state from cannabis legalisation. The study was based on the full legalisation of cannabis for recreational use, including decriminalisation and the development of a new economic sector. According to Dr. Haucap's calculations from 2021, this model could have brought approximately 4.7 billion euros into the state coffers.

The shift to light legalisation

However, the German government has had to acknowledge that due to existing EU contracts, it is not directly possible to fully legalise intoxicating hemp products in Germany. As a result, the planned 'light legalisation' will generate significantly less revenue. According to a revised forecast by the Düsseldorf economist, only 1.1 billion euros per year will remain, primarily due to savings in police and court costs. If the hunt for cannabis consumers is stopped, the state can expect to save around 1.05 billion euros in police work and court costs alone.

The role of cannabis social clubs

Under the light legalisation model, the trade in cannabis will initially only take place via so-called Cannabis Social Clubs (CSCs). Although this means that the big business with legalised pleasure drugs will not start immediately, the CSCs will still employ some staff. Dr. Haucap expects that income tax revenues of 28 million and social security contributions of 52 million euros can be expected.

The lost potential of full legalisation

The new forecast also clearly shows how much money will be lost due to the non-fully implemented legalisation of cannabis. Since no tax can be expected on the goods traded in the clubs, a sum of 1.8 billion euros will be lost, which could have been earned annually with regulated trade in specialist shops. Since no real economic sector is now emerging, the once assumed 26,000 new jobs will also be lost. As a result, the state is missing out on more than a billion euros in revenue per year from sales tax, business tax, corporation tax and income tax.