A new report has revealed that legalising and regulating cannabis in the UK could generate up to £1.5 billion annually in tax revenue and criminal justice savings, while creating thousands of jobs and reducing the financial burden of prohibition.
The research called High Returns: the Economic Benefits of UK Cannabis Legalisation was conducted by the Transform Drug Policy Foundation. It makes a strong economic case for cannabis reform, arguing that the shift would not only benefit public health and social justice but also provide a much-needed boost to the UK economy.
Legalising cannabis: an economic windfall and job creation
According to the report, a legally regulated cannabis market could capture up to 80% of the current illicit trade within five years.
The Hybrid Commercial Retail model—which includes regulated commercial retail alongside home growing and non-profit associations—is projected to generate £1.1 billion in tax revenue, create over 15,500 full-time jobs, and deliver £284 million in savings across the criminal justice system.
Meanwhile, a state monopoly retail model, where the government oversees cannabis retail operations, could yield even higher financial returns of £1.23 billion.
These figures suggest that the financial benefits of legalisation far outweigh the costs, especially when considering the significant criminal justice savings. By reducing enforcement, prosecution, and incarceration costs associated with cannabis-related offences, the government could save up to £284 million annually, with police savings alone amounting to £88 million.
Stopping criminalisation and ending a criminal justice approach
The current approach to cannabis prohibition places a heavy burden on law enforcement, with over 133,000 cannabis possession offences recorded in 2020/21. The report estimates that policing costs alone could be reduced by up to £88 million annually under legalisation, freeing up resources for more pressing public safety concerns. Court proceedings and prison costs associated with cannabis offences could also see savings of £187 million per year.
Additionally, legalisation could help address the long-term economic harm caused by criminal records. The report highlights how removing criminal penalties for cannabis offences and expunging past convictions would improve life opportunities and economic prospects for thousands of individuals, particularly in communities disproportionately affected by prohibition.
Beyond economic incentives, the report emphasises the public health benefits of legalisation.
Under a regulated system, cannabis products would be subject to strict quality control, accurate labelling, and responsible dosage guidelines, reducing risks associated with contaminated or high-potency products. Consumers would have access to harm reduction information, much like current alcohol and tobacco regulations.
Legalisation also presents a unique opportunity to reinvest in communities that have suffered disproportionately under punitive drug policies. The report calls for a portion of cannabis tax revenue to be allocated toward social equity programmes, helping to empower those affected by past enforcement measures.
Countries such as Canada and certain US states have implemented similar initiatives, with cannabis tax revenue funding drug treatment, education, and community development projects.
Global momentum and public support for legalising cannabis
With cannabis legalisation gaining traction worldwide, the UK risks falling behind in harnessing the economic and social benefits of reform. The report points to Canada, where a regulated cannabis market has flourished, capturing over 73% of the illegal trade while generating billions in tax revenue.
Across Europe, Germany, Luxembourg, and Malta have taken steps towards legal regulation, with more nations expected to follow.
Public opinion in the UK is also shifting in favour of reform. Recent polling suggests that a majority of Britons support legalisation, particularly when considering the economic benefits and the potential to undercut organised crime.
As the financial pressures on the UK government continue to mount, the report argues that cannabis legalisation presents a viable solution for generating revenue without resorting to unpopular tax increases or public service cuts.
Report Co-Author Steve Rolles said:
There are many powerful arguments for ending the generational failure and injustice of cannabis prohibition, but the economic arguments have particular salience in the current political debate. £1.5 billion in annual income could fund 18 million more GP appointments, free school meals for all the UK primary schools, or reverse the cut in winter fuel payments for pensioners. It’s long past time for the UK Government to grow up – deal with reality – and begin an adult debate on how legalisation and regulation of cannabis can deliver for the UK.
Cannabis: a transformative opportunity
The findings of the Transform Drug Policy Foundation report provide compelling evidence that cannabis legalisation could be a game-changer for the UK economy. With the potential to create thousands of jobs, generate significant tax revenue, and reduce the financial strain on law enforcement, legalisation represents a pragmatic policy shift that aligns with global trends.
Report Co-Author Ester Kincova said:
Making cannabis illegal has been a generational failure, it has undermined public health, criminalised millions of people, wasted taxpayer money, and is increasingly unpopular with the public. This Government needs to follow the sensible moves by countries across the world from Canada to Germany, and responsibly regulate and tax our cannabis market, rather than leave control, and profits, in the hands of organised crime groups.
Moreover, the broader societal benefits—including improved public health outcomes, reduced criminalisation, and social equity initiatives—make the case for reform even stronger.
As the UK government faces growing budgetary challenges, embracing cannabis regulation could prove to be a forward-thinking economic and social policy that delivers high returns for both the Treasury and the wider public.
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