Cannabis regulation in Switzerland is considered "very inefficient" economically

The cannabis market in Switzerland generates a turnover of around one billion francs a year. According to a Geneva study, the current regulations produce “a very inefficient result from an economic point of view”. Cannabis has been banned in Switzerland since 1951. In seventy years, attempts have been made to soften or tighten regulations, many of which have so far been unsuccessful, the University of Geneva said on Monday. (UNIGE) in a statement.

The Federal Office of Public Health, the cantons of Geneva and Basel-Stadt, and the cities of Bern and Zurich have therefore commissioned a study from an economic perspective. Developed by the UNIGE Department of Sociology and the consulting firm EBP, this research estimates the turnover generated in Switzerland for the entire cannabis system at one billion francs per year.

This includes both the direct effects of the cannabis market, the health services, the police, the judiciary and the execution of sentences, as well as the indirect economic effects of the Swiss economy as a whole.

750,000 joints per day

About 56 tonnes of cannabis (marijuana and hashish) are consumed each year by Swiss people. That’s about 750,000 joints a day. Based on these figures, the annual turnover of the Swiss cannabis market (production and sales) is estimated at CHF 582 million (minus CHF 432 million). In addition, according to the study, the following annual revenues: in the execution of justice 14 million francs, in jurisprudence 9 million francs, in the police 34 million francs and in the sector health 22 million francs.

If we take into account, in addition to the indirect effects due to the previous benefits and the income generated, the annual turnover is even higher: 843 million francs in the cannabis market itself, 44 million francs in the health sector, 71 million francs in the police, 18 million francs in the judiciary and 23 million francs in the execution of sentences.

Another assessment: The cannabis market weighs 340 to 500 million francs in Switzerland

Very variable effects depending on the models

The study shows that the economic effects of the cannabis system would change in the medium term if alternative forms of regulation were applied. Legalization of drug use and possession for personal use, combined with legalization of non-commercial Community production (Cannabis Social Club scenario), would reduce sales to CHF 650 million.

In a “free market” scenario, sales would fall to almost 200 million francs. A market heavily regulated and organized by the private economy would reach about 275 million francs. However, part of the decline in revenue would be in the form of tax revenue. While the status quo, with no legal market and no product-specific taxation, generates tax revenue of about 25 million francs, the Cannabis Social Club scenario could generate tax revenue of about 166 million francs, the scenario “Highly regulated” of 464 million francs and the scenario “Free market” (VAT only) of 11 million francs.

According to Oliver Hoff, an associate researcher at UNIGE and author of the study, “the results of the simulations show that the current regulations produce a very inefficient result for Switzerland from an economic point of view.” “Artificially high margins benefit mainly those operating illegally, and consumers suffer from a lack of transparency and product quality,” he said. The state does not have access to the market in terms of regulation, taxation and health policy. The study was published in UNIGE’s Sociograph – Sociological Research Studies series.

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