Cannabis legalization in the UK could generate $4.38 to $12.6 billion in annual tax revenue, according to a report by advocacy group CLEAR.
The United Kingdom could generate between $4.38 billion and $12.6 billion annually in tax revenue by legalizing and regulating cannabis for adult use, according to a new report by CLEAR, a cannabis reform advocacy group. The paper lays out a detailed framework for the UK’s potential cannabis industry, from cultivation to retail.
The report proposes establishing a cannabis inspectorate to oversee commercial cultivation, importation, distribution and taxation. The aim is to create a regulated market similar to Canada’s, where after six years, over 70% of all cannabis sales occur through legal channels.
Cannabis Market Could Stabilize Illicit Trade
The piece highlights how cannabis regulation could help control the UK's illicit cannabis market, currently valued between £2.9 billion ($3.84B) and £8.8 billion ($11.67B) per year. By implementing a £1-per-gram cannabis tax ($1.33 dollars), the Treasury could gain substantial revenue while avoiding the pitfalls of over-taxation seen in states like California, where the illicit market continues to thrive despite legalization.
"There isn't really any coherent argument against regulating cannabis," Peter Reynolds, president of CLEAR told Leafie. "It will reduce crime, violence, street dealing, underage use and help to prevent children from being dragged into gangs." Reynolds expressed frustration over the lack of political will to address cannabis reform. "The real problem is that our politicians don't have the courage even to discuss it."
New Approach To Cannabis Cultivation
CLEAR's proposal outlines a permissive yet structured approach to home cultivation, suggesting adults should be allowed to grow up to three indoor cannabis plants, plus three more under natural light, or a total of six plants outdoors. The plan also proposes a separate space for cuttings and seedlings. Unlike other countries with more restrictive cultivation laws, the UK could lead in allowing more personal freedom for home growers.
Reynolds further emphasized the economic benefits of legalizing cannabis. "Our proposals are business-friendly," he said. "Get this right, and we can create thousands of new jobs, fight crime and protect children. When will our politicians wake up?"
Potential Social And Health Benefits
Beyond economic gains, regulation could lead to significant public health benefits. The report cites studies showing that cannabis regulation reduces teen use, lowers alcohol and cigarette consumption and decreases opioid-related deaths. An estimated 1.5 to 2.7 million people in the UK use cannabis monthly, with about 10 million having used it in the past year. Regulation would provide a safer environment for this significant portion of the population. However, the report also cautions against over-taxation.
The California model is often cited as an example of how high tax rates can drive consumers back to illicit markets. Instead, CLEAR points to Canada as a model for success, where government regulation has been more effective in curbing illegal sales and maintaining price stability.
