The economic impact of legalising cannabis : the Maltese context

Abstract

Objective: To analyse the possible outcomes that the legalisation of cannabis may pose on the economy. Therefore, the study aims to evaluate the economic benefits and costs of legalising cannabis in Malta. Methods: The European Health Interview Survey (EHIS) was the primary data source to calculate the cannabis prevalence rate in Malta. For the calculation of the benefits and cost, two main approaches were utilised, namely the Annual Cost Approach and the Human Capital Approach. The benefits and costs were not just calculated over a number of years for a comprehensive estimate. Results: Based on the assumptions taken, the total economic benefits of legalising cannabis in Malta amounted to €37.7 million. From this figure, €0.75 million are allocated to budgetary savings while €37 million are attributed to potential tax revenue generated. On the other hand, the total economic costs reached €35.8 million, from which €28.7 million are attributable to cannabis use disorder, €4.8 million are allocated to physical and mental health costs and the remaining €2.3 million are due to road accidents. Conclusion: A relatively small discrepancy can be noted between the three costs and the three benefits that were analysed in this study. Despite this, this study paves the way towards further research and investigation on the topic.