A new government estimate of the financial impacts of cannabis legalization in Australia suggests that the reform could bring the country nearly $700 million in revenue each year.
The projection comes as part of a Parliamentary Budget Office (PBO) assessment—or “costing”—of a renewed legalization effort announced Thursday by the country’s Greens Party. Annual revenue from that program would likely hit the projected $700 million after three years of implementation, the party said.
The $700 million in annual revenue would come from a mix of sales tax, corporate taxes and a 15-percent special tax on cannabis.
“This is just part of the shift of wealth from bikie gangs and organized crime towards the public and legitimate businesses when we legalise recreational cannabis,” the party said in a news release. “It’s also fresh money that can be invested in schools, hospitals and climate action.”
David Shoebridge, a Greens senator and the chief backer of the legalization plan, quipped in the release: “We’ve already hashed out the details, now is the time to make legal cannabis a reality.”
Last November, Australia’s Senate voted down a nationwide legalization plan led by Shoebridge. The senator nonetheless called the action progress at the time, noting that it was the first-ever parliamentary vote on a federal cannabis legalization bill.
Opposition to that plan was led by the governing Labor party and opposition coalition Liberal and National parties.
“Labor had the chance to vote for legalisation last year and blew it,” Shoebridge said in a statement this week. “We’re not waiting for them to wake up.”
He emphasized that the reform “isn’t a wild idea,” noting that Canada, Germany and much of the U.S. has already enacted adult-use legalization.
“Safe, labelled, quality-controlled cannabis, maybe even organically grown, that’s the future we see,” he said. “This would be an amazing step up from the current policy setting that so often delivers random strength mystery weed and billions in profits to an illegal industry.”
The Greens have a plan to Legalise Cannabis.
Our plan would put billions into public revenue for schools and hospitals, keep people out of jail, and support your right to relax with a brownie instead of a beer
This election, let’s send a message to the major parties. pic.twitter.com/yl4wTMiGqt
— David Shoebridge (@DavidShoebridge) March 12, 2025
Legalization would also bring “secure regional jobs, safe products, flourishing small businesses and the option to visit a chilled out cannabis cafe,” Shoebridge said in the release. “If you can responsibly enjoy a beer, why not an infused smoothie or a fresh baked brownie? Adults should be trusted to make their own choices when it comes to cannabis.”
The latest revenue projection is a decrease from an earlier costing that PBO published in response to a Greens legalization policy unveiled in 2023. The earlier estimate said the country could see as much as $28 billion in revenue during the first decade of legalization—nearly four times the new figure.
Jenny Williams, an economist who studies cannabis issues, told Australia’s ABC News that PBO’s earlier $28 billion projection was based on faulty assumptions, either around current rates of illicit cannabis use or around estimates of how much legalization would spur new use.
“The PBO’s correction has led to a downward revision in the average weekly use of cannabis among past year users in Australia,” she said. “From 6 grams to 2.8 grams per week, which is less than half of the original figure.”
During debate on last year’s Greens-led cannabis bill, Shoebridge said legalization would make for safer marijuana products and reduce harms associated with the drug trade.
But Sen. Don Farrell (Labor), deputy leader of the government in the Senate, called that plan “a stunt by Sen. Shoebridge and the Greens,” asserting it had “a flimsy legal basis.”
“The Senate committee inquiry into this bill could not determine with any confidence that the bill was constitutional,” Farrell said. “Laws dealing with recreational possession and use of cannabis are matters for the states and territories. Sen. Shoebridge’s bill cannot change that basic fact.”
Cannabis remains illegal federally in Australia outside of the country’s highly restrictive medical marijuana program, though some reforms have been adopted at the local level.
In the Australian Capital Territory, for example—which includes the national capital of Canberra and surrounding areas—a policy took effect in 2023 decriminalizing the possession of small amounts of illicit drugs. That reform built on an existing marijuana decriminalization policy that took effect in 2020.
In terms of other substances at the national level, the Australian government rescheduled the psychedelics psilocybin and MDMA in 2023 to provide access to people with post-traumatic stress disorder (PTSD) and treat-resistant depression.
Placing the substances in Schedule 8 for therapeutic use under the country’s drug code allows psychiatrists who meet the required standards to prescribe the psychedelics. The drugs remain in the stricter Schedule 9 for unauthorized use.
Separately in Australia last year, a new policy decriminalizing possession of small amounts of illicit drugs took effect in the Australian Capital Territory (ACT), which includes the national capital of Canberra and surrounding areas. The jurisdiction was the country’s first to adopt the policy change.
The reform removed criminal penalties for simple drug possession and instead made possession punishable by a warning, fine or participation in a drug diversion program. The fine of AU$100 (about $64 USD) could be waived if a person voluntarily completes the program.
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