An Analysis of the Potential Fiscal and Health Benefits of the Legalisation of the Sale of Marijuana in South Africa

Settas, Andrea

An Analysis of the Potential Fiscal and Health Benefits of the Legalisation of the Sale of Marijuana in South Africa

Master Thesis

2021

Abstract

This paper explores the potential fiscal and health benefits South Africa could achieve if it were to legalise the sale of marijuana exploring outcomes from other countries' experiences. The fiscal benefits explored were the potential creation of a new stream of tax revenue and the decrease in government spending currently focused on anti-marijuana law enforcement. The fiscal concerns explored were issues around a decrease in tax revenue from a decline in demand as the price increases, the existence of the black market even after legalisation, and a decline in tax revenue from the decrease in alcohol consumption. The health benefits discussed are the decline in consumption of alcohol, the use of marijuana to aid in rehabilitation for alcoholics and drug addicts and the potential for a new field of research. The health concerns explored are abuse from adolescents, possibility of addiction in adults, and concerns regarding an increase in the consumption of junk foods. The marijuana market already exists in South Africa, in both rural and non-rural areas and as such, both poorer and more developed communities could gain from the legalisation of marijuana in South Africa. Data was collected through surveys to understand consumer preferences for marijuana, there is strong evidence that respondents are consuming marijuana already and as such there is evidence of the existence of a marijuana market within the sample population that is not being taxed, therefore, government could gain from legalising the sale of marijuana as they could earn a tax revenue from it.

Keywords

Economics

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