News that Canada had passed the Cannabis Act, making it the first country in the G7 to do so, has made headlines around the world. This act now allows people over 18 to grow, buy, and use the drug for recreational purposes, whereas previously it could only be used for medicinal purposes. In fact, Canada joins the growing list of countries that decriminalise this drug which includes Uruguay, Mexico and the Netherlands. Even some states of the USA have started to loosen the restrictions on weed, with some already legalising the use of weed. However, these countries and states have different views on the drug, hence have varying degrees of freedom in the law given to the use of weed. Why are all these legalisation happening only now and what are the consequences of these bills?

What is Marijuana?

First of all, we have to understand what this drug really is. Commonly known as weed, or marijuana, cannabis is a depressant drug, which means it slows down the message transmission from the brain to other parts of the body and vice versa. This will give the effect of time slowing down due to the slowdown of the reflexes. Taking large amounts might also lead to hallucinations. However, the effects vary between individuals based on the many factors which includes the size, weight and height of the individual. Ever since the rise in the usage of weed for recreation among teenagers and adults worldwide, the drug is commonly viewed as immoral, dangerous, and a link to violent crimes and insanity. Just like any other drugs, if you are associated with marijuana, then you are deemed as trash by society. Yet, most of the laws that legalised and decriminalised this drug were established due to pressure by the people. Does this mean that society has changed their view on the use of this drug? If so, what is the cause of the sudden paradigm shift? This article will seek to explore the economic aspects and the cause and effects of cannabis legalisation, and not the health benefits of weed for that is a whole different topic, which can be discussed in another article.

Weed and Crime

There must be a reason why this drug is commonly viewed as dangerous and a link to criminal activities. And this reason must be due to the fact that the possession and use of it itself, is illegal. Take for example, when an individual is to attain marijuana. One can only do so by getting it through illegal drug dealers and maybe even through smuggling them from other countries. This will then create a market for the drug, where certain parties would want to benefit from. This illegal market is then called the black market and more often than not, those controlling this market are big drug cartels and crime gangs. Unfortunately, this illicit business is not as simple as getting paid in exchange for products. This is because the cartels will exert dominance and impose a monopoly by introducing violence to fend off potential competitors. The scare tactics can range from extortion of money to gun-related threats. However, these tactics often backfire causing more violence such as gang fights and territory protection. Such is the spiralling effect of the use of marijuana if left uncontrolled.

For this reason, governments around the world have decided to carry out a crackdown on these illegal activities. Some of the initiatives includes the increase in drug enforcements, imposing higher penalties for drug-related crimes and in some countries, an extreme use of police force on drug suspects, such as in the Philippines. Despite drug-related crime rates decreasing, some have surprisingly shown an increase, as if these criminals are saying “the more you do not want us, the more we fight”. Therefore, certain policymakers have looked to a more unconventional method of reducing such crime rates, one of which is to legalise the use of marijuana. Their argument is that if weed is legal and regulated properly, there would not be a black market anymore, for the drug can be sold legally over-the-counter at licensed pharmacies or stores. There are two main advantages of this move. The first being that the government can now control the amount of drugs dispensed by only allowing licensed stores to sell marijuana. The government can exert more control over the use of cannabis by scrutinising the pharmacies or dispensaries before they get their licences to prevent some shops from carrying out illicit drug sales.

The second perk of this move is that drug cartels will lose market share for there is no need to purchase weed illegally anymore. Once criminal gangs are eradicated, policymakers propose that violent gang fights and turf wars will be reduced. This is true in Denver, Colorado, which was the first state in the US to legalise weed, as it has been reported that the crime rate has plummeted by 14.6%. Furthermore, experts say that this is especially true in border of countries. A study carried out by The Economic Journal has showed that the rate of violent crimes like robberies, murders, and assaults have fallen by 12.5% in countries close to borders after the introduction of medical marijuana laws. However, this advantage is not experienced by all parties. For example, some states in the US have experienced a hike in crime rates. Why is this so? Experts predict that this occurrence is due to criminal gangs trying to obtain weed to transport and sell it to the states in the east coast which are still very much strict in their drug laws. This would likely not occur if those states also loosen their grip on drug laws concerning weed. Therefore, it is clear that every government in the world should seek to legalise the use of cannabis as soon as possible.

Marijuana Money

“It’s all about the money”. As much as we try to explain the social and political aspects of the legalisation of cannabis, there is no running away from the monetary aspect of the cannabis legalisation policy. Economists worldwide have projected a positive outcome in terms of financial returns. First of all, we should view the increase in government savings as a positive economic return. How does decriminalising weed help the government save? We must understand that law enforcements on marijuana possession is costly and unreasonably high. A 2010 study by American Civil Liberties Union stated that US states spend an estimated USD 3.6 billion on enforcing cannabis laws. The funds allocated for this cause could be used instead on more needed policies like education, to address more pressing issues such as poverty, or to overcome the income gap. If the government makes the usage of marijuana legal, then there would be no need to spend as much on enforcing cannabis laws. This would mean the taxpayers’ money would not be wasted on going after someone getting high in his or her room. The money could be used instead to educate the public on the proper use of marijuana both for medicinal and recreational purposes.

If the government legalises the use of marijuana, it can then impose a tax on the sales of cannabis for various reasons. The revenue from the taxation of marijuana is predicted to accumulate a huge sum of money. Research by the analytics firm New Frontier Data estimates that the US government can earn up to USD 132 billion on federal tax revenues of cannabis. It also projects that the legalisation of the use of this drug will inject at least 1 million jobs in the industry. Indeed, Nevada makes USD 30 million in marijuana taxes in the first six months of sales after passing the bill. However, critics argue that the taxes will increase the price of weed, which will be counter-effective in combating drug cartels, for the higher price will encourage sales of weed in the black market. As argued in the previous section, the cartels exist because they can control the price of the drug, hence usually selling it at a much higher price. Therefore, although the legal price of weed might be higher, drug cartels still lack incentives to offer the drug illicitly for they cannot offer it at a lower price. This is because the low price cannot justify the risk they go through to sell the drugs. Thus, a tax imposed on cannabis is both beneficial to the government due to the increase in tax revenues; and to the public, for keeping the crime rate low.


The legalisation of weed obviously comes with a handful of benefits. Even if the aim of the government is to reduce the usage of cannabis, especially among underage kids and teenagers, criminalising weed is not an effective solution. Economists advocate the use of education for a better education policy, which can help the government reach this objective in a cheaper, faster, and more efficient method. However, the policy must evidently be carried out hand-in-hand with the legalisation of marijuana. Recruitment of children into gangs will be drastically reduced, hopefully even completely stopped following the decrease in gang activities. This article has shown that the advantages of cannabis legalisation are aplenty. With that said, policymakers should strongly consider the legalisation of weed.


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Prepared by:

Researcher: Lee Yang Ler

Editor: Mohamad Syafiq Aiman bin Azlan


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