Legalization in Germany Could Bring in 4.7 Billion Euros Annually and Create 27,000 Jobs

Legalizing cannabis in Germany could generate approximately 5 billion dollars for the state budget and create 27,000 new jobs, according to researchers from Heinrich Heine University in Düsseldorf. At the same time, the move could eliminate the illegal black market, offer better protections for the youth, and pave the way for significant financial gains through various tax streams.

Legalization of the possession and consumption of cannabis in Germany could bring in approximately 5 billion dollars to the country’s state budget each year and generate 27,000 new jobs. These are the latest findings from researchers.

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The Financial Benefits of Legalization Predicted

In November 2021, when the German government announced that it would present a bill to the Bundestag on the legalization of the consumption and possession of cannabis, researchers from Heinrich Heine University in Düsseldorf predicted that such action would bring financial benefits.

A research team from Düsseldorf, led by Professor Justus Haucapa, estimated potential revenue of around 4.7 billion euros annually based on a consumption scenario of 400 tons of cannabis per year. Their calculations included expected tax revenue, the costs of legal cannabis shops, and savings in law enforcement and the judiciary following legalization.

Breakdown of Potential Revenue

Taxes on the legalization of cannabis in Germany alone could contribute 1.8 billion euros annually to the state treasury. Additionally, income from corporate tax, trade tax, and VAT could amount to about 735 million euros. Social security contributions and personal income tax generated by legal employment in the cannabis sector could amount to 526 million euros and 280 million euros, respectively.

Legalization Could Eliminate the Black Market

Legalization could put an end to the existence of the illegal black market, thereby allowing better protection for youth and more effective addiction prevention. It would also decriminalize millions of cannabis users.

Opportunities for Existing Medical Producers

The bill for legalization has created opportunities for companies that have been producing medical cannabis since 2017. Germany is becoming the largest country in the world to allow the sale of cannabis, presenting a tremendous opportunity for local producers. However, the current draft of the bill limits sales to so-called cannabis clubs.

Legalization of Cannabis Clubs

Cannabis clubs must be cooperative in nature, require a permit, and can have a maximum of 500 members. Each member can purchase a maximum of 25 grams per day and 50 grams per month. Individuals between the ages of 18 to 21 may consume up to 30 grams per month. The plants will be cultivated on “community” and “non-commercial” bases and will be financed through membership fees. Greenhouses must be secured against theft and equipped with screens to ensure privacy.

Pilot Programs for Legalization

Aside from cannabis clubs, the federal government plans to introduce pilot programs for cannabis legalization in which legal cannabis sales will be tested. Some cities, such as Frankfurt, Berlin, or Cologne, have already expressed interest in participating in this project.

A Bright Future for the Cannabis Industry

Germany stands on the cusp of a revolution in terms of cannabis legalization. Although final decisions are still being made, many signs point to a bright future for this industry and the potential benefits it could bring to the economy and society.

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(Featured image by Samuel Hagger via Unsplash)

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Michael Jermaine Cards

Michael Jermaine Cards is a business executive and a financial journalist, with a focus on IT, innovation and transportation, as well as crypto and AI. He writes about robotics, automation, deep learning, multimodal transit, among others. He updates his readers on the latest market developments, tech and CBD stocks, and even the commodities industry. He does management consulting parallel to his writing, and has been based in Singapore for the past 15 years.