Economic Implications of Marijuana Legalisation

The focus of marijuana legalization is not to generate more demand for the substance, but to focus on regulating it for the safety of its consumers.

After the legalization of medical cannabis in Malta last week, people are now starting to look into whether or not cannabis for recreational use is en route to being legalised any time soon. Before delving into such dialogue, it is important to evaluate the social and economic effects this would have, and the rules and regulations that would surround it.

Cannabis prohibition has meant that instead of safely buying a regulated drug from a legal seller, people must take a gamble. When a person buys weed off the streets, there is an element of uncertainty as to how fresh the substance is, and whether or not the substance could be something else entirely, being falsely marketed as cannabis. If unlucky, smoking the substance could result in hospitalisation. Legalisation gets rid of this risk, and in a way promotes the general welfare of the public.

On top of this, cannabis prohibition has meant that money which could be spent on the legal selling of cannabis is instead lost to the black market. In the case that cannabis is legalised, not only will this money remain within the visible economy, but the government could also use this opportunity to tax weed consumption, thus creating more government revenue.


There are, of course, a number of cons to marijuana consumption. Since research on the effects of marijuana is fairly recent, there are few accurate studies on the long-term effects of regular consumption. Some may say that cannabis could make people aggressive, and more prone to schizophrenia or depression. Its legalization could also result in a higher dependence on the substance, or a general increase in medical problems, thus putting more pressure on the medical system.

However, the above complications could be greatly minimised if the legalization is done well. The focus of marijuana legalization is not to generate more demand for the substance, but to focus on regulating it for the safety of its consumers. The tax rate implemented should be high enough to prevent a great deal of demand, but simultaneously low enough to prevent people from resorting to the black market. The government should have strict criteria as to who is allowed to sell cannabis, and to whom it can be sold, and there would have to be stringent regulation on advertising, importation, and exportation, and cultivation of the plant on our islands.

The key to marijuana legalisation is to achieve a balance between a conservative and liberal approach. If it is to be legalised, the restrictions must be strictly adhered to, and inspections are to be carried out with utmost scrutiny. If this is done right, the government would be able to stave off any severe implications, whilst allowing the public to enjoy the substance in as safe a manner as possible.

Nicole Meilak is a first-year student reading for a degree in economics at the University of Malta.


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