Legalising cannabis could raise £1bn in tax, says think tank

Legalising cannabis could net the public purse more than £1bn in tax, according to a think tank.

A report from the Institute for Economic Affairs (IEA) says decriminalising the Class B drug would also lead to savings for the police and other public services.

It has called on the UK to follow Canada and parts of the US in introducing the reform.

The report - called Joint Venture: Estimating the Size and Potential of the UK Cannabis Market - claims the current black market for cannabis is worth £2.6bn a year with 255 tonnes sold to more than three million people.

Chris Snowdon, head of lifestyle economics at the institute, said: "It's high time for reform of cannabis policy in the UK. Canada and the USA are showing the way.

"Done properly, the legalisation of cannabis is a win-win-win: criminals lose a lucrative industry, consumers get a better, safer and cheaper product, and the burden on the general taxpayer is reduced."

It comes after former Conservative leader Lord Hague suggested the Government should consider legalising the drug.

Writing in the Telegraph he said: "Everyone sitting in a Whitehall conference room needs to recognise that, out there, cannabis is ubiquitous, and issuing orders to the police to defeat its use is about as up-to-date and relevant as asking the Army to recover the Empire.

"This battle is effectively over."

Separately, the Government has said it will review the medicinal use of cannabis following the case of young epilepsy sufferer Billy Caldwell, but underlined the drug would remain outlawed for recreational use.

The IEA said savings to the NHS and other public services from legalising the drug would amount to at least £300m per year.

"When added to tax revenues of £690m, plus new streams of income tax, business tax and VAT created by the legal industry, claims about cannabis legalisation providing a £1bn windfall to the Treasury seem pessimistic," it added.

The UK is the world's largest producer and exporter of legal cannabis for medical and scientific uses.

It recently emerged that Theresa May's husband Philip's firm Capital Group is the biggest investor in GW Pharmaceuticals, which mass produces medicinal cannabis oil in the UK.

The husband of Tory drugs minister Victoria Atkins, Paul Kenward, is managing director of British Sugar, another medicinal cannabis supplier.

This week the US health regulator approved GW Pharmaceuticals' epilepsy treatment Epidiolex making it the first cannabis-based drug to get approval in the country.