Cannabis regulation in Switzerland considered “very inefficient” economically

The cannabis market in Switzerland generates a turnover of around one billion francs per year. According to a Geneva study, the current regulations produce “a very inefficient result from an economic point of view”. Cannabis has been banned in Switzerland since 1951. In seventy years, attempts to relax or tighten regulations have been made repeatedly, so far largely unsuccessful, the University of Geneva said on Monday. (UNIGE) in a statement.

The Federal Office of Public Health, the cantons of Geneva and Basel-City as well as the cities of Bern and Zurich have therefore commissioned a study which adopts an economic perspective. Developed by the UNIGE Department of Sociology and the consulting firm EBP, this research estimates the turnover generated in Switzerland for the entire cannabis system at one billion francs per year.

This includes the direct effects of the cannabis market, health services, police, justice and enforcement of sentences as well as the indirect economic effects triggered throughout the Swiss economy.

750,000 joints per day

About 56 tons of cannabis (marijuana and hashish) are consumed each year by Swiss men and women. This corresponds to approximately 750,000 joints per day. Based on these figures, the annual turnover of the Swiss cannabis market (production and sale) is estimated at 582 million francs (minus imports at 432 million francs). Added to this, according to the study, are the following annual turnovers: in the administration of justice 14 million francs, in case law 9 million francs, in the police 34 million francs and in the healthcare 22 million francs.

If we also take into account the indirect effects due to prior services and the income generated, the annual turnover is even higher: 843 million francs in the cannabis market itself, 44 million francs in the health sector, 71 million francs in the police, 18 million francs in justice and 23 million francs in the execution of sentences.

Another assessment: The cannabis market weighs 340 to 500 million francs in Switzerland

Highly variable effects depending on the model

The study shows that the economic effects of the cannabis system would be modified in the medium term if alternative forms of regulation were applied. A legalization of the consumption and possession of the drug for personal use, combined with the legalization of non-commercial community production (“Cannabis Social Club” scenario), would reduce turnover to 650 million francs.

In a “Free Market” scenario, turnover would even fall to nearly 200 million francs. A market strongly regulated and organized by the private economy would reach approximately 275 million francs. Part of the decline in turnover would, however, be collected in the form of tax revenue. While the status quo, without a legal market and without product-specific taxation, generates tax revenue of approximately 25 million francs, the “Cannabis Social Club” scenario could generate tax revenue of approximately 166 million francs, the scenario “Heavily regulated” by 464 million francs and the “Free market” scenario (only VAT) by 11 million francs.

For Oliver Hoff, associate researcher at UNIGE and author of the study, “the results of the simulations show that the current regulations produce a very inefficient result for Switzerland from an economic point of view”. “Artificially high margins mainly benefit players operating illegally and consumers suffer from a lack of transparency and product quality,” he points out. The state has no access to the market in terms of regulation, taxation and health policy. The study has been published in UNIGE’s “Sociograph – Sociological Research Studies” series.

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