Legalising Cannabis: Evidence from Abroad

How Canada, Uruguay, US states and Thailand legalised cannabis, what happened to prices, tax revenue and illegal markets, and India's traditional bhang exception.

Several places have legalised recreational cannabis.

Examples

Uruguay (2013): the first country to legalise, with state-controlled sales.
Canada (2018): nationwide legal sales.
US states: starting with Colorado and Washington in 2012, now many states.
Thailand (2022): decriminalised, leading to thousands of shops, then moved to re-tighten rules.
Germany (2024): partial legalisation for personal use and clubs.

Results

Tax revenue: US states collect billions of dollars a year.
Prices fell as legal supply grew.
Illegal markets shrank but persisted, especially where taxes were high.
Evidence on youth use is mixed; studies generally find small or no increases.

India

The NDPS Act, 1985 bans cannabis resin and flowers.
Bhang, made from leaves, is legal in some states and traditional during Holi.
Industrial hemp and medical cannabis research are allowed in some states, like Uttarakhand and Himachal.

Economic trade-off

Legalisation trades criminal enforcement costs for regulation and taxes, with public health uncertainties.

The legal shop

In Canada, a licensed shop sells tested, labelled cannabis products and pays taxes, taking business from illegal dealers.

Thinking legalisation eliminates illegal sales

Illegal markets shrink but persist, especially if taxes are high.

Key takeaways

Uruguay, Canada, many US states and others legalised cannabis.
Legalisation raised tax revenue and lowered prices.
Illegal markets shrank but persisted.
India bans most cannabis under the NDPS Act, but bhang is traditional.