The Federal Ministry of Health of Germany released a Referentenentwurf (draft bill) proposing a new law, known as the Cannabisgesetz (CanG), which targets regulating the controlled handling of cannabis. The draft seeks to solve the rising consumption of cannabis, particularly among young people, despite present prohibition regulations. The proposal not only aims to enhance cannabis-related health protection and education, but it also intends to increase tax revenue for the government and open up opportunities for employment. Let’s examine the financial details described in the Act as provided.
Cannabis draft law and financial aspect
The CanG draft bill defines several key economic effects that the proposed law is expected to bring about. The main goal is to manage cannabis quality for consumers while reducing the illegal cannabis market. The proposed measure provides for home growing, non-commercial community cultivation, and controlled distribution of cannabis to adults while outlining rules for safe cannabis usage. This managed market strategy presents a chance to increase tax collections for the federal government, states, and local governments. The expected tax revenues are as follows:
- €200,000 in the first year after the law’s enactment
- €300,000 in the second year
- €400,000 in the third year
- €500,000 in the fourth year
- €600,000 in the subsequent years
These numbers illustrate the possible monetary benefits from regulating the cannabis industry. Tax revenues are anticipated to slowly rise as consumption moves from the grey market to the legal sector, giving public budgets a new source of money.
Economic boost through possible employment in Germany
Another important financial aspect is the creation of social security-liable employment opportunities resulting from the implementation of the CanG. It appears that the cultivating associations (Anbauvereinigungen) permitted by law will raise social insurance contributions. These are the projected amounts:
- €380,000 in the first year
- €570,000 in the second year
- €760,000 in the third year
- €950,000 in the fourth year
- €1.1 million in the subsequent years
These employment opportunities have a beneficial economic chain effect since they not only produce social security contributions but also support local economies and job growth.
Cost savings and expenditure summary
The CanG admits some costs related to its implementation while also introducing potential financial rewards. In particular, it refers to costs associated with evaluation, information, education, and prevention initiatives that are incurred at the federal and state levels. The federal budget will include additional expenses of €6,000,000 in 2024, followed by €2,000,000 in annual expenses.
The draft bill does, however, point out significant cost savings in other areas. The estimated savings for law enforcement are €800 million, while savings for the judiciary and penitentiary facilities might total €220 and €35 million, respectively. These savings are due to the absence of the need to charge and imprison people for non-violent cannabis-related offences.
The Cannabisgesetz (CanG) under consideration aims to establish a balance between economic advantages and health protection. The proposed bill anticipates increased tax income for governments at various levels. All thanks to controlling the cannabis business and moving use to authorised channels. Additionally, it is anticipated that the expansion of local economies and social insurance contributions will result from the establishment of job possibilities within the legalised cannabis business. The estimated cost savings in law enforcement, courts, and justice systems further support the economic viability of the proposed law, even though there are associated costs with implementation. It will be interesting to see how the financial aspects change and contribute to the CanG’s overall success in achieving its goals as the legislative process moves forward.