How Cannabis Legalisation Could Boost the SA Economy After the Pandemic

3 years on since the decriminalisation of the use, possession and growth of cannabis in South Africa and the question of legalisation is still left up in the air. With the Covid-19 pandemic putting the economy through major strain, the new focus of attention is on how the legalisation of the cannabis industry could possibly help boost the SA economy after the pandemic. 

In the U.S, Cannabis sales hit a record $17.5 billion as Americans consume more marijuana than ever before (Interestingly one of the reasons for this is that many states deemed dispensaries as essential businesses during lockdown). This brought a host of benefits for the U.S economy. Since the legalisation of cannabis in the US, some of the economic benefits include: increased tax revenue, increased job opportunities, reduced crime/social stigma (People being arrested based on possession). These economic benefits may just be exactly what South Africa needs to come out strong after the impacts of the Covid-19 pandemic.


Increased Tax Revenue

There’s no denying that the cannabis industry has the potential to bring in considerable tax revenues. With the 2021 budget speech seeing Finance Minister Tito Mboweni announce proposed tax increases of R40bn, the increased tax revenues from marijuana sales could offer relief to South Africans. At the moment, with the industry operating in a ‘black market’ capacity, the government stands to lose out a lot more as the potential taxes could be put towards things like Covid-19 relief, unemployment benefits, TERS, and other areas where reserves are running low. While most other ways of generating more tax money like raising income tax have the potential to insight a public uprising, most of the cannabis industry actually does support the industry being taxed.


Job Opportunities

In the US, the legalisation of recreational marijuana created 6,208 new jobs in retail and production of marijuana and generates a total labour income of $260,732,000, according to a study by RCG Economics. According to Stats SA, South Africa’s unemployment rate is a record high of 30,8%, with 11,1 million working age South Africans finding themselves in unemployment. Furthermore, more than 2,3 million people lost their jobs between April and March 2020. The cannabis industry presents job opportunities both directly and indirectly like in marketing, data, lawyers, media etc. Considering the potential for both direct and indirectly induced jobs, many South African’s can find themselves in cannabis-adjacent jobs and this could largely help the unemployment problem that the country is facing. These increased job opportunities can contribute to a positive cycle of economic growth, bring more money into the economy and more money to spend in other industries. 


Reduced “Crime”

It’s no secret that the state of South African prisons are largely filled to capacity (And overcapacity). A 2017 study found that South Africa’s prisons only had 119,134 bed spaces available for an average inmate population 160,280. On top of this, according to the department it costs the state an average of R390 a day and R11700 a month. Although it might not be obvious how this is related to cannabis, if you think a little more about it you’ll realise that people imprisoned and prosecuted for selling or possessing more than the legal limit of cannabis are also filling up our prisons. This takes away capacity for actual criminals who have commited crimes like murder. The state also has to take on the financial burden of more prisoners which takes taxpayer money away from other more important avenues.

These are just some of the ways legalising cannabis can help South Africa’s economy. Let’s not forget to mention the benefits it will have for employee wellbeing and possibly put employees in a good mindset to perform the best they can at their work.

Notify of
1 Comment
Newest Most Voted
Inline Feedbacks
View all comments

[…] industry is worth billions (R27 billion according to one estimate) and might be the answer to boosting South Africa’s economy following the economic downturn due to Covid19. Interpol has even ranked South Africa in the top 5 […]