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Source : stuff.co.nz
As part of Stuff’s ‘What if it was legal?’ series we asked two economists to tell us how they’d make New Zealand rich in a market when cannabis was legalised.
* Shamubeel Eaqub, economist and Stuff columnist, says we should look to Colorado to see the impact that could be had on jobs and industry.
* Gareth Morgan, economist and political party leader, says legalising, regulating and taxing cannabis could provide a big opportunity for our struggling regions and provide money to spend on good things.
SHAMUBEEL EAQUB – GROWING WEED COULD LEAD TO A NEW INDUSTRY
In Colorado state in the USA, they have recent experience since legalising growing in 2014.
It is a pretty good comparison, as the size of the labour force is similar to New Zealand. And it has a pretty large agriculture sector, growing similar things to us: beef cattle, dairy, corn and grains. It also grows cannabis – and it earns more than crops like potatoes.
The impact of legalising cannabis growing is complex. The health, addiction, criminal and other effects are of course very important. But there is also a very direct impact on jobs and industry – the focus here.
When Colorado legalised, some estimates reckon nearly 10,000 jobs were in the growing, processing and selling of weed and another 2,000 jobs in related services like real estate agents, financiers, inspectors, etc.
In a labour force of around 2.8 million people, 12,000 new jobs won’t move the needle – around 0.4 per cent. But also, nothing to be sniffed at.
The sector has been growing rapidly since legalisation in 2014 – over 30 per cent a year. A lot of these jobs moved from the shadows to the regulated market. So, not all the jobs are new per se, but they are no longer criminals doing criminal activities. They are now in the open, growing, processing and distributing.
The incentive to grow cannabis is pretty high. The average yield in the US is roughly US$1 million an acre, about 4,800 times the yield for wheat at around $230. But there are costs like security and fences.
Cannabis has the benefit of being a pretty thrifty, unfussy and relatively low environmental impact plant to grow. And in milder weather, does not have to be grown in greenhouses. Instead they can grow in the open and alongside other crops like tomatoes, carrots, and lettuce. Market gardens could have a new crop.
The real potential for Colorado and other places where weed can be grown legally, is in massive predicted growth in use globally. The experience of Colorado shows that a legalised cannabis growing industry can lead to modest increases in jobs and a new use of farm land. With New Zealand now at peak cow and market gardeners suffering from low prices, perhaps we should look at cannabis as a viable cash crop.
Shaumbueel Eaqub is currently researching the fiscal impact of decriminalising drugs for the Drug Foundation.
GARETH MORGAN – BIG OPPORTUNITY FOR REMOTE REGIONS
Back in March, Richard Branson suggested farmers should choose cannabis over cows. While that may be a bit fanciful, cannabis products do provide a promising market, and a bit more diversity in our economy wouldn’t be a bad idea.
The main argument for legalising cannabis isn’t economic, it is about reducing harm. Prohibition doesn’t reduce usage one iota, it just pushes people into the hands of criminals. Better to legalise it, regulate it, tax it and spend the money on good things.
However, the business case for legalisation is compelling. In countries that have done it, the police and courts spend less time and money on cannabis offences. This frees up resources ($180 million is the New Zealand estimate), which can be used to reduce violent crime.
Taxing cannabis could also raise at least $150m in revenue, probably more, which could be spent on drug treatment and after school activities to keep kids off the stuff. Straightaway you have a more productive workforce.
Growing cannabis is unlikely to displace dairy initially, but it is a big opportunity for our remote regions like Northland and the East Coast. While serving the New Zealand market will be fairly straightforward, greater opportunities lie in the emerging export markets. As more countries and states legalise cannabis for medical or recreational use, the demand is growing.
Northern Hemisphere markets rely on greenhouses for supply, and the products come doused with all manner of pesticides and sprays. New Zealand is perfectly suited to provide these markets with a premium sun-kissed organic crop, particularly in the Northern Hemisphere winter.
And the cannabis plant has plenty more surprises than getting people high. Hemp is a variety of cannabis that doesn’t contain the psycho-active chemical THC, but still contains other compounds in cannabis (such as CBD) that offer promising health benefits.
The hemp seed market is worth $1 billion globally already and organic New Zealand products will again have a premium. The only available medicine (Sativex) based on CBD is imported and currently sells for more than $1000 for a month’s supply. New Zealand could easily make a cheaper product that is just as effective. Fibre is the lowest value cannabis product but still has the potential to replace the oil-based plastics clogging our oceans. And all from a crop that is kinder to the environment than pasture-based farming. What’s not to like?
Progress is being made; the Government is making it easier for people to access CBD medicines, and hemp seeds have been approved for human consumption. The Green Party have proposed legalising cannabis for medicinal purposes, although full legalisation is a superior solution for many reasons. Yet no party is actively backing the development of a local industry to service these markets. In fact, the Government appears to be quite hostile to the idea.