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Assessing the economic consequences of cannabis policy options

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Date Commenced:
Project Supporters:

ARC Discovery Grant - Colonial Foundation Trust

Drug Type:
Project Members: 
image - Marian Shanahan
Dr Marian Shanahan
Honorary Senior Lecturer
Project Main Description: 

Changes to the status of cannabis, ranging from legalisation through to tougher enforcement of prohibition are frequently posed. To date, the debate has centred on arguments associated with liberty and harm, but not on economic analyses.


The aims of this project were to:

  1. Estimate the current societal costs related to cannabis
  2. Investigate the economic costs and benefits of a legalised and regulated alternate policy options
Design and Method: 

A cost benefit analysis (CBA) was undertaken using a static economic model to assess the costs and benefits from the two policy options. Costs pertaining to enforcing cannabis policies or treating the consequences including those incurred by the criminal justice system, health care system, regulatory structures, consumers, their family and society at large were quantified in monetary terms.  

Other componenets of the method included:

  • Completion of a literature review;
  • Development of a framework for a legalised-regulated model for cannabis based on public health criteria;
  • Determination of the current and projected consumption of cannabis under a legalised-regulated framework using the 2007 NDSHS data;
  • Quantifying the value of stigma from a criminal record using contingent valuation methods;
  • Exploration of societal preferences for policies using a discrete choice experiment (DCE);
  • Quantifying the health care costs as a result of cannabis use;
  • Estimation of the costs to the criminal justice system for the enforcement of cannabis laws.

The results from the cost benefit analysis indicate there is no clear difference in the net social benefit between the two policy options. The results from the DCE reveal that compared to the current policy there is a moderate preference for legalisation of cannabis among a community sample and strong preference against the complete criminalisation of cannabis.  The results also demonstrate the trade-offs between different harms and benefits as well as the interactions between personal characteristics and the policy preferences.


The writing of peer review papers is ongoing.

Shanahan, Cyrenne, M Cannabis policies in Canada: How will we know which is best?  International Journal of Drug Policy Available online 26 September 2019

Cyrenne, P., Shanahan, M. Towards a Regulatory Framework for the Legalization of Cannabis: How do we get to there from here? Canadian Journal of Public Policy. 2018 44:1 (accepted 27/12/2017).

Shanahan. M. Assessing the economic consequences of two cannabis policy options. Doctoral Thesis 2011. University of New South Wales.

Shanahan,M., Ritter, A. Quantifying the costs and benefits of two cannabis policies.  International Society for the Study of Drug Policy Conference. Utrecht, Netherlands, May 2011.

Ngui, R. Shanahan, M. Cannabis use disorder treatment and associated health care costs in New South Wales, 2007.  DPMP Monograph 20. Drug Policy Modelling Program. NDARC, UNSW.

Shanahan, M. (2010, October). Evaluating cannabis policies: using contingent valuation to value. Australian Health Economics Society Conference, Sydney.

Shanahan, M. (2010, August). Stigma – does society care? DPMP Team Meeting, Sydney, Australia.

Shanahan, M. (2010, August). Cost-benefit analysis of NSW cannabis policy options. DPMP Team Meeting, Sydney, Australia.

Shanahan, M. (2010, June). Evaluating cannabis policies: Willingness-to-pay (WTP) to avoid stigma. Health Economists’ Study Group 2010 Summer Conference, Cork, Ireland.

Shanahan, M. (2010, July). Using discrete choice modelling (DCE) to explore trade-offs between different policies for cannabis. 8th European Conference on Health Economics, Helsinki, Finland.

Shanahan, M. (2009) The costs associated with cannabis law enforcement.  DPMP Research Symposium, Sydney, 13 October.

Shanahan, M. (2009) Assessing the economic consequences of cannabis policy options. Poster presentation. DPMP Team Meeting, Sydney, 14-15 October.

Shanahan, M. (2009) Using discrete choice experiments to quantify preferences for cannabis policies: A pilot study. DPMP Team Meeting, Sydney, 14-15 October.

Hughes, C and Shanahan M. (2009) Workshop: Using Modelling to Inform Cannabis Policy. National Cannabis Conference .

Shanahan M. (2009) Using DCE to measure preferences for cannabis policies: A pilot study (Australian Health Economics Conference, Hobart.

Shanahan (2008) Cannabis and costs to the criminal justice system.  APSAD Conference. Sydney.

Shanahan M. (2008) Costs and benefits of cannabis policies.  SPHCM Postgraduate Research Student Conference.  UNSW. Sydney.

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