Cannabis over the counter
Tairawhiti could have as many as seven legal cannabis outlets turning over up to $4 million a year if the cannabis reform referendum is supported as part of the General Election, a new report reveals.
Business and Economic Research Limited (BERL) was commissioned by the Ministry of Justice in 2019 to report on what the cannabis industry would look like in New Zealand if the drug was legalised.
BERL's reports indicate that if legalised the cannabis industry could employ about 5000 people across New Zealand and earn the Government almost $1.1 billion in taxes each year.
The 51-page report indicates there could be more than 400 cannabis stores across New Zealand, and that an estimated 120 tonnes of legal cannabis could be produced each year for sale in those stores.
It has been estimated New Zealanders already cultivate about 74 tonnes of cannabis a year.
The report also details the profit structure of a legal cannabis retail scene.
According to BERL, each cannabis retail store in a major urban area like Auckland could expect to make more than half-a-million dollars a year after tax and other business costs.
Even in minor urban areas, yearly profits are estimated to be $393,000 a year if it could sell 110kg of cannabis a year.
In rural townships, a retail store selling 100kg annually would generate $4m in revenue and a profit of $385,000.
It is proposed in rural townships that retail outlets also double as a combined store.
The estimated number of stores in Gisborne-Tairawhiti, at seven, appears higher per head of population compared to other regions in the country.
Palmerston North, Whangarei and Tauranga would have 10, Hastings, New Plymouth and Rotorua nine, Napier seven, Whanganui six, and Nelson and Whakatane five.
Auckland would have 119, Wellington 29, Christchurch 25 and Dunedin 10.
The report recommends sales be limited to on-premises and retail — not online — with a minimum age limit of 20.
BERL proposes the market be run on a yearly quota allocation model, with a scalable annual cap of 110 to 120 tonnes on production, micro-licensing and the use of excise duty and levy.
A tiered quota system would allocate “blocks” to cultivators meeting certain social equity objectives. The residual from tier 1 could then be allocated to all approved licence holders.
The quota system would be run on an auction basis, with the first auction for cultivators, and licence holders able to bid on the second round.
BERL recommended no single cultivator should hold more than 20 percent of the total quota.
A micro-cultivation sub market would allow lower scale cultivation — up to 100kg, with a maximum of 100 micro-cultivators.
One micro-cultivator, employing up to two full-time staff, could generate an annual revenue of $324,000, the report said.