Evaluating the revenue and taxation implications of cannabis legalization in South Africa: Insights from Canada and the United States
Evaluating the revenue and taxation implications of cannabis legalization in South Africa: Insights from Canada and the United States

Summary/Abstract: Purpose: This study aims to evaluate theimpact of cannabis legalization on revenuemobilization and taxation in South Africa byanalyzing the experiences of jurisdictions that havelegalized cannabis. Methodology: A qualitativeapproach was employed, including a literaturereview and trend analysis. Data from Canada,California, Colorado, and Washington State, wherecannabis has been legalized, were analyzed for 2018-2021. Results: The findings demonstrate thatcannabis legalization significantly impacts revenuecollection and taxation. However, optimal pricing andtaxation policies are crucial to capture the illicitmarket, minimize negative externalities, and ensureindustry growth. Legacy growers and previouslydisadvantaged individuals should be integrated intothe legal market. Theoretical Contribution: The studycontributes to the theoretical framework ofPigouvian taxation by examining its applicability tothe cannabis industry and the challenges posed byillicit markets and product substitutability withalcohol and tobacco. Practical Implications: The studyprovides recommendations for South Africanpolicymakers on taxation policies, market regulation,and inclusive strategies to ensure a successful andsustainable cannabis industry while maximizingrevenue mobilization.

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