Who Spends More On Pot Than Wine?

September 30, 1999

PERTH (Reuters) - Australia's reputation as a nation of big drinkers is going up in smoke with research released this week showing vast untaxed expenditure on marijuana.

Researchers at the University of Western Australia's Economic Research Center have found that Australians spend almost as much on illegal cannabis as they do on their beloved beer and twice as much as they do on wine.

"Expenditure on marijuana in 1995 was a little over A$5 billion (US$3.25 billion) or A$351 per capita," said researchers Professor Ken Clements and Mert Daryal in a paper entitled "The Economics of Marijuana Consumption."

The estimated pot expenditure was equivalent to one percent of Australia's 1995 gross domestic product, far higher than was previously estimated.

It represented double the expenditure on wine and three-quarters of the money spent on beer.

Clements and Daryal also found direct link between pot consumption and drinking habits. Experience in other countries had suggested liberalisation of marijuana laws results in a fall in alcohol consumption.

"Alcohol and marijuana seem to be substitutes, with cross-price elasticities," they said.

"In most cases, (liberalized) legislation lowers drinking. Spirits consumption falls the most, then wine and then beer," they said.

The researchers said they hoped to gain a better understanding of the economics of a drug which they estimate "is used by something like one-third of the entire adult population" but which "generates no tax revenue."

Their paper also included a survey of University of Western Australia first year students which found that about 50 percent had used marijuana.

Not surprisingly, the report found that legalizing marijuana would "increase consumption by about 13 percent ... and alcohol consumption would fall."

Clements and Daryal said that "in view of the large number of people who have used marijuana" and that expenditure is twice that on wine "it is surprising that more is not known about these intriguing matters."

Most of the marijuana consumed in Australia is grown in remote tracts of the island continent.

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