The report by researchers BERL estimates 74 tonnes of cannabis are currently consumed by 560,000 users each year.
Daily users consume 62 tonnes and each year 1115 people are hospitalised due to health issues with cannabis use.
Based on what happened following legalisation in Colorado and Washington, BERL expects an immediate but short-term 30% increase in the amount of cannabis consumed and the number of users to increase 25%.
This will lead to a further 300 people a year hospitalised at an extra cost of $4 million.
But, after three to five years it expects use to tail off and forecasts annual sales of 50 million tonnes supplied by 567 licenced growers.
This will be sold through 420 retail stores and licenced premises.
Total staff employed is estimated at 5000.
Legalisation will mean 1930 fewer police warnings, 1200 fewer charges, 940 fewer convictions and lower justice and corrections costs of more than $10m.
Expected income from the excise tax is $640m. As a comparison tobacco raises $1.8 billion and alcohol $1bn.
In addition, the cannabis industry would generate $181 from GST, $56m licence fees and $40m from income and company tax.
