The Next Taxed Vice: Cannabis After Tobacco and Vapes

The UK talks about ending smoking like it’s a purely medical mission. It isn’t. It’s also a fiscal operation, because tobacco duty still matters to the Treasury. The Office for Budget Responsibility estimates tobacco duties will raise about £8.1 billion in 2025–26. That’s a serious revenue stream, and it creates a silent problem: if smoking is engineered out, what replaces the money?

The direction of travel on nicotine is clear. The Tobacco and Vapes Bill proposes a generational ban on selling tobacco to anyone born on or after 1 January 2009. That is policy designed to shrink the legal market year after year. On vaping, the government has already shown it will act decisively: single■use (disposable) vapes were banned across the UK from 1 June 2025.

At the same time, government has confirmed it will put vaping onto the excise ladder. From 1 October 2026, the UK will introduce Vaping Products Duty on vaping liquids, backed by a duty■stamps scheme. Tobacco duty rates will also keep rising, with a further uplift in October 2026 alongside an extra cash increase on cigarettes and other tobacco products. The message is blunt: nicotine will remain regulated, and it will remain monetised.

Now imagine the endgame. A generational tobacco ban means fewer legal smokers every year. Even if the duty rate climbs, receipts eventually fall when the customer base collapses. Vaping duty can plug a gap for a while, but if the government tightens vape rules further—flavour limits, marketing limits, enforcement—then the legal vape market shrinks too. Black markets don’t fund hospitals.

So the Treasury faces a reality it hates: a disappearing vice tax. Historically, when a big “sin” revenue stream declines, governments don’t simply accept the loss. They look for a substitute that can be reframed as regulation plus revenue.

Cannabis fits the template.

The UK already created a legal route for cannabis■based products for medicinal use to be prescribed from 1 November 2018 under strict controls. That matters because it proves the state can build a regulated supply chain when it wants to. The leap from medical cannabis to a tightly controlled recreational market would be political—not technical.

Abroad, the fiscal attraction is obvious. Canada’s Cannabis Act came into force on 17 October 2018 and created a nationwide legal framework. In the US, states such as Colorado publish regular marijuana tax and fee revenue reports through their revenue departments, demonstrating that cannabis can become a predictable, trackable tax base once licensed.

If tobacco is phased down and vaping is squeezed, a regulated cannabis market becomes a tempting “next vice”: age limits, product testing, potency rules, licensing fees, and a tax lever that can be sold as funding prevention and treatment. It can also be sold as a policing win—pulling money out of illicit supply—though the black market doesn’t vanish overnight.

None of this guarantees UK legalisation. But it explains the gravitational pull. When governments lose billions in one excise stream, they don’t abandon the habit of collection. They change the target. If nicotine fades, the question isn’t whether the Treasury will look elsewhere. It’s what it will choose—and how it will justify it.

Fact-check sources (selected): UNODC—1912 International Opium Convention; UK history of drug regulation (Pharmacy Act 1868; Dangerous Drugs Act 1920 background); UK Parliament—Tobacco and Vapes Bill (generational tobacco sales ban); GOV.UK—single-use vapes ban (1 Jun 2025); OBR—tobacco duties forecast (£8.1bn, 2025–26); GOV.UK/HMRC—Vaping Products Duty (1 Oct 2026) and stamps scheme; GOV.UK—medical cannabis rescheduling (1 Nov 2018); Health Canada—Cannabis Act in force (17 Oct 2018); Colorado Department of Revenue—marijuana tax reports.