The first part of this study empirically investigates the economic effects associated with the current regulation of recreational cannabis in Switzerland. The analysis of the cannabis system includes the cannabis supply and demand (market), the healthcare system providing treatment and counselling of consumers, police activity related to the enforcement of narcotic laws, jurisprudence (court proceedings, prosecution, etc.), and court enforcement including prison sentences, monetary penalties and social work. The second part of this project builds on the analysis in the first step and estimates the economic effects of alternative cannabis regulations with regard to gross output, value added, tax and employment effects. Simplified and stylized regulatory scenarios were constructed based on the experiences in other jurisdictions and available data for Switzerland.