This paper analyzes the economic benefits of legalization cannabis on the Swedish market and how to price and tax the product. This paper will not take into account moral standards, healthcare, crime rate, addiction etc. In the past years several states in the US have legalized cannabis and there's been a positive economic effect. Furthermore, other countries such as Ireland and Canada are discussing whether to legalize cannabis or not. They have done some researches on the topic to analyze potential effects of the legalization. At this point Sweden hasn't brought up the subject for discussion, but studies show that there's an interest among the citizen to discuss whether to legalize or not. By using different methods such as demand and supply, price elasticity of demand and a regression analysis the most beneficial price and tax rate of cannabis can be estimated. The conclusion is that the most optimal price of cannabis in Sweden is 200 kr with a tax rate of 72Swedish krona per gram cannabis plus 1 percent of the retail price. With these conditions and an estimated increase in demand, the Swedish state could have generated approximately 1.4 billion kronor in 2016.