Cannabis use is costing Australia $4.5 billion a year, with more than half of the toll related to the criminal justice system.
More than two million Australians reported using cannabis in the 12 months to June 2016, a new study published by Curtin University's National Drug Research Institute shows.
About 150,000 people met the criteria for cannabis dependence, a figure NDRI professor Steve Allsop described as significant.
The social and economic costs of cannabis use include more than $700 million in increased demand on the healthcare system.
Worker absence and reduced productivity was estimated to cost about $560 million.
But the greatest costs by far were related to crime including policing, prosecution and an estimated $1.1 billion spend on imprisonment.
"It could be people who are found in possession of small amounts for personal use," Professor Allsop told AAP.
"Some people might be engaging in other risk behaviours or criminal activity where cannabis use is associated with it ... someone who is completely dependent, who uses a lot of the substance, might resort to either selling the substance or might resort to property crime in order to continue to support the purchase."
Prof Allsop said it could not be extrapolated from the data whether the costs to society would be lower if cannabis was decriminalised, as it has been in some jurisdictions around the world.
But while stressing the seriousness of crimes such as driving under the influence, he said non-punitive measures were more likely to be effective for minor possession charges.
"I've worked in this field for 40 years ... if someone's found with small amounts of cannabis for personal use, we shouldn't potentially do more harm," he said.
"The evidence tells us we're going to have a better chance of success if we have a health response as opposed to a criminal response as our first response."
The study also quantified a further $100 million in intangible costs due to the premature death of 23 people, mostly through cannabis-related traffic accidents.
"I think it's important to recognise that those costs don't just impact on the individual user," Prof Allsop said.
"If somebody's using cannabis and they're driving a vehicle, they're not just putting themselves at risk."
Researchers from the University of Adelaide, UNSW, Flinders University and the University of Queensland contributed to the study led by the Perth-based NDRI.