Legalizing Recreational Marijuana Could Mean Big Bucks For Canada
It's more than we expected!
There are high hopes for Canada’s economy now that recreational use of cannabis is legal. Our neighbors to the north are now the second country in the world with this distinction after the Cannabis Act passed its final legislative hurdle through the Senate in June.
The bill’s summary on Canada’s Open Parliament website states:
“This enactment enacts the Cannabis Act to provide legal access to cannabis and to control and regulate its production, distribution and sale.
The objectives of the Act are to prevent young persons from accessing cannabis, to protect public health and public safety by establishing strict product safety and product quality requirements and to deter criminal activity by imposing serious criminal penalties for those operating outside the legal framework. The Act is also intended to reduce the burden on the criminal justice system in relation to cannabis.”
The Cannabis Act came all the way from the top, as the legislation started as a campaign pledge of Prime Minister Justin Trudeau. Now it is expected to go into effect on October 17, 2018.
Currently, Uruguay is the only country where it is legal to consume cannabis recreationally, although a few other countries tend to turn a blind eye towards its use. Here in the U.S., nine states and the District of Columbia allow recreational marijuana possession and use, and 29 states allow its medicinal use.
Billion Dollar Buzz
Based on the U.S.’ state-by-state experiments, the recreational cannabis industry has proven to be a boon to local economies. Canada’s economy is expected to particularly benefit because businesses can be nationwide, whereas in the U.S. they are limited by each state’s laws on marijuana.
Expectations and estimates of what legal cannabis could do for the country’s economy are flooding in as Canadians gear up for countrywide legalization. Even on the low end, recreational cannabis could be a multi-billion dollar industry.
According to a new report by Deloitte, Canada’s cannabis industry is predicted to generate more than $7.2 billion in annual sales by 2019. (Although this estimate includes black market and legal sales, a majority of revenue will come from recreational marijuana sales.) Canada’s GDP is currently $1.5 trillion, so these estimates would only be a drop in the bucket for the economy. Additionally, some analysts suggest the current cannabis black market is already accounted for in other portions of GDP, so legalization may not have as dramatic an impact after all.
Nevertheless, experts anticipate this growing, legal industry will need to fill more than 150,000 jobs to keep up with demand.
Naturally, the Canadian government has proposed new taxes to get its cut of legal cannabis. The planned excise tax will be $1 Canadian, or 79 cents American, per gram of cannabis. The federal government and provinces will split this revenue, and each province is empowered to make their own rules regarding how sales will operate.