Legalizing marijuana the key to $1 billion Canadian windfall

by Paul Lucas01 Feb 2016
Marijuana + sales tax = a windfall for the Canadian economy.

That’s the verdict of a new report from CIBC World Markets which has suggested that legalising the controversial drug would pour as much as $10billion into the economy every year.

Using a financial model built around Colorado’s experience of legalisation, economists have concluded that the marijuana market could far surpass original predictions – which put it at around $3billion on an annual basis.

During 2014, legal sales of the drug reached $700million – and during 2016, they are expected to reach $1billion. Now, the report suggests that when transferred to Canadian dollars, the industry over here could reach $10billion per year: especially if a tax of around 50 per cent is placed on the sales.

This figure, of course, will only be achieved if all underground sales are wiped out. This, in turn, raises questions about implementing such a substantial tax because it might be the case that legal marijuana is more expensive than marijuana on the black market: which would likely mean that many people continue to buy the drug from illegal sources.

The Liberal Party’s Prime Minister Justin Trudeau has pledged to legalise, tax and regulate marijuana but has stated the cash generated will not be used as revenue stream for the government and will instead be diverted into public health and addiction treatment programs.

What do you think about the legalisation of pot? Is it the right move? Leave a comment with your thoughts below.
 

COMMENTS

  • by Dbernst 2016-02-01 2:18:21 PM

    After weed is legalized, as with alcohol, the effects to personal health and community safety must be monitored and policed appropriately. However, the economics should not be measured on tax revenue alone. The cost-out implications to our criminal justice system need to be factored in as well, a number that may increase the net positive by billions more.

  • by dchristine 2016-02-01 4:02:48 PM

    If the Feds don't keep the cost down, of course people are going to continue to buy from the "black market" !! I'm suprised they haven't figure that out yet, oh wait a minute, no I'm not!

  • by Robert 2016-02-01 7:12:36 PM

    Is smoking pot (or ingesting), good for oneself? Of course not. As we learned with Prohibition though - you can't stop people, by threat of sanctions, from wishing to alter their mood, to finding a way to loosen their inhibitions.

    We also learned from Prohibition that was once it was repealed - there was actually less access to liquor. Many of the 'speak easy's' - that operated 24 hours a day - simply closed with in months.

    The hard truth is that legalization won't be simple and there will be mis-steps along the way. But this is just the only sensible way to proceed, after a long difficult and costly criminalization process, that had no hope of succeeding.