Canada Could Reap Billions from Recreational Legalization

Recreational Legalization

On Jan. 28, 2016, CIBC World Markets, a Canadian financial institution, announced that it had released a revised economic forecast for Canada, “Economic Insights: The Winter of Our Discontent.”

While the report focuses on the Canadian outlook for commodities and prevailing investor sentiments, it also discusses the economic implications of legalized cannabis in a section authored by economist Avery Shenfeld titled, “Growing Their Own Revenue: The Fiscal Impacts of Cannabis Legalization.”

Shenfeld has forecasted that, if legalized, recreational cannabis sales in Canada could range from C$3 billion to C$10 billion, with the low estimate based upon cannabis consumption estimates in Canada and the high estimate based upon sales data from Colorado.

Canadian Prime Minister Justin Trudeau is currently pursuing the potential legalization of recreational marijuana in the country as a means of protecting minors from access to marijuana and squelching the black market’s marijuana revenue.

If recreational marijuana is legalized in Canada, shuttering the black market will bolster the fiscal impact of legalization.

According to Shenfeld, “The bottom line is that federal/provincial governments might reap as much as $5 bn from legalization, but only if all the underground sales are effectively curtailed.”

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