Canada set to reap billions in taxes if it legalizes marijuana: study


Prime Minister Justin Trudeau’s promise to legalize marijuana for recreational use could generate up to 5 billion Canadian dollars ($3.6 billion) in taxes for Canada’s federal and provincial governments, a study says.

CIBC World Markets said its assessment is not comprehensive, but that with Ottawa and provincial governments facing revenue crunches in the wake of falling commodity prices, it is worthwhile exploring how much new revenue could be generated from legal marijuana.

The study ignored broader health, social policy and criminal justice issues.

In it, analyst Avery Shenfeld put forth various scenarios to try to pinpoint the size of the Canadian market for cannabis, using Statistics Canada surveys and a study in the International Journal of Drug Policy on the estimated number of pot smokers in the country, as well as Colorado’s experience.

“Given that marijuana has to this point been illegal for recreational use, hard data for Canada is lacking,” Shenfeld commented.

Extrapolating from the International Journal of Drug Policy research, total Canadian spending on marijuana would be C$3 billion ($2.1 billion), he said.

“If so, dividing that pie among governments and producers would not appear to leave a lot of room for a fiscal boost unless prices were raised substantially,” Shenfeld said.

But he noted that in Colorado the size of the market was underestimated, and if the same is true in Canada, the market for cannabis in the country could be worth as much as C$10 billion (just over $7 billion).

Other reports have pegged the size of the market at half that, noting that other U.S. states did not see a similar bump in cannabis usage post-legalization. Shenfeld suggests tourists may have been behind the higher Colorado figures.

If marijuana is taxed at the same rate as other economic activities, the governments’ combined take would be about 30 percent, or up to C$3 billion. If it is taxed at the same higher rate as cigarettes and alcohol, however, the amount will rise to C$5 billion.

Trudeau has appointed former Toronto police chief Bill Blair to sort out new regulations for the distribution of marijuana post-legalization.

No timeline has been provided, but when Canada moves to legalize the drug it will become the first G-7 nation to do so.

  • handytrim

    “The study ignored broader health, social policy and criminal justice issues.” maybe because the study wasn’t focusing on those issues?

    I’m sure they should’ve been taken into account as they will inevitably have an impact on revenue, tax and expenditure. And what we can see from those going down the legalisation route is that health issues are being more successfully tackled, social policy is being addressed and not ignored as is the case under prohibition, and criminal justice issues are also being improved as users are no longer deemed criminals and sent through the justice system for consuming a substance less harmful than coffee.

    I’m sure there are some negative impacts also present, but it would appear they are far outweighed by the positives. Only those who stand to lose out financially are the ones who are most against progressive reform. Funny that!

    • Chris Sonier

      I couldn’t agree more. We need to just legalise cannabis. And as a G-7 country, we could be the example of how it is done right.

    • Chris Sonier

      I couldn’t agree more. We need to just legalise cannabis. And as a G-7 country, we could be the example of how it is done right.

  • Jay

    Agree with the opinions below regarding legalization. Cannabis is a non-addictive substance that is, in some respects, less harmful than alcohol and tobacco, both of which are legal and regulated. But as this is a Japanese news site, I just wanted to comment on some Japanese opinions. Preparing students to visit Canada, I told them about liberal Canadian attitudes towards marijuana, which they could encounter. They were totally shocked. One asked if she could be affected by second-hand smoke; another asked about the difference between heroin and marijuana–she could not distinguish. When asked if they thought Japan should do the same, 100% of them replied, “NO.” I wonder where they get these paranoid attitudes towards marijuana, when Japan is one of the world’s heaviest tobacco-smoking nations, and where alcohol abuse is not only rampant, but even approved of.


    Legalize and regulate, not interested in getting my supply from the black market where its wrought with violence