A new report from CIBC World Markets claims that Prime Minister Justin Trudeau's plan to legalize marijuana for recreational use could rake in Can$5 billion (US$3.6 billion) a year in tax revenue from its sale.
According to CBC, the total figure is calculated by CIBC economist Avery Shenfeld using the current Canadian recreational marijuana consumption estimates, the revenue in US states where pot is legalized, and factors such as the present "sin tax" rates on tobacco and alcohol.
"The bottom line is that federal (and) provincial governments might reap as much as $5 billion from legalization, but only if all the underground sales are effectively curtailed," said Shenfeld. "That's on the order of 0.25 per cent of GDP, no barnburner."
Meanwhile, VanCity Buzz wrote that based on Colorado's experience when it legalized marijuana, experts forecast that the market could earn bigger than just Can$5 billion. In 2014, Colorado spent $700 million for recreational marijuana, which raked in a total of $75 million in sales tax and licensing revenues. At present, Colorado's marijuana sales could reach $1 billion. Adjusted to Canadian dollars, the marijuana market could reach $10 billion in Canada. With the "sin tax" rate that potential income can be cut into 50 percent.
The Tico Times reported that the figures in Colorado could have been raised by the tourists who visited the state simply to buy recreational marijuana. Meanwhile, Trudeau appointed former Toronto police Chief Bill Blair to oversee the new regulations for distributing marijuana. There is no exact date on when the marijuana will be legalized in Canada. However, when it does get legalized, it will be the first G7 nation to pass this bill.
With the big tax income that the government can own from legalizing marijuana, Trudaeu ensures that it will not be a cash cow. He promised that all revenues will go to public health projects and other addiction issues. He said it was not about making money, but about health and public safety.
