Trudeau’s Plans For Cannabis
In a new report from CIBC World Markets, economic experts say that if Canada follows through on Prime Minister Justin Trudeau’s plans to legalize cannabis, it could generate as much as $5 billion each year in tax revenues.
In the study, analysts looked at a variety of data sets including current tax rates on alcohol and tobacco. Estimates on the numbers of cannabis users in Canada. And the financial impact of legalization in places like Colorado in order to come up with an estimate on how much the federal and provincial governments can expect to bring in from legal cannabis sales taxes.
“The bottom line is that federal provincial governments might reap as much as $5 billion from legalization, but only if all the underground sales are effectively curtailed,” said Avery Shenfield, an economist at CIBC who worked on the study.
And while that figure may seem significant, Shenfield stated that in the big picture, cannabis legalization would likely not become a major source of tax revenue for the government.
“That’s on order of 0.25 percent of GDP,” he explained, saying that the $5 billion figure is “no barnburner.”
Cannabis legalization has been a hot topic in Canada for the last year or so, thanks to Prime Minister Trudeau’s outspoken commitment to seeing the drug legalized during his tenure.
Trudeau took office in November 2015, and in the months of campaigning leading up to his election, he made marijuana legalization a key piece of his platform.
Within a month of becoming Prime Minister, he took his first steps toward following through on his promises when he issued an official mandate calling on Health Minister Jane Philpott to begin researching and planning out steps toward legalization.
Since that time, however, Canada has run into potential roadblocks, as some international treaties explicitly require member nations to criminalize cannabis.
Currently, Trudeau and other Canadian lawmakers are exploring possible solutions that would allow them to move forward with the legalization process.
An official briefing earlier this month pointed out that “as part of examining legalization of cannabis possession and production, Canada will need to explore how to inform the international community and will have to take the steps required to adjust its obligations under these conventions.”