Legalizing cannabis in Canada could bring in 5 billion $ a year

In a new report from CIBC World Markets, a Canadian investment bank, economists have calculated that if Justin Trudeau legalizes cannabis in Canada, 5 billion in tax would be generated every year.

In the study, analysts looked at all kinds of data including current tax rates on alcohol and tobacco, estimated the number of cannabis smokers in Canada, and the financial impact of legalization in states like Colorado, to finally estimate what provincial and federal governments can expect to reap in legal cannabis taxes.

«The condition for the provincial and federal governments to reach the 5 billion following legalization is that they completely eradicate the black market,» says Avery Shenfield, a CIBC economist who worked on the study.

And while the 5 billion figure may seem huge, Shenfield adds that, overall, cannabis legalization won't be a major source of revenue for the government, amounting to around 0.25% of GDP.

The legalization of cannabis in Canada has been a hot topic since Justin Trudeau's campaign promise to legalize cannabis and his subsequent inauguration. Justin Trudeau has already moved forward on the subject, asking the Minister of Health to clear the ground and see what the best options for cannabis legalization. There have been a few stumbling blocks, including the following 3 international treaties that require member nations to criminalize cannabis:

• the Single Convention on Narcotic Drugs, 1961, amended by the 1972 protocol
• the Convention on Psychotropic Substances from 1971
• the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of 1988

Canadian legislators are therefore studying the possibilities of informing the international community of their willingness to move towards a legalization process under these conventions, if necessary by adjusting their obligations.