Canada’s recreational cannabis black market already enjoys annual operating revenue of around 22 billion Canadian dollars ($17 billion) when exports are accounted for, according to Capital Economics senior economist David Madani.
Canada has about 4.2 million regular users of marijuana, Capital Economics estimates.
Those users spent about CA$6.5 billion on marijuana within the nation’s borders last year, Madani told The Globe and Mail, accounting for 30% of Canada’s domestic production of 2.8 million kilograms (3,086 tons).
Accounting firm Deloitte previously estimated that Canada’s impending legal recreational marijuana industry could be worth CA$22.6 billion down the road.
Madani cautioned, however, that Ottawa’s plan to legalize marijuana by next July might end up hurting Canada’s economy.
He told the newspaper that Canada’s massive underground marijuana industry launders some of its profits by spending cash earned illegally on goods and services, including cars, yachts, clothes and even real estate.
But pilfering a portion of the black market means that money will instead be deployed in other places and could end up having a ripple effect through the broader Canadian economy — potentially even triggering an economic slowdown.
That’s the economist’s worst-case scenario.
Madani’s best-case scenario predicts no “material effect” on economic growth.
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