Economist: Canada’s illicit marijuana market worth CA$22 billion

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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2 comments on “Economist: Canada’s illicit marijuana market worth CA$22 billion
  1. Lyle Courtsal on

    If you do economies of scale considering long term slow growth, then such a transition should not destabilize economy. It only gets nasty when too many producers are allowed into a stable market all at once, like a digital flash crash. It got real nasty when they de-regulated trucking; too many trucks, not enough freight. See? too many producers, not enough buyers. Nasty. Try not to do any hostile takeovers; that makes everyone look real bad. . . .


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