The Canadain government could yield as much as $5 billion per year in tax revenue from the sale of legal cannabis, according to a newly-released report.
The report, conducted and released by the Canadian Imperial Bank of Commerce (CIBC), arrived at the final tally through an examination of both Canadians’ average rate of consumption of recreational cannabis and the revenue schemes enacted in the U.S. in states where cannabis is legal, such as Colorado and Washington.
“The bottom line is that the federal (and) provincial governments might reap as much as $5 billion from legalization, but only if all the underground sales are effectively curtailed,”
wrote Avery Shenfeld, an economist for the CIBC. “That’s on the order of 0.25 per cent of GDP, no barnburner.
“The desirability of increased marijuana tourism inflows will be questioned, no doubt, but they would generate additional fiscal revenues for government on their other tourist spending,”
The Canadian government, headed by newly elected Prime Minister Justin Trudeau, has promised to legalize cannabis nationwide, and institute a tax and regulatory scheme following its legalization. Trudeau has insisted that the legalization of the product is not about increasing government revenue, but rather about an improvement of public health.
“It was never about a money-maker, it was always about public health, public safety,” Trudeau said in December.
The reduced costs of enforcing out-dated cannabis laws may also decrease government expenditures, according to Shenfeld. Considering that former Toronto Police Chief Bill Blair will aid in shaping the legal cannabis market in Canada, it will likely be designed to reduce costs for law enforcement.