Canada is closer than ever to creating a legal nationwide marijuana industry, with the last hurdle being the Canadian Senate who need to pass the bill to finalize the creation of a fully regulated recreational and medicinal cannabis industry. The measure has the full support of the Canadian Prime Minister, and in fact, the legalization of marijuana was a major element of his 2015 campaign for office. Should the final legislative hurdle be cleared as everyone expects, the legal sale of of recreational marijuana could begin as early as July, and Canada stands poised to reap the financial benefits.
Marijuana Consumption Set To Boost Canadian Government Profits By C$700 Million A Year
A recent estimate from the Canadian bureau of statistics, based on cannabis consumption during the period 1960 to 2015, suggested that Canadians already spend around the same amount on weed as they do on wine every year, and usage has been increasing year on year as older people are becoming more frequent users. While the 60s and 70s saw cannabis being mainly used by teens and young people, in 2015, only 6% of users were teenagers, while two thirds of people using the drug were aged over 25.
During 2015, Canadians consumed approximately 697.5 tonnes of weed with a rough value of C$5 billion. Many of the provinces have suggested charging around C$10 per gram once its recreational use is legalized in July, and with a 10% federal government excise tax of C$1 for every gram of the final retail price chosen by each province this means that the government could make as much as C$700 million in taxes from cannabis every year. An amount that is certainly not to be sneered at.
A Billion Dollar Industry
At the moment, estimates vary greatly on how big the growth of the Canadian legal cannabis industry could become. One study has predicted that the industry could be worth over $22 billion per year, although other projections have been a lot more conservative, suggesting that the more likely figure is between $2.3 billion and $4.5 billion by the year 2021. Whichever figure is most likely, it’s still a pretty impressive sum, and whatever happens, when the bill is finally passed the country is set to gain hundreds of millions of dollars in fee revenues and taxes.
Surge In Demand Expected
Canada’s booming cannabis industry will be building on its existing online sales which have been supported by the government and which have been implemented to support the Canadian medicinal marijuana industry. At the present time, when buying medical weed Green Panther and other online companies are supplying the needs of Canadian patients, and these e-commerce businesses are preparing to meet the anticipated rise in sales once recreational marijuana is also legalized. Cultivators too are gearing up to meet the expected increase in demand, with cannabis farms taking on additional staff so they can boost their annual production.
Private Businesses Set To Gain
Needless to say, countless private businesses are ready to seize the potential of the new cannabis market. One sector which also looks set to see a huge increase in profits is the hospitality and tourism industry. The province of Alberta is leading the way, allowing cannabis to be consumed in its hotels, and this is sure to prove to be a strong draw for tourists and visitors to Canada. Cannabis-friendly rentals and “Bud and Breakfasts” are already popular, however Alberta’s move goes one further, taking advantage of an excellent opportunity to become more competitive in an overcrowded hospitality marketplace.
Marijuana Stocks Also Increasing
The Canadian Marijuana Index which keeps a track on stocks of all the major legal marijuana companies increased by 28% during 2018, with The Horizons Marijuana Life Sciences ETF rising by over 20% since its April launch. Three of the country’s largest cannabis producers – Aphria, Aurora Cannabis and Canopy Growth Corp all made gains during 2017, by 71%, 137% and 89% respectively, and the fourth largest, MedReleaf Corp, has seen its stocks increasing by 107% since its launch.
Latest US Moves Set To Benefit Canadian Weed Industry
The rescinding of the 2013 US administration guidance which suggested that the Federal Government should not intervene in any of the states where cannabis is legal also looks set to benefit Canada since it will most likely suppress any large American marijuana companies from challenging the marijuana producers north of the border. This ensures that Canada can pursue further opportunities in the industry with virtually no competition from its neighbors, and not only that, but US investors are more likely to cross the Canadian border to make their investments in the cannabis industry.