Cannabis Legalization: Impact on Canadian Economy

The movement to ensure the legalization of cannabis has been going on in many parts of the globe.

Even in the United States, many states have legalized cannabis. This means that it is legal to possess cannabis for the purpose of sale in these states.

However, this rule has not been formed on a national level in the United States. In fact, this rule is not even present in the Netherlands. This means that although cannabis is widely sold and consumed in coffee shops in Amsterdam, technically it is not legal to possess more than a certain amount of cannabis.

There are only two countries in the world where cannabis or marijuana is completely legal now. These countries are Uruguay and Canada.

This makes Canada the only country in the developed world to have legalized the recreational consumption and sale of marijuana. This recently enacted move by the Canadian government has led to a heated debate on both sides.

However, many experts believe that the real reason why the Canadian government has legalized marijuana is economic. In this article, we will have a closer look at the economic impact of the legalization of cannabis in Canada.


The Canadian marijuana market is expected to be in the range of $5 billion to $8 billion per annum. Critics of this policy argue that there is no new addition to the economy. This annual figure of $5 billion to $8 billion was already a part of the Canadian economy.

Since it was illegal, it was not being accounted. However, now since it is legal, it will be accounted for.

However, this difference is not minor. Since the sale of cannabis will now be legal in Canada, the Canadian government will have the authority to tax the sale.

The Canadian government has decided to levy a tax of $1 per gram of marijuana or 10% of the sale price whichever is higher. This means that the Canadian government will earn at least $500 to $800 million in additional taxes every year!

Individual states will retain close to 75% of this new revenue which will be generated because of the sale. Hence, the direct impact of cannabis legalization will be a significant increase in the revenue of the Canadian state.

Also, it is likely that there will be a significant increment in the revenue being generated by taxing employment as well. Up until now, the incomes being earned by drug peddlers were illegal.

Hence, they were not being taxed. Now companies selling marijuana will legally earn profits. Hence, they will have to pay taxes.

Also, the salaries that they pay to thousands of employees will also be taxed. The final result will be that the Canadian government will be significantly better off.

Online vs. Brick and Mortar

The future of the cannabis business in Canada is still not clear. The business was illegal until now. This is the reason why cannabis use still has a stigma associated with it, and regular users of cannabis are viewed as drug addicts. This might take some time to change. This is the reason why many people believe that cannabis users will prefer to buy online as compared to buying from brick and mortar stores. This is because brick and mortar stores do not provide the anonymity that online purchases provide.

The impact of the legalization of cannabis is likely to be felt by the e-commerce industry in Canada which is likely to witness a steep spike in revenue.

Impact on Government Expenses

Cannabis legalization is like a boon for the government. This is because not only does the income go up significantly but the expenses are also reduced drastically. If the possession and sale of marijuana is decriminalized, the number of crimes in Canada will drop a lot.

There will be no drug gangs who will be perpetrating drug-related violence on the streets of Canada! The absence of these gangs will save the Canadian government a lot of money in terms of law enforcement costs. Also, the number of people locked up in prisons will come down bringing down the cost of maintaining prisons and then later the cost of rehabilitating prisoners.

Impact on Tourism

The United States government is continuing its war on drugs in many northern states. Also, there are many other countries where consuming cannabis is illegal.

Canada is likely to appeal to these people as a tourist destination. The government of Canada is very optimistic about the fact that people from across the world will visit Canada and that cannabis tourism will also lead to a significant increase in both private as well as the government revenue.

Impact on Real Estate

Lastly, the real estate industry in Canada is expecting a positive impact from cannabis legalization. This is because new demand has been created for warehouses and stores that will help the real estate industry as more commercial and industrial units will be sold out or leased.

The demand for rental housing is also likely to go up. This is because states and countries where cannabis is legal to attract a lot more tourists

To sum it up, the government of Canada is likely to reap significant economic benefits as a result of its cannabis legalization policies. The other impacts need to be considered as well, but if Uruguay and Netherlands are considered to be examples, there seems to be no harm in legalizing cannabis.

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