As Canada plans to legalize recreational marijuana use, many concern has risen on how the cannabis industry will affect the Canadian economy with time. Whether positively or negatively, it will surely affect the economy.
To start with, one basic fact according to the Senior Canadian economist at capital economics is that the legalization of this drug will lower its’ prices which obviously will make many people happy, and even the already happy ones happier.
The Canadian government and taxpayers spends huge amounts of money (in billion dollars) on prosecuting and imprisoning dealers in this illicit drug.
Not only will the impact of marijuana legalization help save the government on law enforcement expenditures, but it will also include the possibility of generating additional tax revenues, provide employment opportunities for the unemployed Canadians who can grow and package marijuana for sale in the government approved industry and also job opportunities for individuals who can promote safe use of the drug both educationally and health wise as the new industry emerges, and it will also cause a sudden strong rise in the country’s Gross Domestic Product (GDP) as more goods will be produced and retailed in the country.
The economic impact of legalizing marijuana covers a lot of aspects of the country’s economy. Another one is that there will be an increase in the demand and supply of the product, leaving drug dealers with bulky profits at the expense of the Canadian government.
Stephen T. Easton, an economist conducted a case study using Canadian data to calculate the amount of tax revenue that the legalization of marijuana could bring to the government. According to his case study, the average price of 0.5grams of marijuana has a production cost of only $1.70. Meanwhile, it is sold for $8.60 on the streets of Canada. Drug dealers would make a huge profit of $6.90 on a 0.5grams of marijuana. What really cautions these drug dealers and other people that are interested in this business is the risk factor that the possession and distribution of the drugs are illicit and subject to a serious jail term.
The most attractive argument in favor of marijuana legalization is the increased tax revenue that it would fetch the Canadian economy, but it will be so naïve of us if we think that the legalization of this drug will affect the Canadian economy positively alone with it having any negative impact on the economy. Beer sales could take a huge hit if Canada legalizes marijuana. According to Cannabiz Consumer Group (C2G), prediction shows that the beer industry could lose over $2 billion in retail sales if marijuana is legalized.
Is the Cannabis Industry good for Canada?
Analysts have stressed the fact that we should expect the new market to eclipse wine, beer, and liquor in sales within the first few years of legalization. That is just on the home front because our companies are already distributing goods to countries around the globe.
Canada is about to experience a massive race to capture market share and sales as there are plenty of opportunities for investors in the neighboring countries who wouldn’t ignore the Canadian companies that are on the rise right now.
What will happen to the black market and organized crime in Canada?
Canada’s black market for recreational marijuana has experienced significant changes in recent years and, obviously, will experience more as the country races to a new world of legalization soon. This legalization won’t end but reduce Canada’s black market and its consequences for the society too. The biggest difference between legal marijuana and black market marijuana has to do with superiority and diversity in price. The government-regulated market is taxed but the black market is not, this is what actually keeps the underground black market in the game.
How will medical marijuana being sold in Shoppers Drug Mart be beneficial for customers/patients?
A sequence to the headlines made by Shoppers Drug Mart across the country about their decision to apply to Health Canada as a medical marijuana distributor. The key fact is that they are aiming to become an outlet for medical marijuana patients who want to fill their prescriptions and not seeking to produce marijuana, like the majority of Licensed Producers (LPs) in the country. This is an interesting proposal for a number of reasons;
- Shoppers is a subsidiary of Loblaws
- They are the first major non-cannabis enterprise to announce their intention of entering the competition.
- Licensed Producers are presently required to use a direct-to-client mail order system.
Initially, Shoppers Drug Mart provides review and assessment of all their customers prescription medication (as well as over-the-counter medications) to help ensure that they are contributing to their optimal health, they help refill their customers regular medications and they also help answer questions to know which product is right for their customers, which is one of the beneficial reasons why medical marijuana patients would want to purchase their marijuana from Shoppers Drug Mart.
How is marijuana currently taxed?
The current approach to cannabis isn’t operating, and therefore, the Canadian government is committed to legalizing, regulating, and prescribing access to cannabis to stay it out of the hands of youngsters, and profits out of the hands of criminals. According to the Department of Finance, Canada, a new taxation regime on cannabis was planned which can facilitate the United States of America to reach those goals and is functioning with the provinces and territories to confirm a coordinated approach across the country. Owing to the government’s commitment to legalize marijuana for recreational use, it also mapped out a plan to levy an excise tax on cannabis products at 1 Canadian dollar per gram or the 10% of the actual price. According to a notice from Canada’s finance department, the proposed level of taxation is intended to keep marijuana prices low in other to eliminate the black market.
A forecast of the cannabis industry in the next years
The Canadian government has tabled a legislation legalizing and regulating the sale, possession, and use of cannabis. While the benefits and drawbacks of the legalization have been discussed for years, the complexity has become clear that legalizing this drug is imminent.
A new report says that in the next couple of years, Canada’s Cannabis Industry will be dominated by big pharma, tobacco, and alcohol and that Cannabis beer will soon be available. PB, a company with a global reach to produce beers that are brewed entirely from cannabis plant that are alcohol-free and are yet highly intoxicating.