Canada’s soon-to-be-legal marijuana industry is expected to generate over $6.5 billion in sales by 2020, outpacing hard liquor and putting the plant on path to potentially becoming more popular than wine, analysts for one of the nation’s largest banks predicted in a new report.
Canadians stand to legally purchase roughly 1.7 million pounds of pot by the decade’s end, in turn generating billions of dollars in cannabis-related revenue for provincial governments once taxed and regulated weed sales start later this year, Canadian Imperial Bank of Commerce (CIBC) analysts wrote in a report this week.
“We believe that by 2020, the legal market for adult-use cannabis will approach $6.5 billion in retail sales,” the CIBC report said. “For context, this is greater than the amount of spirits sold in this country, and approaches wine in scale.”
Canadians spent $5.1 billion on liquor and $7 billion on wine in 2017, said CIBC, Canada’s fourth-largest bank. Canadians also spent about $5.7 billion last year on medical and black market marijuana, according to a previous study conducted by Statistics Canada, and CIBC’s analysts expect that cannabis sales will swell once adults can legally purchase the plant for recreational purposes, likely making bank for the country’s provinces.
“By 2020, the legal market for cannabis in Canada will involve demand for over 800,000 kilograms with a retail value of roughly $6.8 billion — 95 percent of which will for adult use (non-medical),” the analysts wrote.
“The bulk of the value generated from this industry will accrue to Canada’s provinces,” the analysts wrote. “In fact, we estimate that provinces will generate over $3 billion of income, either in the form of earned profits or taxation revenues.”
Private companies, meanwhile, will generate nearly $1 billion in earnings before interest, taxes, depreciation and amortization, the analysts wrote, as “the shadow economy becomes legitimate business.”
Prime Minister Justin Trudeau campaigned on legalizing marijuana, and his Liberal government is slated to vote this summer in favor of making Canada only the second country after Uruguay to permit the plant.
Nine states in the U.S. have passed laws legalizing recreational marijuana, including six with systems in place for regulating, taxing and selling retail cannabis. Colorado began the first state to permit recreational marijuana sales in 2014, and last year its dispensaries sold a record $1.51 billion worth of medical and recreational cannabis, earning upwards of $247 million tax and fees for state coffers.
• Andrew Blake can be reached at ablake@washingtontimes.com.
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