New study details huge economic opportunities from marijuana legalization in Canada

This new Toronto Star article reports on a notable new report about the economic potential presented by marijuana reform in Canada. The piece is headlined “Recreational weed could be a $22.6B industry: study; Sales of legalized recreational marijuana would surpass combined sales of beer, wine, and spirits, it says.” Here are excerpts:

Legalized recreational marijuana promises to spark a $22.6-billion industry in Canada, eclipsing combined sales of beer, wine, and spirits, a new study suggests. The Deloitte report — titled Recreational Marijuana: Insights and Opportunities — being released soon concludes that Prime Minister Justin Trudeau’s legalization of cannabis next year could jolt the economy.

“There hasn’t been anything like this — and granted it wasn’t legislated — but you think of the dot-com … flurry,” Mark Whitmore, vice-chair of Deloitte, said in an interview Wednesday. “It has that kind of feel to it. There’s a lot of froth, a lot of interest in this space and a lot of people think there’s going to be an opportunity,” said Whitmore.

Deloitte estimates that satisfying the recreational weed market will mean producing 600,000 kilograms of marijuana annually — far more than the existing 36 licensed producers grow for medicinal purposes.

The consulting firm warns there will be challenges as recreational pot is legalized. “Of course, there will be a practical consideration to take into account when setting marijuana prices that goes beyond what the market will pay,” the 11-page study says. “The challenge will be to set a price point that balances the goal of creating and sustaining a legitimate market (while eliminating ancillary criminal enterprise) with that of not promoting excess consumption.”

In partnership with RIWI Corp., Deloitte surveyed 5,000 Canadians this past summer — including 1,000 identified as recreational marijuana users — and calculated that the base retail market alone would be worth $4.9 billion to $8.7 billion annually. The ancillary market — growers, infused product makers, testing labs, and security — would increase that to between $12.7 billion to $22.6 billion. With tourism revenue, business taxes, licence fees and paraphernalia, Deloitte estimates the market will be even greater than $22.6 billion….

Federally, Trudeau has former deputy prime minister Anne McLellan leading a task force to examine how his government should proceed. McLellan’s panel of experts will report back before Nov. 30 with a blueprint for federal legislation to be introduced next spring. The Deloitte study said regardless of what the new law looks like, it “presents a bold new landscape for Canadian businesses and governments alike.” “What this new landscape might look like remains unclear,” the report says.

The RIWI-Deloitte survey found 40 per cent favour legalization, with 36 per cent opposing it, and 24 per cent undecided. “This will make it challenging to create a broadly accepted regulatory environment,” the report says.