When a state or nation is contemplating legalizing cannabis, revenue projections vary. In the United States, most government projections have underestimated cannabis sales as it is hard to accurately gauge usage from government surveys or predict cannabis-related tourism. Canadian forecasts are now rolling in with New Frontier projecting sales to reach $9 billion by 2025, while Canadian Imperial Bank of Commerce projects that cannabis sales will rival wine, placing the overall value of the cannabis industry in the Great White North at $6.5 billion.
In Oregon, for instance, the state Legislative Revenue Office projected that cannabis taxes would generate about $20 million per year once the system was fully implemented. After hearing from other economic analysts with larger predictions, the initial state “Estimate of Financial Impact” published in Oregon’s 2014 Measure 91 voter guide projected the tax revenue to range between $17 to $40 million. Fast forward to 2018, and the state generated over $20 million in new tax revenue (beyond any administrative costs) during the first three months of 2018 alone, with cities and counties collecting an additional $3.5 million from local taxes on top of that. Colorado also exceeded initial revenue expectations, with the state’s bustling industry selling a record-setting amount of $1.5 billion worth of cannabis in 2017, earning the state $247 million in new tax revenue.
The CBC reports on CIBC’s prediction:
Canadians could soon be spending more on recreational cannabis than they do on liquor, if a report from a major bank is to be believed.
Canadian Imperial Bank of Commerce calculated in a report this week that in the next two years, Canadians will consume 800,000 kilograms of cannabis, the vast majority of which will be for recreational use.
“We believe that by 2020, the legal market for adult-use cannabis will approach $6.5 billion in retail sales,” CIBC said. “For context, this is greater than the amount of spirits sold in this country, and approaches wine in scale.”
Whether New Frontier’s $9 billion prediction is closer to the mark, or CIBC’s $6.5 billion turns out to be accurate, it is clear that cannabis will be a billion-dollar industry in Canada, with a lot of opportunities for entrepreneurs, investors, and businesses. For the record, I think that both numbers are likely underestimating tourism dollars that will be earned, especially while the United States (irrationally and unnecessarily) delays ending federal prohibition. For the Canadian cannabis industry to fully reach its potential, it does need to keep barriers to entry low and reduce unnecessary burdensome regulations that will inflate costs too much and push consumers to the underground market. It’ll take time to iron out the wrinkles, but Canada is poised to bring its citizens more freedom, more jobs, and more revenue in the near future by legalizing and regulating cannabis commerce.
Canada is poised to make history by legalizing cannabis soon, so if you are in the cannabis industry, or are thinking of joining, the International Cannabis Business Conference in Vancouver, British Columbia, is THE place to be this June 24th-25. Don’t miss learning from, and networking with, the top cannabis experts in Canada and from around the world. Get your tickets by June 3rd to save $200!