With recreational legalization, Canada’s cannabis market would be worth nearly $23 billion, according to a new study.
Findings in a new study suggest that legalized recreational marijuana would bring nearly $23 billion in sales. The study, “Recreational Marijuana: Insights and Opportunities“, estimates that Canada’s marijuana retail market alone would surpass beer, wine and spirits purchases combined. Canadian growers would need to produce 600,000 kilograms of marijuana annually to keep up with the nation’s demand.
Conducted by multinational professional services firm Deloitte in partnership with Toronto’s RIWI Corp. to better understand the Canadian recreational marijuana consumer, the study surveyed 5,000 Canadian adults aged 19 or older throughout the country. A total of 1,000 of the participants were self-identified as current cannabis users.
The base marijuana market, calculated by multiplying the population of adult consumers by the volume of annual consumption and the price of cannabis, was found to be valued at $4.9 billion to $8.7 billion. The ancillary market, which includes growers, infused product makers, testing labs and security, bumped up the market value to between $12.7 billion and $22.6 billion. Deloitte notes that the market would likely be even greater due to tourism revenue, business taxes, license fees and paraphernalia.
“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, told The Star. “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.”
Deloitte took into consideration the size of Canada’s expected, likely and potential marijuana users in its projections. Data collected from the survey indicated that 22 percent of the Canadian adult population consumes recreational marijuana at least occasionally, while 7 percent of the population consumes cannabis daily. Additionally, 17 percent of the population noted they would be willing to try the substance if it were made legal, bringing the potential marketplace to close to 40 percent of the adult population.
Canadian Prime Minister ran for his position on the promise he would immediately work toward legalizing marijuana. Upon taking office, he drafted a mandate letter that included a legal framework for legalization and earlier this year Canada’s health minister told the UN that federal legislation for marijuana legalization would be introduced Spring 2017.
Canadian officials are currently studying the economic, public health, criminal justice and road safety issues related to legalization. Former prime minister Anne McLellan is currently leading a task force entrusted with creating and present a blueprint for federal legislation, due to be completed by November 30.
“As we look at this recreational space, it could be a significant opportunity for both Canadian businesses and governments in terms of what they have to do,” Whitmore added.
The Deloitte-RIWI survey found that 40 percent of the participants responded in favor of legalization, compared to 36 percent who opposed the idea and 24 percent who were undecided.