The legalization of the adult use of cannabis in Canada could result in over $4 billion in sales in the first year alone, Deloitte, an advisory, audit, and consulting company from the United Kingdom reported.
Deloitte assessed and estimated that the adult use of legal marijuana in Canada can generate up to $4.3 billion in sales in its first year.
Both the House of Commons and the Canadian Senate have approved the passage to the House Government Bill C-45 that aims to legalize the adult use of cannabis.
C-45 will now then return to the House for the last vote for the approval of the amendments. After that, through the formality of Royal Assent, it can become an official law in Canada.
Once Bill C-45 becomes a law, the use, personal growing, and the possession of cannabis will then be allowed in the country.
The age limit stated on the proposition is 18 years old, three years younger than the cap set in the nine states in the U.S. where the adult use of cannabis is legal.
Cannabis products can now also be sold in cannabis dispensaries and through online stores.
Under the new law, everyone 18 years of age or older is permitted to buy up to 30 grams from cannabis dispensaries, that have been granted the license by the federal government.
Canada will then join Uruguay as the only two countries that have totally legalized cannabis.
As of the moment, other nations also have laws that allow the use of cannabis but not on a full scale. Those laws are just lenient enough not to put cannabis users in jail.
Marijuana legalization was one of the main campaign promises of Justin Trudeau who got elected as Prime Minister in 2015. He promised that he would legalize cannabis by July this year, however that date is most likely going to be missed.
Although a lot of Canadians are celebrating this win, some health care professionals in the country are saying that they fear the possible negative implications of the move.
But the Prime Minister showed his support in the measure and argued that the bill would make sure that it will be hard for the youth to access the drug.
Last May, Trudeau said that he believes the current system is not working, thus, his administration is focused on controlling and regulating the legalization of the substance.
“The decisions and the ways we have chosen to move forward on this issue are based on months if not years of consultations with experts … looking at the best way to ensure that we are eliminating the criminal elements from the sale of marijuana,” he added.
House Government Bill C-45’s legalization is also historical because this will make Canada the first of the G7 countries to legalize the drug.
Estimates of the potential revenue growth of the industry vary by the organization that analyzes the data but all of them reported more than a billion in revenue.
New Frontier Data estimates the legal market could reach about 7 billion U.S. dollars in 2020, while the Canadian Imperial Bank of Commerce estimates that by 2025, it will be a 5 billion U.S. dollar industry.
On the other hand, Deloitte said that because cannabis enthusiasts, as well as the first time users, are prepared to spend more for premium legal access of the drug, the total spending figure for cannabis could surge by as much as 58%.
Deloitte also estimated an increase of up to 22% in the regular cannabis consumers’ purchases when the new law takes effect.
Bill Morneau, the Canadian Finance Minister said that the administration has still been studying on what kind of pricing would be enough for the legal industry to compete and win against the black market but at the same time low enough to appeal to the consumers.
He said that with regards to taxing the adult use of cannabis, the government had laid out plans for their 2018 budget for the substance to be taxed at 10% of the total purchase or $1 CAD per gram, whichever of the two is higher.
Experts from Deloitte also expect that the sales for alcoholic drinks will decline as some customers will choose legal cannabis instead.
They also added that given the sales of the drug are likely to affect the revenue of other substances like spirits, wine, beer, and even tobacco, the government of Canada should reassess and study the potential impact of the legalization on the income coming from these so-called sin taxes.
In the United States, nine states plus the District of Columbia now allow the adult use of cannabis while 30 permits the legal consumption of the drug for medical reasons.
According to BDS Analytics, an organization that tracks the industry, the emerging cannabis industry in the U.S. took in nearly $9 billion in sales in 2017.