Government revenues from legal pot could reach $5B a year: bank economist

Call it Prime Minister Justin Trudeau's secret stash.

OTTAWA — Call it Prime Minister Justin Trudeau’s secret stash.

A new report from CIBC World Markets says Canada’s federal and provincial governments could reap as much as $5 billion annually in tax revenues from the sale of legal marijuana.

CIBC economist Avery Shenfeld crunched the numbers using current estimates of Canadian recreational pot consumption, the revenue experience in U.S. states that have legalized, and other factors — such as prevailing “sin tax” rates on alcohol and tobacco.

“The bottom line is that federal (and) provincial governments might reap as much as $5 billion from legalization, but only if all the underground sales are effectively curtailed,” writes Shenfeld.

“That’s on the order of 0.25 per cent of GDP, no barnburner.”

The Liberal government has promised to legalize, tax and regulate marijuana and has made MP Bill Blair, the former Toronto police chief, the lead on investigating a new regulatory model.

Trudeau maintains that legalized pot will not be a cash cow, and that all revenues will be used to address mental health and addictions issues.

“It was never about a money-maker, it was always about public health, public safety,” the prime minister said in December during a year-end interview.

The experience of Colorado and Washington states, where pot sales were legalized and taxed, suggests no dramatic increase in marijuana usage but a potential for pot tourism.

“The desirability of increased marijuana tourism inflows will be questioned, no doubt, but they would generate additional fiscal revenues for government on their other tourist spending,” Shenfeld writes.

The report uses Colorado sales figures to estimate a Canadian pot market worth about $10 billion annually, then looks at net profit margins from Ontario’s government booze monopoly and other associated income and payroll taxes to come up with the revenue total.

Shenfeld also suggests that the oft-touted law enforcement savings from pot legalization may not materialize due to ongoing international obligations to stop marijuana exports and the enforcement needed to curb the untaxed black market.

“Deficits won’t simply go up in smoke as a result,” he concludes.

Just Posted

Man accused of manslaughter in fatal collision testifies he was cut off

A Delburne man accused of causing a fatal collision said he was… Continue reading

Class size targets hard to reach in Red Deer

Red Deer Public Schools recently updated its average class size

Lotteries look to younger customers to increase sales

Promoting online and interactive games

Red Deer man helps light up the holidays for others

Jim Elliott’s in his 15th year of mapping the city’s most magical, lit-up homes

WATCH: CP Holiday Train rolls into Lacombe

Kelly Prescott performed for hundreds of Central Albertans

Barry Cooper: Separation has become a real possibility, thanks to Ottawa’s abuses

In the past couple of weeks, a retired senior oil executive, Gwyn… Continue reading

Sex assault trial for former gymnastics coach resumes in Sarnia

SARNIA, Ont. — The trial of a former high-ranking gymnastics coach accused… Continue reading

Victims of former ski coach Charest say they were ‘sacrificed’ by Alpine Canada

MONTREAL — A lawsuit filed Wednesday against Alpine Canada by three victims… Continue reading

Emily Blunt on the ‘daunting’ task of playing Mary Poppins

BEVERLY HILLS, Calif. — Emily Blunt loves a challenge, and in the… Continue reading

Tommy Chong says Canada’s weed legalization has kept ‘underground market alive’

TORONTO — Tommy Chong has a pass, man. While some Canadians who… Continue reading

Apple deepens Austin ties, expands operations east and west

AUSTIN, Texas — Apple will build a $1 billion campus in Austin,… Continue reading

Trump comments upend U.S. approach to Huawei, trade talks

WASHINGTON — The United States and China have taken pains this week… Continue reading

Most Read