Marijuana Money: How Marijuana Legalization Will Affect Canada’s Economy

By: Gerald Steven

Canada launched a nationwide experiment by legalizing marijuana. Policymakers argued that the legalization will boost the country’s economy, but just how much will the economy benefit?

On October 17th, Canada became the largest country in the world to legalize marijuana for recreational use. The new legislation will allow officially recognised shops with license to sell marijuana to persons of legal age. Justin Trudeau, the country’s Liberal Prime Minister, pledged to legalize marijuana during his election campaign in 2015. He stated that legalizing marijuana would reduce the estimated C$6 billion in profits from marijuana sales from the black market. From his pledge, it seems that the motive for marijuana legalization is mainly economic, but how much will Canada exactly economically benefit from legalizing marijuana?

On paper, marijuana legalization should benefit Canada’s economy because by legalizing marijuana, the government will be able to bring a black market economy into the official and taxable economy. According to Toronto-Dominion Bank, marijuana legalization should increase Canada’s real GDP in 2019 by as much as C$8 billion. They predicted that the growth forecast for the fourth-quarter will be 2.9%, an increase from initial prediction of 2%.

But the bank also warned that this growth might be an accounting illusion. They warned that some of the cannabis-related trade already happened in the economy, but was never officially recorded in measure of output. Statistics Canada only included “licensed and unlicensed cannabis activity” in their economic calculations after marijuana was legalized, so more time is needed to find out just how much marijuana legalization will benefit the country’s economy.

What is certain, however, is that the government will gain sales tax revenue from legalized marijuana. The Parliamentary Budget Office estimated that the country will gain between C$350 million to C$960 million in sales tax revenue. Foreign investments in the cannabis industry will now also be part of the official economy. When marijuana was still illegal in Canada, foreign investors poured C$30 billion in the illegal cannabis industry. After October, foreign investments will be included in the official economy.

In terms of employment, Indeed Canada, an employment-related search engine, stated that cannabis-related jobs have tripled in the past year, and interest in those jobs has quadrupled. Over time, it is predicted that marijuana legalization will create more jobs in certain industries, such as agricultural manufacturers and transportation companies.

The government’s task of bringing a C$5.3 billion illegal trade into the official market comes with its challenges. The legalization of marijuana has since created a surge in demand, and marijuana stores around the country have been struggling to keep up with the demand. In Quebec, all 12 marijuana stores were closed for three days since they were unable to keep up with the crowds. In Ontario, their online marijuana store received more than 150,000 orders within the first week of legalization.

Because of their inability to satisfy the high demand, some marijuana users are pushed to go underground once again. Canada’s move to legalize marijuana is not an easy transition. So far, politicians and analysts believe that the legalization will benefit the country’s economy, but only time will tell just how much benefit the country’s economy will gain.

Works cited:

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Bilefsky, D. (November 2, 2018). High Demand and Short Supply in Canada’s Legal Cannabis Trade. The New York Times. Retrieved from:

Fournier, C. (September 18, 2018). Marijuana to Boost Canada’s 2019 GDP, at Least on Paper, TD Says. Bloomberg. Retrieved from:

Parfitt, T. (October 16, 2018). Canada legalises marijuana: Everything you need to know about the new cannabis law. Independent.Retrieved from:

Tencer, D. (October 21, 2018). Cashing In On Cannabis: What Will Legal Weed Mean For Canada’s Economy? Huffpost. Retrieved from: