According to CIBC, the country’s largest bank, the market for legal marijuana in Canada will be worth $6.5 billion by 2020. After just a few years of legalization of recreational marijuana, Canadians are predicted to consume more weed than alcohol which generated $5.1 billion of revenue last year.
The report also indicates that by 2020, 95 percent of marijuana consumers in Canada will be in the recreational market while five percent will stick to the medical market. Marijuana consumption is estimated at 800,000 kilograms of cannabis in 2020.
The Federal government has confirmed that the full legalization of Marijuana will be finalized by early September 2018. The legalization of recreational marijuana in Canada will be a massive event for the cannabis community and many investors including marijuana producers, provincial governments to large banks will be awaiting the arrival of the new cannabis market.
Where Did All This Start?
The sudden change of consumer preference mirror the process that the alcohol industry went through after the end of prohibition in the 1920’s that saw liquor regaining social acceptance. Consumers were then enjoying the consumption of alcohol without the fear of the law.
The illegality of the consumption of marijuana rises from motives that prevented hemp from competing with pulp in the market. Despite numerous calls from various camps to make marijuana use legal, the July 1 legalization date has always remained in doubt, and it appears the time has been pushed forward to either August or September.
In 2015, the Federal Liberal platform on cannabis was made public ensuring that marijuana was kept out of reach of children and criminals, by legalizing, regulating and restricting the access of marijuana and since then, the Canadian government created a fact-finding task force on the use of cannabis.
The Worth of Legal Marijuana Will Be Worth Billions
CIBC bank has produced a report on the Canadian marijuana industry predicting that the market will be valued at around $6.5 billion by 2020. The change in consumption and customer preference is due to the increase of cannabis consumption even before its official legalization. From 1985 to 2015, the use of weed in Canada doubled, increasing by 12.3 percent with teens and moms being the biggest consumers of the substance.
In 2017, approximately 4.9 million Canadians between the ages of 15-64 have spent over $5.7 billion on marijuana for both recreational and medical purposes. The $6.5 billion legal marijuana market worth is a reasonable estimate, considering that the use of weed is being accepted and easily accessible. Besides, the full legalization of cannabis will also be a determining factor. In Canada, the majority of weed users are mostly between the age of 25-44, representing 45 percent of marijuana consumption.
At a time when consumers will prefer the use of marijuana to alcohol or tobacco, liquor and tobacco investors will even opt to buy and create their cannabis facilities. Legal pot will decrease the sales of alcohol, and will significantly increase in value by 2020. The deals received from the sale of marijuana will outsmart the sale of hard liquor in the country, but not alcohol.
The Impact of Cannabis Legalization
Apart from producers and investors benefiting from the legalization of marijuana, Canada’s provincial governments will enjoy the most benefits through the taxation of marijuana. The Federal government is expected receive over $100 million in taxes in the first two years, while the rest will be distributed among the Canadian provinces.
According to a report produced by CIBC, almost half of all the provinces in Canada will be in control of all sales, with provinces like Nova Scotia, Ontario and New Brunswick running all the dispensaries. While the other regions like Manitoba, Alberta and Labrador will experience some private distribution.
The legalization of Marijuana in Canada is expected to be fully launched this September.
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