Monday’s election in Canada brought an end to ten years of Conservative rule under the helm of Stephen Harper. In a shift to the left, the Liberal Party was voted into power, with Justin Trudeau as the new prime minister. Among many expected policy changes to come, a notable one is his promise to legalize recreational marijuana.
Trudeau has pledged that under his leadership Canada will create a system to tax, regulate, and sell recreational marijuana. The Liberal Party’s website states “We will remove marijuana consumption and incidental possession from the Criminal Code, and create new, stronger laws to punish more severely those who provide it to minors, those who operate a motor vehicle while under its influence, and those who sell it outside of the new regulatory framework.”
By several measures, demand for marijuana in Canada is very high, as Canadian daily 680 News details. Canadian police reported about 73,000 cannabis offenses in 2013 — 80% of them for possession. Furthermore, a 2015 poll conducted by Forum Research showed that 68% of Canadians are in favor of relaxing cannabis regulations. And self-reported surveys indicate Canadians have some of the highest rates of cannabis use in the world.
Trudeau will no doubt draw on Colorado’s successful experience in legalizing marijuana. Combined recreational and medicinal marijuana sales in that state pulled in over $100 million in revenue in August alone — the highest monthly total since recreational marijuana was legalized there in January 2014. Based on Colorado’s marijuana revenue (and assuming similar cannabis consumption rates and the state’s relatively low taxes), Canada’s government could collect $411 million a year in taxes from marijuana.
Canada currently has 35,000-40,000 licensed medicinal marijuana users and 26 licensed producers, all of whom are regulated by Health Canada. Under the Conservative government’s watch, Health Canada tended to discourage doctors from prescribing medicinal marijuana, citing a lack of clinical trials, but that stance looks set to change with the new administration. Presently, Canada’s total cannabis market is worth $80-100 million, but with the legalization of recreational marijuana and a potential customer base of millions, the market could reach $5 billion, according to Dundee Capital Markets analyst Aaron Salz.
And the Conservative government may have inadvertently laid the foundation for a legal recreational marijuana industry last April, when the Marijuana for Medical Purposes Regulations were enacted. These require patients to purchase only from licensed producers, instead of growing their own cannabis. (Harper’s government was concerned that loosely-regulated medicinal marijuana would end up on the black market.) These mass-producers must adhere to Health Canada’s strict quality-control guidelines, but more importantly they will be able to scale up their operations for a larger recreational market, and the basic framework is in place for new suppliers.
Trudeau said in September that his administration will get started on legalization “right away.” However, he acknowledged “We don’t yet know exactly what rate we’re going to be taxing it, how we’re going to control it, or whether it will happen in the first months, within the first year, or whether it’s going to take a year or two to kick in.”
Canada’s legalization of recreational marijuana would add to the momentum in the U.S. towards that end (check out our recent Blouin News feature on that topic). Trudeau’s plan would boost tourism, similar to how in some ski resorts in Colorado, 90% of marijuana customers are tourists. In many parts along the U.S.-Canada border, Americans would cross over to Canada to legally buy marijuana, similar to young Americans crossing over to buy alcohol. (Canada’s legal drinking age is lower than the U.S.). And that will spur bordering states to legalize marijuana as well, to generate more internal revenue. (Recreational marijuana is already legal in Alaska, Colorado, Oregon, Washington State, and Washington, D.C., while possession has been at least partly decriminalized in 15 other states.) It should be easier for Canada to succeed now that it can draw on successful examples just south of the border. That and a new, and energized, public advocate.