Canada’s prime minister, Justin Trudeau, is set to legalize marijuana for recreational use next year. And it could be a $22.6 billion industry, according to a soon-to-be-released report from Deloitte provided to The Toronto Star.
Here’s the breakdown of that number, based on Deloitte’s survey of 5,000 Canadians:
- The retail market would be worth between $4.9 billion and $8.7 billion annually. The market for marijuana products and services – including growers, testing labs, lighting, and security systems – would increase that number to between $12.7 billion and $22.6 billion. Factoring in taxes, licensing fees, and weed-related tourism, the market could even be greater than $22.6 billion.
“There hasn’t been anything like this – and granted it wasn’t legislated – but you think of the dot-com … flurry,” Mark Whitmore, a Deloitte vice chair, told The Star.
Canada won’t be alone in realizing the economic benefits of a legal marijuana industry. A recent Gallup poll also found that 60% of Americans now support legalization, up from 35% in 2005.
Recreational marijuana is on the ballot in five US states this year, and it's likely to pass in Maine, Massachusetts, California, and Nevada. California's vote is particularly crucial given the state's population and the size of its economy.
Furthermore, a report from The Tax Foundation, a nonpartisan research group, estimated that the marijuana industry could generate up to $28 billion in tax revenue in the US if it were legalized at the federal level. The Tax Foundation also estimates that marijuana is a $45 billion industry in the US.
Marijuana stocks have also jumped in the lead-up to Election Day, trading as if most states will vote yes on legalization.
Innovative Industrial Properties, a marijuana real-estate investment trust, on October 17 filed to go public on the New York Stock Exchange. If approved, it would be the first publicly traded marijuana REIT.
Though marijuana is set to become a huge industry, many companies in the space still face unique challenges to doing business, including accessing payroll and benefits management companies as well as opening bank accounts and credit lines.