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How Has The Legalization Of Cannabis Affect The Economy Of Canada

On October 17, 2018, Canada officially became the 2nd country in the world and the first developed nation to have legalized the possession and recreational use of cannabis by adults. Owing to this legalization, Canada has seen a slow but steady rise in its economic growth charts. Since it is the only developed country to have a regularized market for cannabis products, Canada has become the global center point for high-quality commercial marijuana. Considering the positive economic impact of cannabis on Canada’s economy, several states in the US have also followed in its footsteps, and many other countries plan to follow suit.

In this article, we will discuss how the legalization of cannabis has fared in Canada and impacted the country’s economy.

Increase in Tax Revenue

According to the latest data revealed by Statistics Canada, the cannabis industry contributes around $8.16B to Canada’s national economy. By February 2020, it had contributed a sum of nearly $3.96B to the country’s Gross Domestic Product (GDP). In terms of percentage share, this was a 215% rise in the GDP since its legalization in 2018. 

Before the legalization of pot, there were no regulatory procedures to oversee its sale, and hence, its transactions were not part of the government’s tax net. However, legalizing the cannabis industry allowed the government to collect tax revenue from its sale, all while keeping the substance out of the hands of underage youth. As per the official government policy, a tax levy of $1 per gram or 10% of the sale price of marijuana is imposed, depending upon which one is higher. That has resulted in an additional earning of nearly $800 million for the Canadian government annually. 

Before its legalization, all the cannabis was being smuggled and sold by drug peddlers through illegal means. Hence, they were not taxed. Now that registered companies are dealing with the sale and purchase of marijuana, it is much easier for the government to tax them. 

The regulation of the cannabis industry has also brought about a massive boost in employment. The government levies a certain percentage of tax on the salaries of employees working in the cannabis industry. All this has led to a massive increase in the country’s total earnings. 

The Rise Of E-Commerce 

In the past decade or so, the world has witnessed the exponential growth of the e-commerce industry. Most people nowadays prefer to buy stuff online instead of visiting a physical store. Due to the COVID-19 pandemic, the popularity of e-commerce websites has skyrocketed, and rightly so. 

Like any other retail product in today’s day and age, recreational cannabis is also sold online in large amounts. Those living in Ontario and other provinces can order cannabis products in bulk with the click of the mouse, such as from an online Ontario cannabis store. Users can find and order a wide range of cannabis strains available in the market. Whether they are Indica strains, Sativa strains, Hybrid strains, or perhaps mix and match, there is a product to match their needs.

Even before cannabis became legal in Canada, there was a stigma associated with its recreational use. Unfortunately, this notion is still somewhat persistent amongst the general population. Due to this, most users prefer to buy cannabis online instead of visiting brick-and-mortar stores. Simply speaking, a brick-and-mortar store does not provide a buyer the same anonymity that an online store does. Thanks to the legalization of cannabis in Canada, the e-commerce industry has seen a steep spike in its revenue. 

Reduced Government Spending

Since cannabis has become legal in Canada, the government can expect to experience a sharp decrease in its expenses against drug-related criminal activities. With the decriminalization of the possession of recreational cannabis, the number of drug traffickers and gangs may reduce significantly. Consequently, drug-related offenses will also go down. 

The illicit marijuana trade that once provided organized crime an impetus could see a decline too. The legalization is creating a positive economic impact by eroding the illegal marijuana market’s share. All these factors can play a massive role in saving the Canadian government a lot of money regarding law enforcement costs. 


Being the only developed country to have legalized cannabis, it may not be long before Canada becomes a tourist hotspot for cannabis lovers due to its pro-pot laws. The majority of these tourists would be from countries where cannabis is still illegal. Combined with the scenic beauty of the country and its cannabis-friendly policies, Canada is undoubtedly a paradise for tourists looking to have a good time. This influx of tourists can provide an added boost to the already skyrocketing economy of Canada.

From a native point of view, it is safe to say that the legalization of cannabis has mostly had a positive impact on the country. Both in terms of economy and law enforcement, Canada is definitely on the right track. The robust black market for cannabis continues to fade slowly but gradually, making the legal market for cannabis rise slowly and contribute heavily to the economy.

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