Canada is becoming the second country in the world to legalize cannabis today, following in the footsteps of Uruguay who gave the drug the green light back in 2013. Supporters claim the move will help eliminate much of the black-market drug trade and help bring about new medicinal advances. The move is somewhat of a leap into the unknown, however, with the rules governing the use of legal cannabis different in Canada’s territories and provinces. There could be serious cross-border implications as well. Even though the U.S. has legalized the green stuff in nine states, it remains a crime at federal level.
The legal framework of legalization is also shrouded in uncertainty and confusion. For example, only purchases from official stores will be legal while sales of several ounces between friends could result in fines or jail time. That is also true when it comes to sales of the drug to the minors; an 18-year old selling a few ounces to a 17-year old could result in the former getting 14 years in prison. One certainty is that the Canadian cannabis industry is packed with potential. Even though it remains unclear on how much pot will be needed to meet the country’s demand, Canadians have been spending big on the stuff for years. According to Statistics Canada, people spend over $5 billion CAD on cannabis every year.
Expenditure has been rising steadily since the 1960s with dips in the early 1990s and between 2005 and 2010. The cost of cannabis has also fallen considerably in recent years with the price gram declining by more than 10 percent in the past two years. Spending is expected to increase even further after legalization and despite the unknowns involved in the experiment, investors will be eyeing the Canadian cannabis market intensively.
Chart source: Statista.