Canada’s bean counters are getting a new assignment: adding marijuana to the country’s official economic growth figures.
Statistics Canada said it will begin making estimates of current illegal production, sale and use of cannabis to provide a clearer picture of the “economic and social consequences of the legalization” expected by mid-2018. The agency will begin integrating the data into GDP accounts once the numbers go through their normal revisions in November 2019, the Ottawa-based agency said in a report Tuesday.
Prime Minister Justin Trudeau is pushing ahead with a plan to make marijuana legal through stores or home delivery by next July, saying the move is needed to cut out illicit producers and discourage sales to youth. While officials have said they only have very rough estimates of the size of the market, investors have swelled the market valuation of companies such as Canopy Growth Corp. beyond the billion-dollar mark.
“It seems pretty normal when you’re in Canada. It seems super not normal when you’re in the rest of the world,” Canopy’s Chief Executive Officer Bruce Linton said by phone. “We live in a country that’s leading the exit from the prohibition of cannabis.”
Statistics Canada says it will start with government health surveys to create estimates of consumption and production of non-medical marijuana. Some production of the drug for medical use is already legal in Canada.
The agency’s paper released detailed algebraic formulas of how it will measure spending on cannabis, based on estimates of price and the prevalence of consumption. To illustrate, if it finds one million people toke a gram a day at an average price of $8 per gram, expenditures would total almost $3 billion annually.
According to one estimate — from Canaccord Genuity Inc. — retail sales of recreational marijuana could reach $6 billion by 2021. Canada’s economy generates more than $2 trillion in output annually.
Statistics Canada will also develop a model to estimate domestic output, imports and exports of non-medical cannabis.
“There is strong evidence from health surveys and justice statistics that there is significant illegal production, distribution and consumption occurring in Canada and this has been the case for the last 50 to 60 years at least, but there are few if any related economic data that have been developed over this period,” Statistics Canada said in the report.
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