Canada: cannabis sector generates $15 billion in taxes and 151,000 jobs since legalization
Despite 2021 being a challenging year with layoffs and losses affecting most companies in the country, the legal cannabis industry in Canada has had a significant economic impact since the end of prohibition
By João R. Negromonte
Since Canada regulated adult use of cannabis in 2018, the country has created over 151,000 new jobs in the sector and $15 billion in direct or indirect tax revenue for the government. This is according to a report by Deloitte - a leading firm in audit, consulting, and financial and tax advisory services.
In total, between 2018 and 2021, the cannabis industry contributed $43.5 billion to the country's economy, with:
- $4.4 billion invested directly in the economy by companies
- $29.3 billion from "indirect" economic contributions
- $9.8 billion in "induced" contributions
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According to Deloitte, "indirect" economic contributions are those generated in sectors like construction and manufacturing as a result of the cannabis industry, while "induced" economic contributions are defined as consumer spending resulting from wages earned in cannabis-related jobs.
The report also noted that direct economic impacts were greater than indirect ones, due to significant capital expenditures in construction and modernization activities.
Tiago Zamponi, a columnist for this portal, lawyer, and sales director at Molecule, a Canadian cannabis beverage company, states that:
"In times of pandemic, where many companies had to close their doors and people became unemployed, receiving an injection like this into the economy and generating this number of jobs shows the potential of the cannabis market in the country. Remember that 75% of the revenue from this area stays in the states and 25% goes to the federal government."
Zamponi also highlights that there were initial projections errors about the industry before legalization, but over time, after the sector self-regulated, signs of progress reappeared.
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However, a negative point, according to another study by the University of Toronto, showed a lack of diversity in executive positions in this sector, where 72% of directors identify as white men, while only 16% identify as Black. The other 12% did not know or did not want to comment.
Another noteworthy topic was the environmental impact that the cannabis industry has had. There were 5,184kg of carbon emissions released into the atmosphere for every kilogram of dried flowers produced. Additionally, approximately 6.1 million kilograms of cannabis packaging were sent to landfills from 2018 to 2019 alone. These are significant numbers considering the investments made in sustainability in recent years in the country.
Rishi Malkani, a partner at Deloitte who leads the firm's Canadian cannabis practice, stated in an interview with Bloomberg: "Our hope with this report is that people realize that the industry has done much more than just provide (licensed producers) with $4 billion in retail access and, despite the negatives, the market contributes to the country's development".