The Senate voted on an amended legalized cannabis bill on Thursday passing it with a vote of 50 to 36 with one abstention. (Jim Young/ REUTERS)

Cannabis in Canada, a $7 billion dollar industry in 2019

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A new report says Canadians could spend up to $7 billion on cannabis products in 2019 once recreational use becomes legal.

The study indicates that cannabis use could increase because of legalisation.

However, the report indicates that even after legalisation, the illicit sales segment would survive with about $1 billion still within the black market.

Still, the law should be a success in gaining control and regulation according to most experts.

Bill Bogart (LLM) is a law professor emeritus at the University of Windsor and author of “Off The Street: Legalizing Drugs”

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Canada’s Senate is to vote today on it’s amendments to the government Bill to legalise recreational use of cannabis. If accepted, the Bill would go back to the House where they would vote on the amended Bill.

Professor emeritus and author Bill Bogart (LLM)

While there is some contention, it is generally thought the Bill will pass and that recreational cannabis use –with certain restrictions and government control- will be legal later this year.

The report by the firm Deloitte is entitled “ A Society in Transition, an industry ready to bloom”

While Holland decriminialised personal cannabis use, Portugal decriminalised all drug use, and certain U.S. states legalised recreational use, Canada will be the first G7 country to legalise cannabis on a national scale.

In the report, Deloitte indicated that the burgeoning market would be roughly made up of over $4 billion in legal recreational sales, medicinal use would account for an addition amount of approximately $1.5 billion, and the black market would hang on for about $1 billion in sales..

Huge greenhouse of marijuana plants. The cannabis industry is poised to become big business in Canada with legalisation. A study says it could be worth about $7 billion in 2019 Photo: Getty Images

Both professor Bogart and the report say the success of legalisation depends on the government offering product at a competitive price to black market sales, as well as the simple fact of availability so that people have easy access to the government controlled sales outlets.

Quality is also a factor.

The report says about two thirds of current regular users will likely switch to legal sources once this becomes an option.

Deloitte 2018- A Society in Transition

It also says the age group of 35-54, currently not users, may become occasional users upon legalisation.

Currently provincial liquor boards control the distribution and retail sale of alcohol, and will also control cannabis sales.

Interestingly, the report suggests that cannabis may to some extent become a substitute for beer, spirits, and wine.  Thus all alcohol categories are expected to be negatively affected in terms of revenues for governments, liquor companies,and retailers, especially in Quebec where grocery and convenience stores offer wine and beer products.

A Liqour Control Board of Ontario store. Provinces control the very profitable sales of alcohol and will control cannabis sales. As cannabis sales rise, the report suggests these may supplant alcohol sales to some extent and decrease alcohol revenues to the province and to manufacturers. Photo: David Donnelly-CBC

With variations regionally, the average Canadian price on the illegal market for marijuana is roughly $8.24 per gram and the survey suggests users would be willing to pay slightly more for legal product, again roughly 30 cents to a dollar more per gram, but there are limits.

While price can be an issue, respondents said the added advantage of safety is a concern which may push them toward the legal product.

The report also shows a desire for “edibles” or cannabis in non-combustible forms, but this will not be available for at least a year after legalisation.

Noting that about 100 years ago, alcohol was viewed negatively, even banned, the report concludes that eventually cannabis will become accepted in society as “normal” just as alcohol has become.

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