With pot legalization staring to materialize a little more clearly out of the hazy horizon, number crunchers are starting to look at just how much money the industry could be worth.
And it’s not chump change.
A new report from CIBC pegs the potential windfall as high as $5 billion.
“Those are big numbers,” says David Brown, with Lift Cannabis. “I think people have been throwing around a lot of big numbers for a long time. Everyone knows that cannabis is a profitable industry.”
But Brown says that figure might be a little wishful. He says even if the industry brought in $1 billion it would still be a great haul.
That would put earings closer in line to Health Canada’s prediction of $1.3 billion.
“I think it’s also important to emphasize that the federal government has really emphasized that they don’t want to look at this is a a cash grab,” he says.
Brown emphasizes this is an extremely complicated issue, one that could take years to resolve.
“We are watching the government figure out how to legalize something that has been illegal for a century now.”
He says a recent court ruling regarding GST and medical marijuana sold through compassion clubs is a good example.
In the conclusion of a long-running case, the Federal Court of Appeals ruled the B.C. Compassion Club wasn’t exempt from charging GST on the pot it sold.
That’s because the marijuana was produced illegally; the rationale being why should an illegal producer be able to skip taxes, while a legal one couldn’t.
Brown says once legalization is ironed out a little better, questions around GST and medical pot should get clearer.
He says medical marijauna would likely be given a drug ID number that would let someone with a prescription be tax exempt.
While those who want to smoke for fun…
“I think we would most likely look at a system where you would see GST on recreational and and some kind of a sin tax.”