What Will Legalization Mean for Canada?

The Liberal government of Prime Minister Justin Trudeau tabled their legislation legalizing marijuana in Canada on 420, or April 20th, commonly known as Stoner's New Year's eve. There are many factors to be considered in the legalization of recreational marijuana use in Canada.

canadians protesting for weed
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Canada Takes On Recreational Marijuana

The Liberal government of Prime Minister Justin Trudeau tabled their legislation legalizing marijuana in Canada on 420, or April 20th, commonly known as Stoner’s New Year’s eve..

There are many factors to be considered in the legalization of recreational marijuana use in Canada, but let’s begin with some history.

According to a Time magazine article, the origins of 420 can be traced to a small town just outside of San Francisco:

The most credible story traces the date to Marin County, Calif. In 1971, five students at San Rafael High School would reportedly meet at 4:20 p.m. by the campus’s statue of chemist Louis Pasteur to partake.

That explanation makes sense as a start. Time continues to outline how 420 entered popular culture.

A brother of a group member apparently knew Grateful Dead bassist Phil Lesh, so the band is said to have helped popularize the term. On Dec. 28, 1990, Deadheads in Oakland handed out flyers reportedly inviting people to smoke “420” on April 20 at 4:20 p.m—and one got in the hands of Steve Bloom, a former reporter for High Timesmagazine, an authority on cannabis culture. Once the publication published the flyer in 1991 and continued to reference the number, it became known globally for its association with marijuana.

Will Marijuana be Good for Canada?

That depends on a number of factors. The first of these factors is the potential to increase government revenue. The Trudeau government has not been discussing the financial aspect of marijuana legalization. Maclean’s addresses the revenue issue in a piece on legal weed:

The federal government made no commitments on how it plans to tax marijuana, or perhaps split the revenue windfall with the provinces.

With the Canadian government remaining quiet on the revenue issue we look south for guidance. MarketWatch recently discussed the situation in Colorado in 2016:

The state of Colorado pulled in nearly $200 million in tax revenue last year thanks to its $1.3 billion in marijuana revenue.  

Provincial & Municipal

The Edmonton Journal provided a tone-deaf proposal to spend all of the extra money raised by marijuana taxes given the huge provincial deficit:

Investing 100 per cent of tax revenue into health services may prove to be a lofty ambition, but the suggestion a cannabis-funded revenue stream should be directed into a special pool that would give addictions and health services first dibs before being doled out to other services is not unheard of.

Alberta’s NDP Premier was uncharacteristically quick to temper expectations for vast amounts of new spending resulting from marijuana legalization:

Notley said the province has been looking at states like Colorado, which has already legalized marijuana, and is considering some of the pros and cons of legalization. “It’s not the cash cow people think it is. There’s a lot of costs associated with it,” said Notley.

It can only be hoped that Notley recognizes a major cost would be retailing through a government agency of some kind. The cost savings associated with private liquor stores will hopefully be a guide on that front. Private retailers are certainly the best way to go. Maclean’s makes it clear that the logistics of the sale of marijuana in Canada will be left up to the Premiers:

Retailing and Health

A lot of major decisions—including exactly how recreational marijuana will be retailed—are left to the provincial governments.

There are public health and safety concerns with legalized marijuana. The Globe and Mail discuss potential mental health issues arising from greater access to marijuana:

“We’re saying, ‘please keep the public-health focus front of mind as this legislation is unrolled,’ ” said Gail Beck, the clinical director of youth psychiatry at The Royal, a psychiatric hospital in Ottawa. “Lots of people think this is harmless.”

One top-of-mind concern: The potential for addiction to marijuana, especially among teens and young adults. “We know that 1 in 7 teenagers who start using cannabis will develop a cannabis-use disorder, which is significant,” said Christina Grant, a professor of pediatrics at McMaster University in Hamilton.

Rampant Mental Illness

Cannabis has also been linked to certain mental illnesses. The drug’s relationship to depression and anxiety is still up in the air; the science has not established a causal relationship between the two. In other words, it’s not clear if people smoke pot because they are depressed and anxious or are depressed and anxious because they smoke pot.

The Globe also looks at public safety issues:

“Most of the health concerns associated with cannabis apply to heavy users. But occasional tokers can wreak havoc if they get behind the wheel while high. “Cannabis impairs your ability to safely drive a vehicle,” said Amy Porath, the director of research and policy for the Canadian Centre on Substance Abuse (CCSA.) “It impairs your reaction time. It impairs your ability to multitask and pay attention.” Police across the country are currently piloting a roadside saliva test to see if it adequately detects cannabis-impaired drivers.”

Maclean’s briefly addresses the public safety concern. Specifically, they talk about testing for high driving and when the police will be able to conduct such tests:

“They will, though, be allowed to demand a saliva sample, to test for drugs, only when they “reasonably suspect that a driver has drugs in their body.”

Marijuana legalization can be a good thing for Canadian society. The ongoing criminal status of the drug has lead to many decent citizens unnecessarily having criminal records. If the system is run properly tax revenues should help reduce our large federal and provincial deficits. Deficit reduction should be a priority for the increase in revenue after reasonable expenditures are made for mental health and public safety.


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Burt Schoeppe

Burt is a dedicated CPA based in Edmonton. When not at work assessing financial competencies he can be found cheering for the Oilers or the Redskins. In terms of the economy, he advocates for fiscal responsibility at all levels of government.

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