Tax revenue from legal pot could hit $5 billion each year, CIBC says

Call it Prime Minister Justin Trudeau’s secret stash.

A new report from CIBC World Markets says Canada’s federal and provincial governments could reap as much as $5 billion annually in tax revenues from the sale of legal marijuana.

CIBC economist Avery Shenfeld crunched the numbers using current estimates of Canadian recreational pot consumption, the revenue experience in U.S. states that have legalized, and other factors – such as prevailing “sin tax” rates on alcohol and tobacco.

1:11 Trudeau talks ‘two elements’ involved in legalizing, controlling and regulating marijuana

The Liberal government has promised to legalize, tax and regulate marijuana and has made MP Bill Blair, the former Toronto police chief, the lead on investigating a new regulatory model.

Trudeau maintains that legalized pot will not be a cash cow, and that all revenues will be used to address public health and addictions issues.

The bank report suggests there will be a sizeable bump in government revenues from the eventual legal sales, but says the cash will not enough be to make government deficits simply go up in smoke.