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Effect Of Marijuana Legalization

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How Marijuana Legalization Will Affect the Canadian Economy.



Cannabis, an illicit drug in most places, is the most widely used drug in Canada as well as in the world.  In Canada, it is legal only for medical purposes. Anyone caught possessing and trafficking cannabis for recreational purposes is considered a criminal under the current law. However, there are still facilities that sell marijuana, called ‘dispensaries,' which is not legally licensed by Health Canada (Ducatti Flister, 2012). These facilities receive cannabis from illegal suppliers who grow it. They then sell the cannabis without having it tested, and this makes it very unsafe and particularly risky to children who may accidentally consume it. They also end up not paying taxes because they are not legal.

Many risks come with the use of cannabis which ranges from safety to health risks. However, there are also numerous economic benefits that can be derived from the legalization of marijuana. In Canada, the local authorities have a job to keep ensuring that they reduce the distribution of illegal cannabis to avoid the adverse effects associated with it (Friese & Grube, 2012). There is a proposed Cannabis Act that is very strict in preventing illegal cannabis from being produced, distributed or sold. This act has a framework that ensures that only the people, with medical prescriptions, can possess marijuana.

This act has various functions. It controls the way youths can possess marijuana. It ensures the youth are shielded from enticements from different sources to use cannabis and serves appropriate punishments to the people who import or export cannabis. It also ensures that public health is well protected through the presence of high-quality products (Joffe & Yancy, 2004). Additionally, it provides access to marijuana for medical purposes only. Finally, it provides public awareness on risks caused by the use of marijuana for them to make informed decisions.

It is evident that this act mainly aims at protecting the young people from using cannabis. For adults who sell cannabis to young people or use the youth to commit any offenses related to marijuana, they face a penalty of at most fourteen years in jail (Monte, Zane, & Heard, 2014).Other policies that have been put in place to discourage the youth from gaining access or interest to marijuana include; packaging it in a non-appealing manner so as not to attract youths. Not selling marijuana using self-service vending machines and non-promotion of marijuana. The reason why the Canadian government is very keen on protecting the youth is that they are a vital part of progress and economic growth in the country. More production and consumption of goods will further improve the Canadian economy giving a lifeline to many other industries as a result (MCGUIRE, 2014). Similar to the case of Colorado which amended its laws to pave the way for the legalization of marijuana, Canada will benefit economically because of the new legislation which legalizes the drug.


The illicit drug dealers, fueled by the demand for the drug, started engaging in ways of supply which could cause harm to the citizens hence Canada saw a need of legalizing the drug. Legalizing marijuana benefited Canada from an economic point of view first in that it saved the taxpayer millions of dollars which were meant for enforcing the ban on the drug. New demand and supply of marijuana will add jobs to the Canadian economy and increase revenue for the country through various taxation programs (Ducatti Flister, 2012). The new industry of marijuana trade will help create the much-needed employment opportunities in the country.

Marijuana legalization in Canada would mean that it is used for recreational purposes as opposed to medical purposes only. This would require significant changes in the many laws that have been set up to discourage its consumption (Hajizadeh, 2016). Currently, a report from the University of Waterloo at the Propel Centre says that two percent of children in Canada between grades seven to twelve smoke marijuana daily (BRANNON, 2013). It has also been seen that many youths occasionally use the drug as it is reported that one in five students has tried the drug.

The majority of youths also believe that smoking marijuana is not as dangerous as smoking tobacco. Additionally, many of the students who were found to have smoked cannabis had also smoked cigarettes (Rich & Stingl, 2016). The statistics showed that the numbers were at ninety-two percent. This was an increase from when the study was last conducted in 1991 which was at sixteen percent (Hickenlooper, 2014). In the 1970s the number of people who used cannabis was low but it has now risen at a very high rate. Legalizing marijuana will result in improved healthcare in the country which will lead to pursuing of economic ventures which will result in an improved economy. The direct cost savings on health treatment will also redirect the funds to other sectors of the economy hence improving the overall health of the economy.

By legalizing marijuana, the government should find ways to regulate the market to protect people from excessive risk. The number of individuals in Canada, who can legally buy medical marijuana, has increased since the introduction of the Federal Commercial Access Program (Caulkins, Lee, & Kasunic, 2012). This program was introduced four years ago, but people registered to access medical marijuana increased substantially since.

The Canadian government introduced, in the year 2017, legislation to regulate and legalize cannabis before July 2018. Marijuana legalization is of concern to people who do not support such legislation due to the negative effects it brings about. Additionally, the wide spread use of cannabis among the youths is of growing concern (Hajizadeh, 2016).The concerns for cannabis possession outside the law have various penalties. Possession leads up to five years’ imprisonment; illegal production will lead to seven years in prison while trafficking may cause one to be jailed for life.

Despite all the negative impacts, marijuana has many positive effects that should be noted. There is much clinical evidence that supports the use of marijuana for medical purposes. Therefore, the government, the medical practitioners and the bodies that regulate the medical sector, are coming together in a bid to make policies that balance the needs of the patients. They also want to ensure people have information on cannabis about the health risks associated with diversion and misuse.

It is important to view how the legalization of marijuana has affected various American states economically. In Oregon, marijuana legalization proved to be a very lucrative move as it increased the tax paid to the government by a significant margin. Colorado also collected much money from the marijuana industry in taxes and revenue. The tax generated is used in public programs such as marijuana and other substance use regulation programs and the construction of public schools. This ensures that marijuana tax revenue is used in the management of any adverse effects brought about by its use.

Washington and Alaska are other states that legalized marijuana. They have experienced an influx of tourists who come in just to use marijuana for recreational purposes. These tourists bring about economic growth not just in the marijuana sector but also in other industries. The tourists stay in hotels, buy foodstuffs among other activities. In 2014, Colorado had higher revenue from the sale of marijuana than from gold mining. In 2015, marijuana brought in higher revenue than bakeries, sports’ venues, as well as family residential construction.


Decriminalization of marijuana is likely to have a myriad of positive effects on the economy. It would result in increased tax revenues. This is because people running marijuana facilities can be able to sell it freely and therefore pay taxes. Statistics show that very many people use marijuana in Canada for medical purposes and many more use it illegally. Legalization will result in high sales volumes of marijuana which will consequently result in more taxes being paid to the government. In the long run, the Canadian people will benefit as the government uses the derived taxes to bring about development in the country.

Colorado passed an amendment that would allow marijuana use for recreation purposes. In this regard, the government issued an arbitration to regulate the production, sale, and distribution of cannabis with a cultivation tax, a sales tax, as well as an exercise tax. Before marijuana was legalized, the projected sum of savings and increased revenue was at sixty million dollars to Colorado. In 2017, the statistics were expected to double and then the exercise tax per unit was expected to be increased.

Changes in consumption levels after the legalization of marijuana may be dependent on a variety of factors both endogenous and exogenous. The endogenous effects are not affected by price while the exogenous factors related to price. The endogenous factors include the ‘forbidden fruit effect.' Exogenous effects have to do with costs of production, the price elasticity of demand, and price levels. Under decriminalization of marijuana, the farmers and other producers can expand their production without fear and therefore benefit from economies of scale associated with increased production. As a result, this will reflect on the final prices which will be reduced and higher sales. This in turn leads to increased taxes paid to the government.

Price elasticity is defined as the percent change in quantity produced resulting from a one percent price change. If the change is high, this means that there is a high price elasticity of demand.  Therefore, reduction in price results in a higher change in marijuana that will be sold. With legalization, there is an expectation of a high price elasticity of demand that will result in higher sales revenues. Legalization will thus result in an increased demand for marijuana which will alternatively result in an increased supply, and when the producers take advantage of economies of scale, the price elasticity of demand will also increase. In the long run, this will result in high revenues which consequently bring in higher taxes to the government.

The costs spent on marijuana related arrests will be substantially reduced with the legalization of marijuana. The reduction will occur because people can now farm, process and sell marijuana legally. As a result, fewer people are arrested and prosecuted, and this is mainly for non-marijuana related cases. Consequently, this would mean that millions of dollars that would have been spent will now be saved.

In 2102, there were an estimated 1,552,432 arrests associated with drug possession in the USA. Of the total arrests, 48.3% were of marijuana users. The sellers and manufacturers accounted for 5.9% while 42.4% was from possession. In total, approximately 750,000 people are arrested in marijuana related incidences.  These are very high statistics relating to marijuana. Therefore, the costs that were being incurred in marijuana related cases cost the government a lot of money in legal and justice fees. The costs that will be saved with legalization include; prosecution and judicial costs, correctional expenditures, as well as police funds. At least twelve million dollars were estimated to be saved by the government with marijuana legalization. The saved funds could be used to carry out various government projects that would, in turn, generate income and create employment opportunities.


Marijuana legalization would mean that public health costs would be significantly reduced. Currently, there are very many illegal providers of cannabis all over Canada. These dealers sell marijuana that has not been tested nor cleared for sale. As a result, a majority of people who buy from them are risking their health. The use of untested marijuana can lead to marijuana poisoning (Caulkins et al., 2012). Consequently, the country’s economy would be negatively affected due to reduced productivity. Legalization of cannabis would, therefore, help to reduce all these cases and ensure that people gain access to high quality and safe cannabis. Cases of marijuana poisoning would be highly reduced and health charges substantially reduced leading to an improvement in the country’s productivity.

Legalization would also lead to increase in per capita income. This will be caused by an increase in individual revenue for people in the marijuana business. First, the growers will have a source of income and those selling marijuana in retail stores would also have a source of livelihood. The companies that process marijuana will also have higher incomes. These companies will have the ability to create job opportunities for unemployed people in the society. Therefore, this shows that marijuana legalization will massively improve the microeconomic sector by increasing households’ income.

It is evident that the job market will experience a boom with the legalization of marijuana. In Colorado, it is expected that at least sixteen jobs will be created that benefit other different businesses. It is also estimated that one dollar spent on marijuana sales results in an economic benefit of at least three dollars (Hickenlooper, 2014). Many youths are interested in entrepreneurship but lack the capital to start businesses. The legalization of marijuana provides opportunities which the youth can explore and create capital as well as sustain themselves. They could farm marijuana, sell it in retail, or work in processing plants.

Legalization will also lower crime levels in the country caused by people who use the drug. The decrease is people who used marijuana for recreational purposes before legalization will now be able to possess it without breaking the law. Additionally, people will have a source of revenue that they can use to provide for themselves and their families (Rich & Stingl, 2016). If this was not the case, people such as ex-convicts who may be unable to find jobs might result in crime to be able to survive. Reduced levels of insecurity will provide a conducive environment for other businesses to thrive hence ensuring proper economic growth.

There would also be improved traffic safety which would provide a favorable environment for business activities. Right now in Canada, if someone who is illegally transporting cannabis comes across the authorities, they are likely to get nervous. In case they realize that they might get caught, they may start driving recklessly to get away from the authorities (BRANNON, 2013). Consequently, this could lead to accidents. Legalization, on the other hand, will avoid such occurrences because dealers and users are not breaking the law by being in possession of cannabis. This reduces costs that may have been incurred in accidents and saves lives.

Past studies show that there is a correlation between the use of marijuana and a reduction in suicide rate levels. This is shown mainly in sample populations that are most likely to be using marijuana. People who support legalization say that marijuana can treat various things such as; depression, bipolar disorder among other disorders that have to do with people’s moods.  These are disorders that affect very many people. With marijuana legalization, costs that are spent on treatment of these disorders can be saved (MCGUIRE, 2014). The saved funds can, therefore, be used in projects that improve the country’s economy. Additionally, legalization will ensure that prescription pills are used for their medicinal purposes only, instead of being abused. This will occur when people use marijuana as opposed to prescription pills for recreational purposes. Consequently, there is a reduced misuse of resources.

Marijuana legalization has been seen to have different positive impacts to the individuals involved in this business, the society, the government, and the economy as a whole. However, there are many adverse effects related to this move. Currently, many people use cannabis illegally. If this drug was legalized, so many of these people might overuse it due to the freedom of use (Monte et al., 2014). This would lead to excessive usage of the drug which consequently would render these individuals physically and psychologically dependent on the drug. This high level of dependence may make people unable to function without the drug. Additionally, these people may also face the problem of marijuana poisoning. This could lead to the death of the addicts or other severe conditions. All these problems would lower economic growth.

This high dependence on marijuana may also lead to an increase in crime levels in the society. Whenever the people who are addicted to cannabis need the drug but lack money to purchase it, they may result to robbing other people to buy cannabis (Hajizadeh, 2016). This may create a sense of insecurity in the country hence discouraging smooth running of businesses. Consequently, the country’s economy may suffer.

Legalization may also lead to increased traffic problems. This may occur when people who are under the influence of marijuana drive. They may cause accidents which could even lead to their deaths of even the deaths of other innocent people. This leads to loss of people who would have helped in economic growth. Some studies have concluded that too much use of marijuana will lead to anxiety, schizophrenia, and depression among other disorders. If used very early in life and in large quantities, marijuana has been said to lead to permanent brain damage (Joffe & Yancy, 2004). This condition may occur especially when very young children use the drug for recreational purposes. It is imperative to note that medical marijuana is used to control some of these disorders especially anxiety. However, when used in much quantity, it could increase instead of control these negative effects. Therefore, the economy will be negatively influenced by marijuana legalization, when people become sick due to reduced productivity.


Marijuana legalization may also lead to a reduction in the educational achievements of teens. When teens become dependent on marijuana at a very early age, they will neglect their studies. The drug, therefore, robs young people of their ability to have a good education. It is therefore crucial for the government to ensure that young people are not exposed to drugs. Finally, these teens become adults who cannot even take care of themselves due to how negatively the drugs have impacted them (Ducatti Flister, 2012). They become a liability to society costing a lot of money to those who take care of them. Moreover, these teens are not able to work in society to aid in improving the country’s economy. When the drug is left lying around in the house, children may accidentally ingest it. Such situations are precarious because children have a fragile immune system and this could lead to serious repercussions. Much money is thus used to treat the children, whereas it could have been used in other productive activities.

It is therefore evident that marijuana legalization would bring about massive economic growth. It will increase employment opportunities in the country, therefore, resulting in increased GDP levels for the country and a higher per capita income (Friese & Grube, 2012). Additionally, the tax revenues for the government will also increase. These tax revenues can be used to set up other projects in the country that could be used to derive more income. The crime levels would also decrease considerably because of the increased opportunities to make a living. With proper management and regulation by the government, legalization of marijuana will bring more good than bad in the Canadian economy. It is, therefore, a step that the Canadian government ought to make, and it should also ensure that proper policies are put in place. With proper management and monitoring, the legalization of marijuana in Canada will significantly improve the economy.



BRANNON, I. K. E. (2013). Legalizing Marijuana: Money Over Minds. Regulation, 36, 16.

Caulkins, J. P., Lee, M. A. C., & Kasunic, A. M. (2012). Marijuana legalization: Lessons from the 2012 state proposals. World Medical and Health Policy, 4(3–4), 4–34.

Ducatti Flister, L. (2012). The Economic Case for Marijuana Legalization in Canada. Journal of Alternative Perspectives in the Social Sciences, 5(1), 96–100.

Friese, B., & Grube, J. W. (2012). Legalization of medical marijuana and marijuana use among youths. Drugs: Education, Prevention, and Policy, 20(February), 1–7.

Hajizadeh, M. (2016). Legalizing and Regulating Marijuana in Canada: Review of Potential Economic, Social, and Health Impacts. Int J Health Policy Manag. Int J Health Policy Manag, 5(58), 453–456.

Hickenlooper, G. J. W. (2014). Experimenting with pot: The state of Colorado’s legalization of marijuana. Milbank Quarterly.

Joffe, A., & Yancy, W. S. (2004). Legalization of marijuana: potential impact on youth. Pediatrics, 113(6), e632–e638.

MCGUIRE, J. O. (2014). What Are the Costs Associated with Marijuana Legalization? Occupational Health & Safety, 83(9), 74–78.

Monte, A. A., Zane, R. D., & Heard, K. J. (2014). THe implications of marijuana legalization in colorado. Jama, 313(3), 241–42.

Rich, A. K., & Stingl, A. (2016). Legalization of Marijuana: An Overview. Points of View: Legalization of Marijuana, 1


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