Cannabis sales to top hard liquor by 2020, but there will be 'many losers' - From Financial Post

Cannabis sales to top hard liquor by 2020, but there will be 'many losers' - From Financial Post
Cannabis sales to top hard liquor by 2020, but there will be 'many losers' - From Financial Post
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Cannabis sales could soon eclipse hard liquor sales in Canada, according to a new report by The Canadian Imperial Bank of Commerce analysts, with provincial governments, rather than private companies, expected to reap the most benefit.

Legal recreational marijuana sales could hit $6.5 billion by 2020, topping the $5.1 billion Canadians spent on spirits in 2017 and approaching $7 billion spent on wine, according to the report released Tuesday.

“The bulk of the value generated from this industry will accrue to Canada’s provinces. In fact, we estimate that provinces will generate over $3 billion of income, either in the form of earned profits or taxation revenues,” the CIBC analysts John Zamparo, Prakash Gowd and Mark Petrie wrote in the report titled, Cannabis: Almost Showtime.

“The provinces will hold all the cards when it comes to distribution… In fact, we estimate that provincial governments will capture a stunning 70 per cent of industry profits.”

In contrast, private companies “will generate nearly $1 billion in EBITDA (earnings before interest, taxes, depreciation and amortization),” the authors estimate, “as part of the shadow economy becomes legitimate business.”

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