Free Trial

MNI DATA ANALYSIS:Legal Cannabis Unlikely To Impact Canada GDP

By Yali N'Diaye
     OTTAWA (MNI) - The inclusion of the cannabis industry in Canada's economy
will move the value of GDP upward but it is unlikely to change GDP growth rates,
given the small size of the industry, according a Statistics Canada analyst.
     In addition, some of the activity is already indirectly accounted for, such
as power consumption of black market facilities.
     "Due to the relatively small GDP values compared to the overall economy,
its inclusion in the core measure of Canada's GDP is unlikely to impact growth
rates," Ian Donegan, economist at Statistics Canada, told MNI in an email.
     As such, the legalization of cannabis on Oct. 17 is unlikely to affect the
Bank of Canada's overall growth projections in any meaningful way - both in
level and trajectory. The central bank will publish its updated economic
forecasts on Wednesday, when a 25 basis point rate hike of the overnight rate
target to 1.75% is widely anticipated.
     "Cannabis will appear in most components of the accounts including
household spending, taxes, inventories, imports and exports and investment for
the expenditure based GDP, and as compensation of employees, gross operating
surplus and mixed income (for the incomes derived from illegal activities) for
the income based GDP," the analyst said. "In the monthly industry GDP, cannabis
activities will appear in the agricultural and retail industries."
     Statistics Canada estimates the size of the cannabis industry at C$3.0
billion as of the end of 2017, on par with the beer industry and larger than the
tobacco industry. 
     Spending on legal cannabis is expected to range from $816 million to $1.0
billion in the fourth quarter, while purchases of illegal cannabis are
anticipated to range from $254 million to $317 million, about 24% of the total
market.
--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com
[TOPICS: MACDS$,M$C$$$]

To read the full story

Close

Why MNI

MNI is the leading provider

of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.

Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.