Big 5 Bank in Canada Weighs in on Cannabis Legalization

avery shenfeld
Avery Shenfeld, Chief Economist at CIBC World Markets

CIBC World Markets, the capital markets division of one of the leading banks in Canada, published its Economic Insights report on 1/28 that included some perspective on the pending cannabis legalization.  ‘Growing Their Own Revenue: The Fiscal Impacts of Cannabis Legalization’ (see pages 7-8 or click here for just this article),  authored by Avery Shenfeld, Managing Director and Chief Economist of CIBC World Markets Inc., explores the potential revenue generation for the government based upon sales forecasts ranging from as low as $3 billion to as high as $10 billion.  The more aggressive forecast is based upon an extrapolation of the experience in Colorado and applying it to Canada’s larger population.

The CIBC report  begins with ‘The Winter of Discontent’, which conveys the firm’s reduced economic outlook.  Shenfeld and his team now expect full year economic growth in Canada (as measured by GDP) to be 1.3% compared to their prior forecast of 1.7%. While Shenfeld doesn’t mention it, and Trudeau is motivated by more than just potential tax revenue, the weakness in the Canadian economy is yet another reason to legalize cannabis, which can not only boost tax revenues but also create some economic growth

In October, I posted a presentation I had made on the Canadian market along with slides, sharing a forecast of a combined medical and legal market of $2.3-$5.7 billion by 2019.  I believe that extrapolating the Colorado experience is a bit aggressive, as tourism as well as cross-border purchases from residents of nearby (not yet legal for medical or adult-use) states may inflate consumption, as Shenfeld acknowledges.  Whether one agrees or not with the CIBC forecasts, it’s very exciting to see on of the “Big 5” in Canada weigh in.

NCV credits Lauren Sundstrom of VanCityNews for bringing this to our attention
Exclusive article by Alan Brochstein, CFA
Alan Brochstein, CFA
Based in Houston, Alan leverages his experience as founder of online communities 420 Investor, the first and still largest due diligence platform focused on the publicly-traded stocks in the cannabis industry. With his extensive network in the cannabis community, Alan continues to find new ways to connect the industry and facilitate its sustainable growth. At New Cannabis Ventures, he is responsible for content development and strategic alliances. Before shifting his focus to the cannabis industry in early 2013, Alan, who began his career on Wall Street in 1986, worked as an independent research analyst following over two decades in research and portfolio management. A prolific writer, with over 650 articles published since 2007 at Seeking Alpha, where he has 70,000 followers, Alan is a frequent speaker at industry conferences and a frequent source to the media, including the NY Times, the Wall Street Journal, Fox Business, and Bloomberg TV. Contact Alan: Twitter | Facebook | LinkedIn | Email

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