Canada’s economy is doing remarkably well despite the global recession, but this could all change if California legalizes marijuana:
This November, in an effort to increase tax revenue, California will hold a referendum on whether or not to legalise the cultivation and use of marijuana. If passed, the change in law would be devastating to the Canadian economy, halting the flow of billions of dollars from the US into Canada and eventually forcing hundreds of thousands into unemployment.
Over the past 20 years, Canada has developed a substantial and highly profitable marijuana industry that is almost completely dependent on the US market. Between 60 and 90% of the marijuana produced domestically is exported to the US via cross-border smuggling operations. It’s exactly like the alcohol prohibition of the 1920s, only far more sophisticated and more profitable. The establishment of a legal industry based in the US would likely cripple these exports overnight.
Due to its contraband nature, it’s difficult to determine exactly how much marijuana contributes to the Canadian economy, but a number of agencies and economists have estimated that it is in the range of $20bn per year (£12.5bn), making it Canada’s single largest agricultural product. The bulk of production is based in British Columbia, where it employs a labour force of 250,000, roughly one in 14 adults. Although strict financial controls are often credited as the source of Canada’s economic resilience, it’s worth pointing out that marijuana production often insulates communities from larger economic phenomenon.