One of Canada’s major banks is placing bets that Canadians will be spending more on recreational cannabis than on liquor by 2020.

Canadian Imperial Bank of Commerce (CIBC) released a report this week that provided predictions of the recreational Canadian cannabis consumption, which it estimated would reach 800,000 kilograms over the next two years.

“We believe that by 2020, the legal market for adult-use cannabis will approach C$6.5 billion in retail sales,” the report said. “For context, this is greater than the amount of spirits sold in this country, and approaches wine in scale.”

Canada’s federal government is currently on track to legalizing sales and possession of marijuana, with implementation plans set for later this year. The report elaborated by saying that provinces would see the most benefits from cannabis sales, estimating over C$3 billion in generated income.

“Public revenue-generating opportunities like this come along once in a lifetime, and though provinces may claim otherwise, they are the big winners of legalization,” the report read. “We estimate that provincial governments will capture a stunning 70 [percent] of industry profits.”

Comparatively, CIBC sees private firms generating almost C$1 billion in earnings before interest, taxes, depreciation, and amortization (EBITDA) as “part of the shadow economy becomes legitimate business.”

On the medical side, Canadians currently consume around 60,000 kilograms of marijuana each year. However, that number has nothing on illicit sales of cannabis, the report says, referring to the former comparatively as a “drop in the bucket”.

Incorporating information from Statistics Canada, the report touched on demand by detailing that just less than 5 million Canadians spent around C$5.7 billion on cannabis in 2017 for both medical and recreational purposes. While still trailing behind the C$16 billion spent on tobacco and the C$7 billion spent on wine, cannabis expenditure topped the C$5.1 billion spent on spirits last year — all while still being considered an illegal substance.

The numbers also suggested that usage among Canadians has grown by 5 percent each year since the early ’60s.

Don’t forget to follow us @INN_Cannabis for real-time news updates!

Securities Disclosure: I, Olivia Da Silva, hold no direct investment interest in any company mentioned in this article.

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