Measuring Canada’s Cannabis Economy

Article by The Economist

StatCannabis Measuring Canada’s cannabis economy Recreational pot will soon be legal. Statisticians have to figure out how much it contributes to output

IF AN agency of your government asked whether you had recently smoked a joint and how much you paid for it, would you tell it? Canada’s statistics agency, informally known as StatCan, is about to find out what that country’s citizens would do. On January 23rd it will invite Canadians to disclose their cannabis habits anonymously through an app. Its nosiness is entirely professional. Canada’s government, led by Justin Trudeau, plans to legalise the recreational use of cannabis by July 1st. StatCan needs reliable data in order to incorporate the newly respectable consumer-goods sector into national accounts.

Ever since Mr Trudeau said during the election campaign in 2015 that a Liberal government would legalise marijuana, discussion has focused on who would be authorised to sell it and what level of government would get the money from cannabis taxes. Government departments in charge of health, tax, security and others are changing procedures and reassigning bureaucrats to prepare for legalisation.

StatCan has an especially tricky job. It has to estimate the contribution to the economy made by the production, distribution and sale of cannabis. To do that it must know what the cannabis economy looked like when lighting up was a crime. The last time Canada dealt with anything like this was in the 1920s, when prohibition ended and the Dominion Bureau of Statistics kept the national accounts.

“We can’t as national accountants just put in a number post-legalisation,” says Jim Tebrake, the StatCan official in charge of accounting for cannabis. That would make it look like the economy had got a sudden boost from activity that was already going on illicitly. To avoid that, the agency needs to publish data going back to 1961, the base year for the accounts. It will incorporate the data into the official figures once it is confident they are reliable. While Uruguay and several American states, including California, have legalised cannabis, Canada’s statisticians are using neither country as a model. Once Canadians can get legally bombed, measuring the worth of indulgence will get easier.

Just hunting for past data can be risky, as a researcher in Parliament’s budget office discovered. The legislature’s technology unit spotted that he was looking at weedy websites and amassing files of fragrant data and shut down his computer account. He had to persuade the in-house detectives that his work was legitimate.

Production is the most difficult part of the cannabis value chain to measure. “The producers are harder to find than the customers,” says Mr Tebrake. That is mainly because, unless they grow the stuff for the legal medical-marijuana market, they are mainly career criminals. In the United States, undercover agents sometimes collect data on production. Canada relies on information from police and border officials on seizures of cannabis. But those data depend on whether the traffickers or the police get lucky in a given year.

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