TD predicts marijuana to cause GDP to shoot up like a weed

Bank says pot-related trade will provide one-time boost of $2 trillion to economy

CHRIS FOURNIER

Canada’s measure of gross domestic product will get a boost after the legalization of recreational marijuana on Oct. 17 adds as much as $8 billion to the country’s economy, according to Toronto-Dominion Bank.

TD says cannabis-related trade will provide a one-time lift to the nearly $2 trillion domestic economy, prompt- ing the bank to raise its growth forecast to 2.2 per cent for 2018 and 2019 — from its June outlook for 2 per cent growth this year and next.

TD, in its Canadian Quarterly Economic Forecast published Tuesday, said absent this influence, “underlying momentum will likely be closer to the 2 per cent mark.”

The bank cautions that the increase in real (inflation adjusted) GDP is an accounting illusion because some of the cannabis-related trade already existed in the economy, but wasn’t formally captured in most measures of output.

TD added that “this amplified high in the growth outlook should thus be discounted when taking the pulse of the economy.”

In light of the lift from cannabis trade accounting, TD raised its fourth-quarter growth forecast to 2.9 per cent, from 2 per cent previously.

The report by authors including chief economist Beata Caranci said a smaller lift would follow in the next quarter. The technical changes, coming at the end of the year, would “flatter” the annual growth figures for 2019, TD said.

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