JACOB GOLDSTEIN, HOST:
When the Canadian government said it would legalize recreational marijuana in the summer of 2018 some people thought, I'm going to have an amazing party. Others worried about what to tell their kids. James Tebrake had a different thought.
JAMES TEBRAKE: We have, like, one chance at collecting as much information as possible about a very interesting and important issue.
GOLDSTEIN: That issue - what happens to a country's economy when a popular drug goes from being illegal to being legal. Tebrake is in charge of measuring Canada's economy, of calculating the country's GDP and trade numbers. And when he heard marijuana was going to be legal in Canada he knew immediately that he was about to observe this amazing natural experiment in drug legalization. And he knew he needed to figure out everything he could about Canada's marijuana economy now while recreational marijuana is still illegal.
I'm Jacob Goldstein, and this is THE INDICATOR, Planet Money's quick take on the news. Today on the show, our hero goes on a journey. And by hero, I mean the director general of Statistics Canada. And by goes on a journey, I mean tries to figure out how to add weed to Canada's GDP.
(SOUNDBITE OF MUSIC)
GOLDSTEIN: GDP stands for gross domestic product. It's supposed to measure all the goods and services that a country produces. And it is the most basic measure of any national economy. James Tebrake knew right away that the basic thing that he had to do to understand the economic effects of marijuana legalization was to calculate marijuana's contribution to Canada's GDP. And that required this series of steps. The first couple steps were actually the easiest because health researchers had been studying them for decades.
How many people in Canada smoke marijuana?
TEBRAKE: About 4.9 million out of...
GOLDSTEIN: Out of how many total?
TEBRAKE: ...Population of around 36 million.
GOLDSTEIN: And that's - so that's - what? - 1 in 7.
TEBRAKE: Yeah. Yeah.
GOLDSTEIN: How much do they smoke?
TEBRAKE: So our estimate given all the different things is around - I know this is kind of a bit weird number, but about 770 metric tons. So we're on the...
GOLDSTEIN: Now, that's for all of Canada.
TEBRAKE: That's for all of Canada.
GOLDSTEIN: (Laughter).
Next, James needs to figure out how much Canadians paid for that 770 metric tons of weed they bought last year.
TEBRAKE: So now it's a little tricky because traditionally to get a price we would go to a retail store, scan the product, get a nice price...
GOLDSTEIN: Sure. Sure.
TEBRAKE: ...We're talking about. That doesn't work in this world.
GOLDSTEIN: So James and his team had to turn to some less conventional data sources.
TEBRAKE: There was one - it's a website called thepriceofweed.com (ph).
GOLDSTEIN: Priceofweed.com. It's just a private website. When I checked it this morning it had an ad promising, quote, "the one-hitter perfected." Does not scream reliable data source. But James says thousands of people have gone to the site. They've entered what province they live in, what grade of weed they bought and how much they paid. So he and his team pulled that data. They combined it with a few other sources and came up with an average retail price.
TEBRAKE: So if you take those, you know, 4.9 million people, the tonnage, and you multiply it by the price, you get about $5.7 billion of spending.
GOLDSTEIN: That is 5.7 billion Canadian dollars of spending, by the way - about 4.6 billion U.S. Now, there is one last thing that James needs to figure out because remember; he's calculating gross domestic product, the value of everything Canada produces. So he needs to know how much of that 5.7 billion was spent on marijuana produced in Canada. He needs to figure out Canada's imports - and, for that matter, exports - of weed. And this is the hardest part.
TEBRAKE: There's no producer we can actually go to and say, hey, how much did you produce and how much did you send abroad?
GOLDSTEIN: Yeah, we just want to figure it out 'cause we're trying to calculate GDP.
TEBRAKE: Yeah. We're just - (laughter) we're just a bunch of statisticians trying to calculate GDP. Yeah.
GOLDSTEIN: So James and his team look at how much marijuana gets seized at the border going into Canada, coming out of Canada. And they also get law enforcement officials to estimate how much weed is being grown in different parts of the country, how many people are growing weed in their basement. Also, they need to figure out, how much weed can you grow in a basement? James knows that there is a lot of uncertainty here. But his best guess is that almost all the weed being consumed in Canada is produced in Canada, and that Canada is also exporting a fair bit.
So James goes through all of these steps, and finally he gets to the bottom line. That bottom line is today's indicator - $6 billion. James figures marijuana contributes about $6 billion a year to Canada's economy. In the spirit of today's show, by the way, that is Canadian dollars. It's about 5 billion U.S. dollars. And James says that is a lot. Marijuana actually contributes about as much to Canada's economy as beer.
(SOUNDBITE OF DROP ELECTRIC SONG, "WAKING UP TO THE FIRE")
GOLDSTEIN: James is still trying to get better data before legalization happens this summer. Just last week, his team launched an anonymous online survey that people can fill out about how much they pay for weed. It is essentially the official Canadian government version of priceofweed.com but without the ads for one-hitters.
Copyright © 2018 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.
NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.