While Canadians are expected to spend billions on legal marijuana, governments won’t see a huge boost in tax revenues right out of the gate, warns Canada’s Parliamentary Budget Officer (PBO).

In a report released today studying the fiscal considerations of legalizing marijuana, Jean-Denis Fréchette suggests initial revenue for governments from taxation could be in the hundreds of millions of dollars, rather than billions.

But as the market matures, those revenues are likely to grow, according to the analysis. Fréchette expects production costs for the industry will decline and suggests governments could collect a portion of the cost savings.

There are many variables that affect revenue projections, from quantity consumed to price and competition from legal and illicit markets. The report estimates sales tax revenues could be $618 million at the outset of legalization, but that number will grow.

“As the legal cannabis market matures, the potential for government to capture fiscal revenues will grow,” it reads.

Source: http://www.cbc.ca/news/politics/marijuana-parliamentary-budget-officer-revenues-1.3830593