Citation

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Title: Canadian Legalization of Cannabis reduces both its cash usage and 'Black' Economy

Author(s): Jonathan Ashworth and Charles A Goodhart

Publication Date: January 2019

Keyword(s): Black Economy, Canada, Cannabis and cash

Programme Area(s): Monetary Economics and Fluctuations

Abstract: The Canadian Government legalized Cannabis usage on October 17th, 2018. During the same month, primarily in the week before and after such legalization, the amount of cash in circulation fell quite materially, in contrast to the rises typically observed in previous years. A key driver is likely to have been Cannabis users switching from cash payments for illegal purchases to using standard recordable electronic payments for their purchases, which have now become legal. The legalization of Cannabis should ultimately reduce the size of the Underground economy by around 4 or 5 percent, with a much bigger decline likely in the black economy.

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Bibliographic Reference

Ashworth, J and Goodhart, C. 2019. 'Canadian Legalization of Cannabis reduces both its cash usage and 'Black' Economy'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13448