Study indicates legal marijuana could generate $675 million in 2018

A new analysis says governments can grab recreational-pot proceeds away from criminals – just don't expect an early windfall from legalized weed.

The study, to be released Tuesday by the C.D. Howe Institute, estimates legalized cannabis would generate about $675 million in 2018 in combined federal and provincial revenue through existing sales taxes.

But if authorities want to raise even more cash in the early days of legalization through additional taxes, they risk undermining their stated priority of squeezing out organized crime.

The study says governments have to choose at the outset between minimizing the black market and a large amount of revenue – and can't do both.

The report also suggests that pricing legal pot too high would allow the black market to continue to flourish.

If prices stay too low, it says, governments could be seen to be encouraging its use.

The study comes as the Trudeau government prepares to introduce legislation Thursday to begin the process of legalizing pot.