When you look closely at the projections for recreational marijuana demand once pot is legalized in this country, you have to wonder what some of the analysts are smoking.

The accounting firm Deloitte came up with a headline-grabbing figure of $22.6 billion a year for the Canadian pot industry. That would mean every adult in the country spending nearly $800 annually on weed and related products, and would be more than total annual retail booze sales: beer, wine and spirits combined.

A senior economist at CIBC World Markets extrapolated from Colorado's sales figures to come up with a $10 billion estimate of the Canadian demand for legal cannabis, and projected provincial and federal governments could rake in $5 billion per year in tax revenue.

More cautious analysts are trying to rein in expectations, projecting that Canadians will actually spend less on marijuana than they do on footwear ($7.4 billion last year, according to Statistics Canada).

"I don't think the numbers are that high," said Chris Damas, editor of The BCMI Report, a stock market newsletter. "Many people who write about cannabis have a vested interest in promoting the industry."

Ontario is considering a retail price for marijuana in the range of $10 per gram. (Darryl Dyck/Canadian Press)

Damas says the "most independent" report on the marijuana market has come from the Parliamentary Budget Officer. That report, issued last November, estimates annual national demand for recreational pot at 650 to 690 tons, for a total retail market of $5.5 to $5.8 billion.

The Ontario government has been reluctant to make public any figures about projected marijuana demand or the likely value of the retail market, leading to wild speculation.

Ontario pot market: $1.6 to $2.3 billion

The Parliamentary Budget Officer's projections would suggest $2.1 to $2.3 billion in retail sales in Ontario.

Another rough estimate can be done based on the first province to announce a recreational marijuana supply agreement. Last week, New Brunswick announced two deals for a total annual supply of nine tonnes (9,000 kg) of recreational weed.

"I expect 9,000 kilograms will represent the bulk of what demand will be in New Brunswick," said Mark Zekulin, president of Canopy Growth Corp., headquartered in Smiths Falls, Ont. It is contracted to supply four tonnes of pot to New Brunswick.

Ontario is 18 times the size of New Brunswick. Assume a retail price of $10 a gram, do the math, and it suggests annual sales worth around $1.6 billion in Ontario.

The figure of $10 per gram for recreational marijuana is "the typical average retail price that exists out there today," said Zekulin. "Will that be the retail price? Will it be a little higher? A little lower? We don't know."

Reports that hype the size of the recreational pot market are based on overestimating consumption once legalization occurs, says Damas. Some of these reports have predicted as much as 40 per cent of Canadian adults will use legalized weed.

"People who say that so many adults will be users frequently of cannabis really are skirting the limits of credibility," said Damas in an interview Wednesday with CBC News.

The retail sales tax on marijuana in Colorado is set at 15 per cent. (David Horemans/CBC)

The most recent Canadian Tobacco, Alcohol and Drug Survey suggests 3.6 million people aged 15 and over used cannabis in the previous year, about 12 per cent of the population. Figures from the states of Washington, Oregon and Colorado suggest somewhere between 15 and 20 per cent of adults are using legalized pot.

Some of the pot market analysts take figures from Colorado, where pot became legal in 2014, and multiply it by seven to project demand and revenues in a country the size of Canada. But that could overestimate the market, because the state was (and still largely is) an island of legal weed in a country where most states continue to criminalize.

Observers found pot tourism has driven a significant amount of Colorado's demand, so the state was selling a lot more pot per person than its population was actually consuming. With legalization happening across Canada at the same time, and visitors from the U.S. unlikely to risk carrying any pot back across the border, it's unlikely pot tourism will drive revenues vastly higher.

The marijuana market in Canada is expected to behave like every other commodity, with supply, demand and pricing all having an impact, making it difficult to predict the economics of it all amid so many unknowns. Putting a flood of new supply on the market after legalization could actually drive down the street price as illicit dealers cut prices to compete. .

Those market forces are why government officials repeatedly say they want to price pot low enough that it wipes out the illicit market, yet high enough that it discourages consumption among young people.

Mark Zekulin is president of Canopy Growth Corp., the largest producer of medical marijuana in Canada, headquartered in Smiths Falls, Ont. (CBC)

Premier Kathleen Wynne said Monday she is "very concerned" about getting that balance right.

The pricing challenge and the limited demand are why marijuana is not expected to become a huge cash cow for government.

If Ontario applies HST to pot, on retail sales in the range of $1.6 to $2.3 billion per year, it's looking at annual tax revenue of $130 to $180 million. That's barely one-tenth of one per cent of the provincial budget.

Colorado's tax take: $20 million/month

Ontario's bigger potential for pot revenue is almost certainly to come through its monopoly on retailing. The government will make wholesale deals with suppliers but can then mark up the retail price as it sees fit, and reap the profits.

"Similar to what the LCBO does now with markups on alcohol, we're working on that with respect to cannabis," Finance Minister Charles Sousa told reporters Wednesday at the Legislature.

Colorado publishes monthly figures on its revenues from marijuana taxation and licensing. So far in 2017, three years into legalization, it's taking in an average of $20 million US a month. Its retail sales tax on marijuana is 15 per cent.