Canadian Federal Government Proposes Weed Tax of $1 Per Gram

The Canadian federal government proposes a weed tax of $1 per gram (plus GST/HST), or 10% of the final retail price, whichever comes higher.

The revenues are to be divided equally between Ottawa and the provinces and territories. Federal and provincial sales taxes would be applied on top of the excise tax. With the $1 excise tax and $1.17 in HST, you’re looking at spending $10.32 per gram of legal weed in New Brunswick. Because Alberta has no provincial sales tax, legal cannabis there may be sold the cheapest price at just $9.45 for an $8 gram of weed. The final price tag varies across the country due to the different sales taxes in various provinces.

Cannabis products of interest include both fresh and dried cannabis, infused oils, as well as seeds and seedlings for home cultivation.

Bill Blair

via The Star

Liberal MP Bill Blair, a former Toronto police chief, made an announcement public on Friday about the federal tax proposal for legal and recreational cannabis, launching a period of public consultations that would end December 7th, 2017. This, according to Blair, gives the government enough time to solicit comments about the federal proposal. Federal, provincial and territorial finance ministers are to discuss the details of the plan when they meet in Ottawa December 10th-11th, 2017.

“I’m very comfortable that the level of taxation that has been determined as appropriate in this case achieves our goals of keeping the price sufficiently low to be competitive with an illicit market, while at the same time not creating an incentive for the consumption and purchase of this drug.” – Bill Blair

Ottawa and the provinces and territories could have another $1 billion a year in tax revenues to split after cannabis becomes legal next year, Blair estimated. “The market is currently controlled almost 100 percent by criminals,” Blair said. “It’s an illicit market. Quite frankly, they don’t share a lot of data on the size of their market, so right now we’re operating on estimates.”

Rosalie Wyonch, a policy analyst with the C.D. Howe Institute, said the plan is reasonable and, with current market prices for cannabis taken into account, will result in a price tag that is competitive with the black market. Provinces who are considering a tax program higher than the Ottawa proposal could likely push the price of legal cannabis above street prices. Wyonch warned this would be a disadvantage to the provincial revenues and push enforcement costs up at the same time.

Federal Tax on Cannabis

via Globe and Mail

Provinces are Not Eager to Fall into Ottawa’s Cannabis Strategy

Ontario Finance Minister Charles Sousa said a 50-50 split of revenues is “not reasonable or sufficient” because there are incremental costs that provinces face that bigger than Ottawa’s. Enforcement, justice, road safety and public education as examples.

Manitoba Premier Brian Pallister said Ottawa wants to split the tax revenues but not the costs of legalizing pot.

British Columbia Finance Minister Carole James intends to talk to her provincial counterparts about the matter. “To look at a 50-50 split when we’re taking more of the share of responsibility here in B.C. just isn’t fair and certainly isn’t going to work for our province,” said James.