Ottawa Agrees To Share 75% Of Cannabis Tax Revenue With The Provinces

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UPDATE: Canada’s federal and provincial governments have agreed on how weed tax revenue will be shared. Ottawa will now hand over more than half of the total tax revenue coming in from legalized recreational cannabis.

A total of 75 percent of what could grow to about $1 billion annually. The federal government also agreed to a $100-million cap on its share of tax revenue—the rest will go to the provinces and territories. Finance Minister Bill Morneau suggested it should be evenly divided. Meanwhile, Alberta Finance Minister Joe Ceci says the two-year deal still won’t cover provincial costs of legalization. “We’re going to have costs that need addressing, and we’re not sure what those are, so today’s arrangement is much better than the one they proposed earlier,” Ceci told reporters.

 

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The finances ministers met Sunday to start discussions on the 50/50 split from the initial plan, and within 24 hours the provinces racked a “W” in their column because they will bear the more significant brunt of the expenses associated with the move toward legalization. Some of those costs include programs to keep citizens safe, train police, and secure leases on properties that will eventually become privately-owned dispensaries (for provinces that are selling cannabis privately).

As planned, the excise taxes on adult-use cannabis will top out at $1 per gram, or 10 percent of the sale price—whichever is higher.

Producers will be taxed similarly to those producing alcohol and tobacco. The end products—fresh and dried cannabis, cannabis oils, seeds, and seedlings intended for home cultivation—will also be taxable under GST/HST.

The federal government estimates about $400 million in excise taxes will be collected from the first year of cannabis sales, which means the provinces would net about $300 million.

Canada’s eventual retail marijuana market has been estimated to be worth $3.7 billion to $5 billion.

 

December 12, 2017

by Parker Wallace

Profile photo of Parker Wallace
Parker is a cannabis enthusiast to the core who shares a keen interest in listening to what others have to say and understanding what’s important to them. Those who know Parker know that his passion for health and wellness runs deep, and his love of Canada even deeper!

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