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BC not happy with Ottawa's plan to split tax revenues from legalized pot

Last Updated Nov 10, 2017 at 3:29 pm PDT

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BC feels the provinces will be doing most of the work once pot is made legal in 2018

The federal government is proposing a 50-50 split on revenue

VICTORIA (NEWS 1130) – If you plan to buy legal pot next year, you need to be prepared to pay taxes as well, to the tune of at least $1 for every gram, plus GST.

The proposed federal tax scheme is open to public comment until December 7th as Canada prepares to legalize the drug by Canada Day 2018.

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The plan would add an excise tax of $1 per gram or 10 per cent of the final retail price, whichever is higher, with the revenues to be divided equally between Ottawa and the provinces.

“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,” says Liberal MP Bill Blair, the government’s point man to legalize weed.

“It’s a matter of finding the right level of taxation and price in order to achieve both of those very important public purpose aims. I believe that the work that we have done sets a very appropriate level.”

GST will be also be applied, so if the retail price of a single gram of pot is $8, consumers would pay a $1 excise tax and $1.17 in GST for a total of $10.17.

The taxes would be levied on both on fresh and dried marijuana, pot-infused oils and seeds and seedlings used for home cultivation.

The 50-50 tax revenue split idea has already annoying at least one premier — BC Premier John Horgan — who complained the provinces won’t be getting a fair share, considering they will be doing the bulk of the heavy lifting on legalization, including policing, distributing and regulating the sale of marijuana.

The discussions are still ongoing, said Blair, noting that the consultation period will end just before the provincial and territorial finance ministers gather Dec. 10 and 11 in Ottawa to sit down with federal counterpart Bill Morneau.

BC says no thanks to 50-50 split

BC’s Finance Minister Carole James says provinces deserve a bigger cut because they will be doing the bulk of the heavy lifting when it comes to policing, distribution and the regulation of all medical and recreational marijuana sales.

LISTEN: NEWS 1130’s Marcella Bernardo speaks with Carole James


However, she’s not willing to put a number on what she thinks would be a fair split. “I know we’ll be engaging in those conversations across the country. The provinces will be talking with the federal minister. We meet in person in December so I expect this will be on the agenda if it’s not resolved by then, so I’ll wait and look at those dialogues and give a chance for that conversation.”

She’s hoping for more help to handle the changes. “The 50-50 split doesn’t recognize the provinces [which] really bear the responsibility for making sure we do this right and we need the resources to be able to do that.”

Once pot is legalized on July 1st, nation-wide tax revenues are expected to be as high as $1 billion a year.

Local activist takes issue with marijuana taxation proposal

Marijuana advocate, Director of Sensible BC and head of the Vancouver Dispensary Society Dana Larsen says tacking on an additional $1 per gram is a bad idea.

“I have nothing against GST, or PST, and things like that being applied to cannabis, but this dollar a gram tax seems very arbitrary, and will artificially increase the price of cannabis,” Larsen says. “There aren’t many other products that are taxed in that manner, based just on the product itself and adding a dollar to every unit. This means that if cannabis gets down to three or four dollars a gram, we’re looking at a 25 to 30 per cent tax on it, which is just inappropriate in my opinion.”

He believes it could also help the black market persist as well as make it challenging to establish a legally regulated system.

“You add extra taxes, like a sin tax or something, when there’s some kind of society problem that this product creates, and you want to tax it to help cover the cost of that problem. But with cannabis there simply isn’t anything like that. In fact, there’ll be less social and health costs around it.”

Larsen adds the taxation doesn’t come as a surprise but had hoped decision makers would have changed their minds. “We want the price of cannabis to be low, so that people can have access and use it, and so that it encourages them to switch from other substances and to use cannabis instead.”

He doesn’t see any way to challenge the tax, but says he’ll continue to run his dispensary so long as it’s needed. Larsen adds he isn’t particularly worried about his business because of this tax, but says it’ll be interesting to see whether dispensaries are integrated into the legal system or if they’ll be replaced by “corporate cannabis.”