A Yellowknife resident says the federal government’s proposed tax regime for legal cannabis is “hefty” and could be a turn off for people who are already familiar with black market prices.
The federal finance department Nov. 10 released a proposed excise duty framework for cannabis, which is set to be legalized next July.
In addition to GST and HST, it suggests adding an excise tax of $1 per gram of cannabis or 10 per cent of the sale price, depending on which is higher.
Excise taxes would be paid by manufacturers, not consumers, the document states, with tax revenues being split evenly between the federal and territorial or provincial governments.
“If the idea is to remove it from the black market … I don’t know,” said Kim MacNearney, a licensed medical marijuana user and cannabis consultant who helps others apply for medical use. “That seems pretty heavy, honestly, at the end of the day.”
She speculated the excise tax might not deter new consumers who have never bought marijuana from the black market before.
“But then there’s totally still going to be this other crowd that’s like, ‘Ya, I’ve been buying from my buddy for 10 years for $10 and I like that.”
It could also “chew away” at producers’ profits, she said.
“Federally speaking, the government needs to have a lot more suppliers and producers … and that doesn’t seem like a good incentive to get people on board more,” she said.
The excise tax would also be applied to medical marijuana, something MacNearney disagrees with.
“I am personally not a fan of that kind of attitude,” she said. “If you’ve been ascribed medically, then there’s a reason for that. A lot of people who use it medically, there’s a significant portion of them that are on disability and low income because they can’t work for those reasons.”
Some provinces aren’t too happy about the federal government’s tax plan either.
Last week, Alberta’s finance minister lambasted the idea that cannabis tax revenues be shared evenly with the federal government, suggesting instead that Alberta should keep it all.
But the GNWT didn’t have an official position on whether or not the proposed 50/50 split is fair when questioned about the topic Nov. 15.
“The GNWT is still considering the federal proposal for cannabis taxation and discussions between the federal, provincial and territorial finance ministers are ongoing,” stated Todd Sasaki, spokesperson for the Finance Department, in an emailed statement. “Until decisions are made, it would be premature to comment any further.”
The federal government is taking written feedback on the proposal until Dec. 7.
At the same time, the GNWT has been working on a legislative proposal for review by cabinet and a standing committee of MLAs, said Mark Aitken, assistant deputy justice minister, in a late October interview.
He anticipated at the time that a bill could be introduced in the February-March sitting of the legislative assembly.
“Realistically, we have to hit that timeline, because the assembly and the standing committees have to have an opportunity to review the bill,” said Aitken. “We have to have it enacted by June if we’re to have our scheme in place for the July coming into force of the federal legislation.”
A report outlining the GNWT’s general direction on cannabis legalization is expected to be released shortly, department spokesperson Sue Glowach confirmed.