Canada earned $186 million in excise and general taxes on goods and services directly related to cannabis sales during the legal market’s first five and a half months, according to figures from Statistics Canada. The federal government saw $19 million from excise taxes and $36 million from goods and services taxes while provincial governments pulled in $79 million in excise revenues and $53 million from goods and services taxes.
Cannabis products in the nation are taxed $1 per gram or 10 percent of the pre-tax transaction price; throughout Canada, general taxes on goods and services range from 5 percent in Alberta, to 15 percent in the Atlantic provinces.
In the first quarter of the year, cannabis-derived excise taxes increased 12.4 percent from the fourth quarter of 2018, while general taxes from cannabis-related goods and services rose 68.1 percent.
Brock University business professor Michael Armstrong called cannabis taxation a “tradeoff,” noting that high taxes lead to an increased illicit market.
“Where they do have legal retail, there are lots of taxes that have been piled up – every level of government has tacked on a tax. That makes it really difficult because the legal retailers can’t compete with the black market.” – Armstrong, to Global News
In April, Statistics Canada reported that both the legal and illegal markets have seen a price jump of 17 percent post-legalization, from a combined average price of $6.85 per gram to $8.04 per gram. The average illicit per-gram market price was $6.37 while the highest price for legal cannabis online was $9.99 per gram and $10.73 at retail shops.
Cannabis retailers in Canada will be allowed to start selling edibles, topicals, and concentrates this October but the tax rates for the products has not been announced. In the federal budget proposal, the rates would be based on THC content which is capped at 10 milligrams per package for edibles, and 1,000 milligrams for concentrates and topicals. A Deloitte study published earlier this month suggested that the “alternative cannabis products” market could be worth $2.7 billion annually, with edibles driving $1.6 billion of those sales.
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