While the initial Canadian cannabis tax framework was revealed on Nov. 10, 2017, provincial leaders and industry stakeholders renounced the proposed 50-50 split of cannabis taxes and so federal, provincial and territorial finance ministers went back to the drawing board, announcing the revised Canadian cannabis tax plan on Dec. 11.
According to the revised plan, 75% of Canadian cannabis tax will go to provincial and territorial governments for the first two years and 25% will go to the federal government, with an annual cap of C$100 million in cannabis excise tax revenue placed on the federal government and any excess beyond that returning to the provinces and territories.
“We have taken action on international tax evasion and money laundering, and we are moving forward with a better approach to cannabis and a stronger CPP. I look forward to continue building on this productive partnership in the months and years ahead,” said Finance Minister Bill Morneau in a press release.
Some provincial and territorial finance ministers have made it known that the revised cannabis tax agrement isn’t perfect.
“Manitoba’s not confident this will be adequate to cover our costs,” said Manitoba Finance Minister Cameron Friesen, noting that his province may have to create and implement an additional provincial tax to cover all of the startup costs of legalization, as reported by Bloomberg.
Considering Canadian cannabis tax is expected to hit C$400 million annually and that there are some yet-to-be-determined expenses for provincial and territorial implementation of legalization, the finance ministers have acknowledged that the 75-25 split of cannabis tax revenue trumps the originally proposed 50-50 split.
“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,” said Alberta Finance Minister Joe Ceci, as reported by CBC News.
Federal, provincial and territorial Finance Ministers will revisit the revised Canadian cannabis tax plan at their meeting in December 2018, at which point recreational cannabis will have been in operation for five months and all parties involved will have a better understanding of the market’s landscape.