Canada: the government proposes a tax of 1$ per gram of cannabis

The Canadian government announced propose an excise tax of at least 1$ per gram of cannabis sold legally after legalization next July.

The motion, if passed, would apply a tax of 1$ per gram or 10% of the price, indexed to the selling price. This tax could be paid by the producer and incorporated into the final price of the product. In addition to this tax, the consumer would have to pay the equivalent of local VAT.

A gram of dried cannabis initially sold for 8$ would in fact be invoiced for 10.17$.

Revenues from these taxes would be distributed equitably between the federal government and the provinces. Taxes would apply to «raw» or dried cannabis, oils, seeds or clones for home cultivation.

Several discussions are underway on the subject. The 50-50 split of tax revenues from cannabis sales is at the expense of the provinces, which are responsible for enforcing the federal law and funding the future regulatory framework for cannabis on their territory. Cities, for their part, are asking to be included in the redistribution of revenues, for the same reasons.

On his side, Canopy Growth, one of Canada's leading cannabis producers, denounced the fact that the tax would affect both medical and recreational cannabis. In their press release, Canopy calls it an «unfair tax» on chronically ill Canadians, reinforcing the need for health coverage for medical cannabis patients.

Canadian citizens have until December 7 to submit their views on the proposed tax plan, which will be discussed at the next meeting of provincial and federal finance ministers on December 10.