December 07, 2017 The Honourable William Morneau Department of Finance Canada 90 Elgin Street Ottawa, Ontario K1A 0G5 Re:
via email: firstname.lastname@example.org
Proposed Excise Duty Framework for Cannabis Products
The Cannabis Trade Alliance of Canada (CTAC), is an organization established to represent a broad range of cannabis industry participants. CTAC has been engaging governments across Canada, recommending policies to assist the drafting of regulations and legislation, and encouraging governments to leverage the existing knowledge base of the cannabis industry to create an inclusive, sustainable and transparent legalized structure. We appreciate the opportunity to provide comments on the proposed excise duty applied to cannabis products.
Taxation Structures The economic impact of legalizing Cannabis is very positive for the federal, provincial and municipal government and taxpayers. A proper taxation structure could potentially deliver billions of dollars in new revenue from the cannabis sector, funds that governments can reinvest in other areas including: •
public health care and harm-reduction (including mental health and addiction),
education and awareness initiatives, and
community infrastructure programs (such as the construction of public buildings and other community amenities).
New tax revenues would be complemented by the ability to reallocate law enforcement, correction, border and justice resources to more critically important tasks
Taxation on Me dical Cannabis CTAC believes that medical cannabis should be treated like other prescribed pharmaceuticals. This means: •
Zero-rated for GST/HST (not tax-exempt),
No provincial sales tax, and
No excise tax.
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The government has expressed concerns that tax differentials between medical and recreational cannabis will drive recreational consumers to the medical market. But, this ignores the fact that is quite difficult to obtain a prescription for medical cannabis from a doctor, wait times for delivery of prescribed cannabis can be lengthy, and the process can be inconvenient due to prohibition of brick and mortar retailers. Due to these factors, it is unlikely that recreational users will rely on the medical system, regardless of tax differentials. By way of example, figures from Colorado (a state with a population 5.5 million â€“ the size of BC) show that this is not necessarily true - recreational sales outpace medical sales by 400% (ie medical represents only 25% of the market): as at September 2017, state figures indicate $100.8 million in recreational cannabis sales, and $25.8 million in medical (based on extrapolations of data put out by the Cannabist: http://www.thecannabist.co/2017/11/09/colorado-marijuana-sales-september2017/92128/ Additionally, it should be noted that these barriers do not exist for more potent and addictive pharmaceuticals such as opioids or anti-depressants. Medical cannabis sales from Licensed Producers via mail order result in very tight inventory controls, which means that medical cannabis sales for tax filings will be both simple and achievable.
Taxation on Recreational (Adult-Use) Cannabis If the price of legal recreational cannabis is not competitive, the unregulated (illicit) market will likely continue to flourish. High levels of taxation can create a market opportunity for untaxed illicit suppliers. CTAC believes that an excise tax at a maximum of $1 per gram (or 10%) + GST/PST or HST is reasonable and sufficient. Provinces and municipalities should be dissuaded from imposing additional taxes. It is important that the federal government share a considerable portion of excise tax revenue with the provinces and municipalities. Thank you for allowing us to provide our input on this important policy matter. Kindest regards,
Rosy Mondin Executive Director Cannabis Trade Alliance of Canada
Published on Dec 9, 2017
Published on Dec 9, 2017
Submission to Finance Canada on behalf of the Cannabis Trade Alliance of Canada regarding the proposed excise duty framework for cannabis pr...