Governments took in $186M in pot taxes in 51/2 months of legalization in Canada
Canadian federal and provincial governments took in $186 million in tax revenue from the sale of pot in the first five-and-a-half months following legalization, according to new Statistics Canada data.
The tax earnings came from both excise taxes and general taxes on goods and services (GST), and were distributed almost evenly between the two kinds of taxes.
Between October and the end of March, provinces came away with excise tax revenue totalling $79.1 million, while the federal government earned $18.8 million. Federal GST in that same time period came to $35.5 million, while provincial tax earnings from the sale of cannabis was $52.7 million.
The government charges an excise tax of 10 per cent on the sale price of cannabis, or $1 per gram, whichever is greater.
Provincial governments reaped the bulk of this revenue due to a pre-legalization agreement that saw 25 per cent of excise tax revenue going to the feds, and the remaining 75 per cent to the provinces. The federal government has previously proposed a 50/50 revenue split but received significant pushback from provinces.
Early data showed revenue from excise taxes increasing on a quarterly basis due to stronger sales by licensed producers to retail distributors, according to Statistics Canada. The agency predicts that excise taxes will continue to rise in the second half of the year, as more stores start opening nationwide.
Growing sales led to a rise of 68.1 per cent in GST revenue for governments between the last quarter of 2018 and the first quarter of 2019.
These figures are the first glimpse into pot-related government revenues since Canada legalized recreational pot on Oct. 17.
Due to the “bumpy” rollout last fall, these first government tax figures are lower than expected, said the Conference Board of Canada’s economist Robyn Gibbard.
“However, we think that as the kinks are worked out, governments can expect strong growth in revenues from cannabis sales going forward,” she said in a statement.