Up to $1B a year in revenues estimated from legalized pot

Ottawa and the provinces and territories could have another $1 billion a year in tax revenues to split after pot becomes legal next year.

Liberal MP Bill Blair, former Toronto police chief and the government’s point man on legalizing marijuana, made public the federal tax proposal for legal pot Friday, kicking off a period of public consultations that ends Dec. 7.

That, Blair said, gives the government just enough time to solicit comments on the proposal so that federal, provincial and territorial finance ministers can discuss it when they meet in Ottawa Dec. 1011.

The plan would add an excise tax of $1 per gram of marijuana or 10 per cent of the final retail price, whichever is higher, with the revenues to be divided equally between Ottawa and the provinces and territories.

The final price, including provincial and federal sales taxes, would vary by jurisdiction, since the combined total is in some provinces is higher than in others. On an $8 gram of pot sold in Ontario, for instance, the final purchase price would be $10.17, with a $1 excise tax and $1.17 HST. In New Brunswick, it would be $10.35. Alberta, which has no provincial sales taxes, could see the cheapest pot in the country at just $9.45 total for an $8 gram of weed.

“I’m very comfortable that the level of taxation that has been determined as appropriate in this case achieves our goals of keeping the price sufficiently low to be competitive with an illicit market, while at the same time not creating an incentive for the consumption and purchase of this drug,” said Blair.

“It’s a matter of finding the right level of taxation and price in order to achieve both of those very important public purpose aims. I believe that the work that we have done sets a very appropriate level.”

Blair gave $1 billion a year as a very rough estimate of how much Canada and provinces stand to raise from the plan, although that number is at the high end of the scale, he warned, since so much depends on just how many people will end up buying marijuana once it becomes legal.

“We’re working very closely right now to determine what the size of that market will be,” he said, adding that determining the market is very difficult, but the tax will end up being between one-fifth and one-quarter of the final price, with tax revenues to be split 50-50 with the provinces and territories.

“The market is currently controlled almost 100 per cent by criminals,” Blair said. “It’s an illicit market. Quite frankly, they don’t share a lot of data on the size of their market, so right now we’re operating on estimates.”

The taxes would be levied on both on fresh and dried marijuana, pot-infused oils and seeds and seedlings used for home cultivation. Revenues would be used for public education, research, enforcement and other activities around the regulation and administration of legal pot.

The 50-50 tax revenue split idea has already rankled at least one premier — B.C.’s John Horgan — who complained that the provinces won’t be getting a fair share, considering they will be doing the bulk of the heavy lifting on legalization, including policing, distributing and regulating the sale of marijuana. attention from Queen’s Park, as the company’s largest shareholder remains Ontario. As of Friday, the province’s Liberal government had sold just over 50 per cent of Hydro One to other investors.

Hydro One included some of the effects of the OEB’s transmission rate decision in its third-quarter results, saying it had provided $55 million in “catch-up” revenue for the year. Quarterly revenue net of purchased power was up by 1.3 per cent, to $847 million, mostly because of higher transmission revenues brought on by the OEB’s rate decision, Hydro One said.

The revenues were tempered by lower energy use due to milder weather, in addition to a weaker return on equity caused by lower interest rates.

Meanwhile, Hydro One is still moving forward with an approximately $6.7-billion purchase of Avista, an energy company based in the northwestern United States. In its third-quarter results, Hydro One reported $18 million in Avista-related advisory expenses, making for $21 million in those costs for the year.

As part of the deal, which was announced in July, Hydro One issued approximately $1.5 billion in convertible debentures, “which were oversubscribed,” the utility said, “reflective of the market’s confidence in the company’s growth strategy.”