Province isn’t counting on pot income in budget

Sask. hopes legalization will be revenue neutral in first year: Moe

The Saskatchewan Party government says it will not have a revenue line item for any taxes stemming from the legalization of cannabis later this year.

Premier Scott Moe told delegates at the Saskatchewan Urban Municipalities Association (SUMA) convention his government does not know what the revenues or expenses of legalization will be.

He said there are “a lot of unknowns” and that for the coming year, the province won’t be looking at any revenues from marijuana sales, but are hoping to at least be revenue neutral in the short term.

Even if the federal government delays legalization until after July, it is likely the province will see some tax revenue from legal cannabis sales before the end of its next fiscal year in March 2019.

What is unclear is if those revenues will outweigh costs associated with legalization, such as helping municipalities prepare police forces.

Either way, any projections of what those numbers might be won’t be included in the April 10 budget.

SLGA Minister Gene Makowsky told reporters there are too many unknowns — such as how many people in the province use cannabis, and how many people will migrate from the black market — to quantify projections.

“It is very difficult to pinpoint that, and for me to announce extreme ballpark numbers, I hesitate to do that,” Makowsky said.

But there are ballpark numbers out there.

One economic study pegged the entire marijuana industry in Canada as being a roughly $23-billion market.

A 2017 study from the Johnson Shoyama Graduate School of Public Policy noted hemp production has increased drastically on the Prairies in recent years, and that the growing conditions of the Prairie region are ideal for producing the highest-quality hemp food product.

Author Kathleen Thompson wrote, “Saskatchewan and its adjoining provinces are uniquely positioned to profit from the global hemp market.”

A 2016 report from the federal Parliamentary Budget Office projected up to seven million Canadians could be consuming cannabis by 2021, and sales tax revenues across the country could vary between $62 million and $488 million.

The province has largely maintained it has an awareness of the economic potential of legalization, but so far has focused on the establishment of a licensing regime for the sale and distribution.

On Wednesday, Makowsky noted the opportunities related to hemp and elsewhere related to legalization.

“We have obviously the best farmers in the world, the most arable land in the country and so we’re the envy of most jurisdictions,” he said.

He also pointed out Saskatchewan is the only province with no government monopoly when it comes to wholesale distribution of marijuana, because that is being left to the private market.

“That’s an opportunity for anyone that wants to invest in our province, and that’s I think the biggest thing there,” Makowsky said. “It’s very difficult to compete against a government monopoly, so there is excitement from people who want to become wholesalers, producers and retailers because they don’t have to compete with the government in the wholesaling, for example, that’s happening in the rest of Canada.”

NDP interim leader Nicole Sarauer has been critical of the province’s approach to legalization, saying the Sask. Party government is “dragging its heels” by not trying to capitalize on economic opportunity, or putting in place basic regulations such as the legal age of consumption.

“There is a real economic opportunity that’s being wasted here in terms of our ag sector. Instead of having these discussions and having these proposals, the Sask. Party is dragging their feet and what we’ve been hearing is that potential businesses, potential entrepreneurs, are looking to other businesses for the economic opportunity because the province is taking so long,” she said.

We have obviously the best farmers in the world, the most arable land in the country and so we’re the envy of most jurisdictions.