Feds, provinces cautiously optimistic they can reach revenue sharing deal on pot

The country’s finance ministers were cautiously optimistic a deal could be reached Monday on how to divvy up the tax proceeds from the eventual sale of legalized marijuana.

Provincial and territorial finance ministers met in Ottawa for a second day to discuss a range of issues — but the dominant topic has been negotiations on how they will share revenue from a federal excise tax on recreational cannabis.

On his way to the meeting Monday, Ontario Finance Minister Charles Sousa said the federal Liberal government argued at a working dinner Sunday night that it, too, will have costs. Ottawa also showed flexibility on revenue and costsharing issues, he added.

“I’d suspect there are a couple of provinces that are still holding out... They don’t want to find themselves caught in a position for the next two years where they’re underwater — nobody wants to be in that position,” Sousa said.

“But I think we’re getting pretty close.”

Part of the negotiations have been centred on the Trudeau government’s proposal to impose a cannabis excise tax of $1 per gram or 10 per cent of the final retail price, whichever is higher.

An initial federal offer of a 50-50 split with the provinces and territories was flatly rejected. The provinces and territories say they will face added expenses such as public-awareness campaigns, extra policing, busier court systems and increased road safety efforts.

Ottawa has since said it’s prepared to go further — as long as some of that extra cash goes to cities. The Federation of Canadian Municipalities wants a third of the revenues earmarked to help municipal governments handle administrative and policing costs.

Federal Finance Minister Bill Morneau said Monday he thinks a reasonable compromise can be reached on how to share a source of tax revenue that Ottawa has estimated could eventually climb to $1 billion per year.

“From a number of provinces, I had a clear sense that they were onboard and ready to move forward,” Morneau said on his way to the meeting.

“Like any negotiations, there’s going to be back and forth. I think we’re making progress.”