PM talks about federal excise tax on legal pot, sharing revenue

OTTAWA — Prime Minister Justin Trudeau is proposing to levy a federal excise tax on recreational marijuana once it becomes legal next July, with the provinces and territories receiving half the revenue.

Under a federal proposal put to premiers during a first ministers meeting Tuesday, each gram of pot would be subject to an excise tax of $1 on sales up to $10 and a 10 per cent tax on sales of more than $10.

However, premiers argued that provinces will foot the lion’s share of the cost of regulating and enforcing the new regime and should, therefore, get the lion’s share of the revenue.

Trudeau said the level of taxation on marijuana and revenue sharing are still matters under negotiation with the provinces. He acknowledged that there will be “significant new costs” associated with legalizing pot and said he’s open to provincial arguments that they’ll bear the brunt of them.

Still, he emphasized that the goal of legalization is not to make money.

“Our goal from the very beginning on the legalization and regulation of marijuana was not to make profits, to bring in tax revenue,” Trudeau told a wrap-up news conference following a daylong meeting with provincial and territorial leaders.

Rather, he said, “all first ministers are fully aligned” on the goal of keeping marijuana out of the hands of kids and out of the control of criminal gangs.

Ontario Premier Kathleen Wynne said it’s not simply a matter of sharing any federal tax revenue with provinces. She noted that a number of municipalities have told her they will face some new costs as well.

Any taxes imposed on marijuana will have to be sufficiently low to keep the price low enough to force the black market out of business, said Nova Scotia Premier Stephen McNeil.

Consequently, he said: “I don’t think we should run out and start spending tax dollars based on cannabis.”

No one should think legalization means governments will “hit the motherlode,” agreed Quebec Premier Philippe Couillard.

He argued that pricing of marijuana will be a balancing act: if it’s priced too low it will encourage use; if it’s priced too high, it will keep the black market thriving.

Trudeau and the premiers sat down for about 90 minutes Tuesday morning with Indigenous leaders. While they were generally pleased to have an opportunity to air their particular concerns, the Indigenous leaders said they’ll continue to push for full inclusion in first ministers’ summits.

“There are still these historical barriers for Indigenous inclusion within multilateral conversations in this country,” said Natan Obed, of the Inuit Tapiriit Kanatami, adding that sometimes provincial and territorial governments “don’t want to give up power” to Indigenous peoples.

Isadore Day, Ontario regional chief for the Assembly of First Nations, dismissed the first ministers’ summit as “nothing but just words.”

“We were shuffled out of the room again.”