Provinces, Ottawa to start debating price for legal pot

OTTAWA — Governments from across the country will meet next month to debate a key question about Canada’s eventual recreational-marijuana market — how much should users pay for their pot?

Federal Finance Minister Bill Morneau said Monday cannabis taxation will be on the agenda when he meets with his provincial and territorial counterparts. Morneau said the Trudeau government has begun designing a taxation regime — but he insisted the top concerns for Ottawa remain getting weed out of the hands of young Canadians and dealers on the street.

“Taxation will follow those principles, so we will be thinking about how we can ensure that the taxation doesn’t generate a black market,” Morneau said.

“We will constantly be looking at how we can ensure that we get criminals out of the market and protect youth in the market. That’s our goal.”

He’s been adamant that maximizing federal revenues will not be the priority when it comes to pot and he’s suggested the feds favour keeping prices competitive in order to wipe out illegal activity.

A recent C.D. Howe Institute report found 90 per cent of the black market would disappear if pot cost $9 per gram, projecting $675 million a year in federal and provincial revenues if governments only applied existing sales taxes.

Last fall, the parliamentary budget officer projected 2018 sales tax revenue for Ottawa and the provinces combined to be as low as $356 million and as high as $959 million.

Provinces and territories have been busy since the Trudeau government tabled legislation last month to legalize and regulate recreational pot use. Ottawa’s goal is to make it happen by July 2018.

Quebec Public Health Minister Lucie Charlebois said in an interview last week that the province is looking at its taxation options, but that it needs more information from Ottawa. “We’ve got to see what the federal government is going to do,” said Charlebois, who added the cost of legal pot must be competitive with street prices.

Alberta Justice Minister Kathleen Ganley said in a statement this month she has asked Ottawa for more information on the tax regimes for recreational pot because the federal legislation did not include details. “The end goal must be to limit the black market as much as possible and taxation cannot drive the price of the product too high if we are to achieve this goal,” Ganley said.