Regulations for marijuana sales should include taxes

In the absence of federal leadership on the issue, B.C. municipalities are lobbying for authority to regulate marijuana dispensaries. That is not all they should be pushing for.

If marijuana is to be available for sale in B.C., as it is in Vancouver, a system needs to be put in place to ensure sellers and buyers pay taxes.

Because of the ad hoc nature of developments relating to pot sales here, this crucial aspect of the enterprise appears to be falling through the cracks.

Lower Mainland municipalities want a national debate on the pot dispensaries, and recently submitted a resolution on the topic to the Federation of Canadian Municipalities, holding a convention in June.

A coalition of 33 Vancouver-area governments that has endorsed the resolution believes greater clarity is required on what regulations would be appropriate.

At present, confusion prevails. Federal Health Minister Rona Ambrose is calling on Vancouverarea governments to shut down the dispensaries even as the city schedules public hearings to solicit opinion on proposed rules and as dozens of dispensaries continue to operate freely.

The city has proposed restricting where the pot outlets can open shop — not near schools and community centres — and a requirement for a $30,000 licensing fee.

However, if the dispensaries are to be permitted to operate in accordance with municipal regulatory requirements, what is the justification for keeping them tax-exempt?

Such preferential treatment would be unjustifiable given that every other business in the city must pay its taxes, and is required to charge customers sales tax.

In Washington state, marijuana sellers pay a 25-per-cent excise tax to the state’s liquor control board. In addition, sellers submit to the state’s revenue department a business and occupation tax, based on gross receipts, plus revenue collected in retail sales taxes.

It is true. Washington, along with Colorado, Oregon and Alaska, has legalized marijuana for recreational use; whereas the federal government in Canada, which bears responsibility for drug policy, has not. Ottawa permits only medical marijuana sales by mail order.

If the dispensaries are going to operate in Canada, regardless of the federal legal vacuum, and pot sales are going to take place, why should the dispensaries get the bonus of tax-free status?

One of the main arguments used by proponents of legalization is the benefit to governments of new tax revenues, money that potentially could be used to advocate against drug consumption.

In Colorado, the state collected $44 million in such new taxes in 2014, the year marijuana legalization was implemented.

It is true it defies logic to tax illegal activity but the system currently being contemplated — a regulatory framework for sale of an illegal substance — equally defies logic.