With a standard sales tax placed on legal cannabis, Canada would garner approximately $675 million ($507 million US) annually.
According to the report from the C.D. Howe Institute, “applying only federal and provincial sales tax (GST/HST, PST) results in over 90 percent of the marijuana market being regulated and $675 million in annual revenue”. The report notes that “Any increase in taxes beyond this level serves to increase the share of the black market and generates little additional revenue.”
The Institute breaks it down like this; “With the regulation of marijuana, the government has a choice to make: either legitimize the market or generate large revenues, not both.”
It will soon be known how exactly the government plans to regulate and tax cannabis, as Prime Minister Justin Trudeau has stated that they will release their plans for legalization this Thursday. It’s expected that the proposal will take effect around July of 2018, and will allow possession of up to 30 grams. Beyond that, it’s unknown what the government’s plans are.
Projections estimate that 4.6 million Canadians will consume about 655 metric tons of marijuana in 2018.
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