Breaking News - Tariff Support - The Chamber is your source for Tariff Updates. Check out our page for the latest Tariff Resources, SUpport & Events
Peterborough + Kawarthas Chamber of Commerce
  • About Us
    • About Us
    • Contact Us
    • Board of Directors
    • Staff Directory
    • Careers
  • Events
    • Calendar
    • Host a Chamber Event
    • Monthly >
      • The Business Exchange (TBX)
      • ChamberAM
      • Not-for-Profit Group (NFP)
    • Annual >
      • Luminary Awards
      • Seniors Showcase
      • PK Excellence
    • Campaigns and Connections >
      • Sales Lead Network
      • 26 Coffees
      • #lovelocalptbokawarthas campaign
    • 26 Coffees Program
  • Membership
    • Join Us
    • Benefits >
      • Chambers Plan
    • Profile and Sponsorships
    • Resources
    • Members Only
  • News
    • Voice of Business Podcast
    • Voice of Business
    • The Business Beat
    • Subscribe to e-Newsletter
  • Resource Hub
  • Directory
  • Advocacy
    • Policy Resolutions
    • Advocacy at Work
    • Advocacy Wins
    • Subscribe to e-Newsletter
  • Breaking News - Tariff Support
    • Updates
    • Resources
    • Support
    • Trade Analytics
  • About Us
    • About Us
    • Contact Us
    • Board of Directors
    • Staff Directory
    • Careers
  • Events
    • Calendar
    • Host a Chamber Event
    • Monthly >
      • The Business Exchange (TBX)
      • ChamberAM
      • Not-for-Profit Group (NFP)
    • Annual >
      • Luminary Awards
      • Seniors Showcase
      • PK Excellence
    • Campaigns and Connections >
      • Sales Lead Network
      • 26 Coffees
      • #lovelocalptbokawarthas campaign
    • 26 Coffees Program
  • Membership
    • Join Us
    • Benefits >
      • Chambers Plan
    • Profile and Sponsorships
    • Resources
    • Members Only
  • News
    • Voice of Business Podcast
    • Voice of Business
    • The Business Beat
    • Subscribe to e-Newsletter
  • Resource Hub
  • Directory
  • Advocacy
    • Policy Resolutions
    • Advocacy at Work
    • Advocacy Wins
    • Subscribe to e-Newsletter
  • Breaking News - Tariff Support
    • Updates
    • Resources
    • Support
    • Trade Analytics

The dollars and cents of cannabis...

9/26/2018

 
Picture
Author: Ryan Greer, Director of Infrastructure & Transportation Policy, Canadian Chamber of Commerce
As of October 17, Canadian adults will be able to legally purchase and consume cannabis for recreational purposes; a year and a half after the federal government introduced its legislation to do so. It will mark the beginning of a fascinating battle between a new regulated industry and the existing illegal market that Canadians are currently turning to for recreational cannabis use.

So what are the steps to legalizing a multi-billiondollar illegal market? Over the last 18 months, federal
legislators and civil servants have been establishing a national framework for regulating access to
cannabis, which includes rules for cultivation, production, possession and marketing. Meanwhile,
provinces and territories have been busy setting the rules for distribution and retail sales. This has been accompanied by a frenzy of private sector activity to supply the legal market with licensed producers,
retailers, ancillary businesses and others investing billions of dollars in this new sector.

Some of the factors that will influence how effective Canada’s legal cannabis market is at reducing illegal sales include safety, quality, access, supply and branding. Like all markets, one of the biggest factors will be price. As the head of the federal Task Force on Cannabis Legalization and Regulation, Anne McLellan, told Members of Parliament studying the Cannabis Act, "Price point here is going to be key in terms of what you see in the illicit market and how effective the legal market is at moving people over.”

In late 2017, the federal government reached a cannabis tax revenue sharing agreement with the provinces and territories. On top of sales taxes, the agreement included a cannabis excise or ‘sin’ tax of 10% of the retail price or $1 per gram—whichever is higher. The 10% tax is expected to raise $300 million annually for the provinces/territories and $100 million annually for the federal government. The agreement projected that including the excise tax, legal recreational cannabis will be priced around $10 a gram.

Only a few months later, Statistics Canada released a survey that found Canadians are currently paying an average of less than $7 a gram for cannabis.

Health Canada proposed four ‘cost recovery fees’—otherwise known as user fees—on the industry to
recoup the costs the government will incur by regulating the sector. User fees are typically associated with a specific service from the federal government, such is the case with the first three of the proposed fees.
An annual regulatory fee of 2.3% of gross revenue for licensed producers was proposed, with a 1% fee for micro-cultivators and processors. The proposal is expected to put an additional $100 million into federal coffers every year. No clear policy rationale has been shared with industry for how government
determined the 2.3% fee level.

This additional tax (which is what the fee is), was also proposed after licensed producers had already negotiated multi-year supply deals with provincial wholesalers based on the previously announced 10% excise tax.

As others have warned, high government taxes and fees will hurt legal producers’ ability to compete with the illegal market and ultimately hurt Canadians as well, which runs counter to the government’s rationale for legalizing cannabis in the first place. There are other looming policy issues that will influence the
effectiveness of breaking up the illegal market. The government of Ontario’s recent decision to move from a sparsely populated government-run retail distribution network to a private retail model will increase the reach of the legal market in Canada’s largest province. Municipalities across the country will need to deal with the hundreds of unlicensed dispensaries that are operating outside the law to protect retailers who are investing and operating within new provincial rules. The federal government must also move quickly to establish regulations for the recreational production and sale of cannabis edibles, beverages and other
products that will remain in the hands of the illicit market after October 17.

Deloitte has forecasted that Canada’s cannabis market will be worth up to $7.17 billion in sales next year. To maximize the economic benefits to Canadians of this $7-billion market, governments must create an environment that supports businesses that are playing by the rules, so they can in turn create new jobs and investment, along with the significant tax revenue for governments that will follow.
​
More: chamber.ca

Comments are closed.

    Author

    The Peterborough and the Kawarthas Chamber of Commerce acts as a catalyst to enhance business growth, opportunity, innovation, partnerships and a diverse business community. 

    Archives

    May 2025
    April 2025
    March 2025
    February 2025
    January 2025
    December 2024
    November 2024
    October 2024
    September 2024
    August 2024
    July 2024
    June 2024
    May 2024
    April 2024
    March 2024
    February 2024
    January 2024
    December 2023
    November 2023
    October 2023
    September 2023
    August 2023
    July 2023
    June 2023
    May 2023
    April 2023
    March 2023
    February 2023
    January 2023
    December 2022
    November 2022
    October 2022
    September 2022
    August 2022
    July 2022
    June 2022
    May 2022
    April 2022
    March 2022
    February 2022
    January 2022
    December 2021
    November 2021
    October 2021
    September 2021
    August 2021
    July 2021
    June 2021
    May 2021
    April 2021
    March 2021
    February 2021
    January 2021
    December 2020
    November 2020
    October 2020
    September 2020
    August 2020
    July 2020
    June 2020
    May 2020
    April 2020
    March 2020
    February 2020
    January 2020
    December 2019
    November 2019
    October 2019
    September 2019
    August 2019
    July 2019
    June 2019
    May 2019
    April 2019
    March 2019
    February 2019
    January 2019
    December 2018
    November 2018
    October 2018
    September 2018
    August 2018
    July 2018
    June 2018
    May 2018
    April 2018
    March 2018
    February 2018
    January 2018
    December 2017
    November 2017
    October 2017
    September 2017
    August 2017
    July 2017
    June 2017
    May 2017
    April 2017
    March 2017
    February 2017
    January 2017
    December 2016
    November 2016
    October 2016
    September 2016
    August 2016
    July 2016
    June 2016
    May 2016
    April 2016
    March 2016
    February 2016
    January 2016
    December 2015
    September 2015
    August 2015
    June 2015
    May 2015
    April 2015
    January 2015

    Categories

    All

    RSS Feed

Copyright Greater Peterborough Chamber of Commerce.  ​All rights reserved.
175 George Street North, Peterborough, ON, K9J 3G6
Phone: (705) 748-9771  |  (705) 743-2331  
Home    |    Calendar    |   Site Map   |    Privacy    |    Accessibility
Join the Chamber
Picture
MemberClicks