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Canadian government must keep its eyes on marijuana’s black market

04 Oct 17
alibhai
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You may only have 13 people in a room discussing selling marijuana for so long until they begin working out how to divvy up the profits.

So no wonder that the feds put the deal on the table once the premiers were in Ottawa on Tuesday: The federal government will impose a 10-per-cent excise tax, and divide the profits straight down the center. Everyone gets a piece of this action.

The sum itself should not shock us. In percentage terms, it is not that different to the excise taxes on a bottle of liquor and a carton of smokes.

However, the rhetoric around the table must stress Canadians their first ministers are taking their eye off the ball: the objective of displacing organized crime and black-market sellers in the marijuana trade.

Prime Minister Justin Trudeau and several of the premiers insisted that nobody in the room was talking about all this because they desired earnings. But it still did not drown out the unmistakable noise of premiers saying it isn’t enough — not enough to pay for the large costs that will include not arresting and jailing people for possession.

But great news! The national proposal — a 50-50 split on a tax of $1 a gram or 10 percent on marijuana that costs more than $10 per gram — is only a proposal. They are willing to negotiate. Maybe there’ll be more!

That is the danger. One reason to legalize marijuana would be to attempt and cut a financing source for organized crime.

Already, the federal government’s careful plans will mean just some success come next July, since legalization will not contain the cornucopia of edibles, oils, vaping capsules and so forth, many of which are already available in crisply branded, brightly colored packages at a store in your neighbourhood.

But cost things, too, particularly in first: A successful reform has to give a sign to marijuana users that it is not only legal, but they may also buy it legally. Not getting a ticket is going to be some inspiration, but the bud also needs to be accessible, and the cost must be close enough.

What is too much? PEI Premier Wade MacLauchlan said he believes it is too soon to begin talking about excise taxes, and the cost is vital. In dispensaries, marijuana often sells for $9 or $10 a gram; Mr. MacLauchlan told colleagues that marijuana sells for $6 per gram in PEI. “We’ll be in competition with the black market,” he said.

Legal pot does not have to be the exact same price, but it needs to be shut, especially in the beginning. At $6 per gram, a $1 tax begins to make a difference. Then there are sales taxes, and additional costs legal manufacturers pay to comply with regulation.

Ottawa and the provinces were constantly likely to collect revenue from legalization. If $1 a gram sets a cap on it, then the market can bear it. But it doesn’t seem like that is all.

The states didn’t like the concept of a 50-50 split. “I hope that does not surprise you,” Quebec Premier Philippe Couillard said. Premiers said they’ll confront the “lion’s share” of costs, suggesting they’ll be large, and grow. Ontario Premier Kathleen Wynne said municipal officials keep telling her they’ll face “enforcement costs [and] other costs” that they need to bear.

So don’t count on the $1 levy being enough to meet the states.

Where are those gigantic costs coming from? There are costs to retrain authorities, and purchase equipment to perform roadside stops for drugged driving. However, the feds only promised them $274-million for that. There’ll be fresh public-health campaigns, and other things, but let us not pretend legalization will suddenly mean marijuana has been smoked in Canada for the first time, and we are going to need to spend gazillions more.

Not enforcing the law might actually save the states a couple of bucks. Some plan to sell pot in provincial shops, which ought to profit. And if legal bud completely displaced the black market — an estimated $7-billion annually — then half of the $1 a gram tax will amount to approximately $350-million annually. There is money there. There is also danger in the premiers’ proposal there should be more of it: which can derail a vital objective of marijuana reform.

Courtesy: The Globe And Mail

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