The smoke is clearing around how the federal and provincial governments will split the revenue gained from marijuana legalization.
Today (December 11), Bill Morneau, the federal finance minister, announced it will give the provinces 75% of tax revenues generated from legalized marijuana. In a news conference, after a meeting with the provincial finance ministers, Morneau said he estimated tax revenue to be up to $400 million annually. The government also announced that the average retail price would be set at $10 a gram.
The announcement came after the 13 provincial and territorial finance ministers along with the federal government came to a two-year agreement about how marijuana will be taxed and the revenue shared.
The original proposal from the federal government included a revenue sharing plan in which the federal and provincial government would each receive 50% of the marijuana tax.
The change comes after wide-scale pushback from provincial governments who made the argument that they should receive most of the revenue since they will bear the majority of the enforcement and health care related costs.
In November, B.C.’s finance minister, Carole James, voiced her concerns arguing, “To look at a 50-50 split when we're taking more of the share of responsibility here in B.C. just isn't fair and certainly isn't going to work for our province."
James’ announcement came soon after the federal government proposed its taxation framework calling for marijuana to be taxed at $1 a gram, or 10% of the retail price. This proposal was adopted into the agreement.
The revenue sharing agreement does not include a share for municipalities and comes less than a week after Jenny Gerbasi, president of the Federation of Canadian Municipalities, publicly requested that a third of the revenues be set aside for Canadian cities.
In a press conference, Moreau highlighted that it is the provinces role to provide funding to municipalities.
"Provinces and territories will work with municipalities according to shared responsibilities towards legalization," the finance ministry said in a press release.
In addition to 75% of the tax revenue, the federal government has also agreed to cap its marijuana revenue to $100 million annually. Any excess revenue will be given to the provinces and territories.
