Pubdate: Thu, 27 Aug 2015
Source: Vancouver Sun (CN BC)
Copyright: 2015 Postmedia Network Inc.
Contact:  http://www.canada.com/vancouversun/
Details: http://www.mapinc.org/media/477
Author: Barbara Yaffe
Page: D3

IF THEY CAN SELL IT, LET'S TAX IT

Marijuana dispensaries: Each level of government has a different
approach to this odiferous issue

In Vancouver, we appear to have developed a system to date that
features only the down sides of permitting pot use.

To tax or not to tax - that is the unanswered question now that
Vancouver City Council has decided to regulate its marijuana
dispensaries.

Various levels of government are finding themselves in an awkward
situation as they determine whether to impose taxation on the
businesses - and thereby confer further legitimacy on a commercial
activity related to cannabis.

According to Canada's Controlled Drugs and Substances Act, cannabis
possession remains a federal offence unless it is for medicinal use
and the user has a doctor's prescription.

Vancouver's decision, with respect to regulation, deals only with the
city government's own powers, including authority to collect business
licence fees of $30,000 per dispensary. But where tax policy is
concerned, the municipal move leaves only giant question marks.

The province has been cautious in its posture, with Health Minister
Terry Lake last spring approving the city's action: "They are just
operating in the interests of their citizens and at least putting some
regulatory framework in their city and, as our public health officers
have said, they are doing it for the right reasons."

Federal Health Minister Rona Ambrose, meanwhile, is in a fury,
insisting cannabis outlets are criminal establishments and urging
police to enforce the law by shutting them down.

Her position makes it pretty difficult for Ottawa to turn around and
tax the dispensaries. Taxation surely would amount to tacit acceptance
of commercial trade in an illegal substance.

Government authorities obviously do not collect taxes on the trade in
stolen goods, under-the-table transactions, or prostitution. So, how
likely is it they would now seek to tax cannabis sales?

When I put the question recently to the folks at the federal finance
ministry, I was referred to the health ministry. Michael Bolkenius, a
spokesman for Ambrose, issued the following statement: "Storefronts
selling marijuana are illegal and, under our government, will remain
illegal. We expect the police to enforce the law."

Of course, with a federal election Oct. 19, Bolkenius added, the
Conservative government's posture was "unlike (that of) Justin Trudeau
who wants to make smoking marijuana a normal, everyday activity for
Canadians."

The province is being equally obfuscatory. Finance spokesman Jamie
Edwardson said: "Businesses that sell items that are subject to PST
would need to collect and remit PST, unless specific exemptions apply.
If the business has taxable income, they would be subject to corporate
income tax."

So, have the pot dispensaries been remitting PST and corporate tax to
the B.C. government?

Edwardson said confidentiality requirements regarding who in B.C. has
paid their taxes precludes him from saying.

Dana Larsen, director of the Medical Cannabis Dispensary in Vancouver
and founder and director of Sensible B.C. which lobbies for pot
legalization, reports: "Some of the dispensaries do charge and remit
GST, while others do not.

"Some may charge PST, too, though I don't think most do
that."

Larsen also noted, "every dispensary operator I am familiar with files
all required business taxes, as far as I know."

Larsen believes taxation oversight will eventually come, now that
municipal bylaws to regulate the dispensaries have been put in place.

One of the principal arguments for legalizing marijuana - apart from
the fact prohibition has not been effective - is, if people are going
to use it, society can at least benefit from applicable taxes that
stand to flow from the cultivation and sale of pot.

In Colorado, where the substance has been made legal (as in Washington
state, Oregon and Alaska), the state last year collected $44 million
in taxes from its cannabis enterprise.

In Vancouver, we appear to have developed a system to date that
features only the downsides of permitting pot use.

We have a bunch of odiferous cannabis dispensaries that now are
allowed to operate in our midst, without any clear rules about the
safety of the stuff being sold, or a framework to ensure buyers and
sellers pay their fair share of taxes.
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MAP posted-by: Matt