Pubdate: Tue, 22 Dec 2015
Source: Toronto Star (CN ON)
Copyright: 2015 The Toronto Star
Author: Christopher Reynolds
Page: A6


As Canada mulls how to handle marijuana legalization - promised in
Prime Minister Justin Trudeau's election platform - experts are
stressing the "Goldilocks point" for taxes: not too low, not too high,
but just right.

"They can't raise taxes too much or people will just smoke the illegal
stuff," said Timothy Easton, an economist at Simon Fraser University
in Burnaby, B.C.

"You want to have it high enough to discourage consumption - if, in
fact, that's your goal - but if you set it too high you end up with a
continuation of the black market," noted Patrick Fafard, associate
professor at the University of Ottawa's Graduate School of Public and
International Affairs.

Four U.S. states have legalized pot for recreational use, with varying
approaches to taxation. In Washington, retailers must pay the
government a 37-per-cent marijuana excise tax, while the standard
sales tax applies to purchases.

Colorado and Oregon favour a 25-per-cent sales tax on weed. In Alaska,
which has legalized the use of marijuana but is still figuring out how
to sell it, lawmakers have discussed levying a $50-per-ounce fee.

Colorado raked in nearly $73.5 million (U.S.) through the first seven
months of 2015, putting the state on pace to collect over $125 million
for the year - about $24 per person from its 5.2 million residents.

Transplanting that formula to Ontario, the cash-strapped government
would be looking at more than $450 million (Canadian) in tax revenue
from its 13 million residents.

Up to $1 billion in savings could be gleaned from the justice system
alone, Fafard said.

Portugal has decriminalized drug use across the board, but that may
not be "the Canadian way," said Craig Jones, executive director of the
National Organization for the Reform of Marijuana Laws in Canada
(NORML Canada).

He prefers provincial regulation along the lines of alcohol or
tobacco. A federal role would be limited to removing marijuana from
the Controlled Substances Act, banning sales to children and potential
collection of an excise tax.

Different tax levels for different potency should be considered, Jones
added, comparable to beer, wine and spirits.

In the 1990s, multiple provinces saw the fallout from slapping high
taxes on a coveted product - tobacco. Canadian cigarettes, exported to
duty-free warehouses in the U.S. and then illegally reintroduced to
the country through a First Nation reserve straddling the
international border in eastern Ontario, made up 30 per cent of the
domestic market by 1993, according to a Fraser Institute study from

Cigarette smuggling fell significantly following a drastic tax
rollback in five central Canadian and Maritime provinces.

Pamela McColl, a member of anti-legalization group Smart Approaches to
Marijuana Canada, criticized the tax revenue plan implicit in
Trudeau's vow to "legalize, regulate and restrict access to marijuana."

"A government is not a business. A government is not supposed to be
making a profit off taxing this thing. That's callous," said McColl.

"The more you make it available in more stores or vending machines,
the more use goes up, particularly among youth," warned Rosalie
Liccardo Pacula, a senior economist and co-director of the RAND
Corporation's drug policy research centre.
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MAP posted-by: Matt