Pubdate: Sun, 16 Apr 2017
Source: Edmonton Sun (CN AB)
Copyright: 2017 Canoe Limited Partnership.
Contact: http://www.edmontonsun.com/letter-to-editor
Website: http://www.edmontonsun.com
Details: http://www.mapinc.org/media/135
Author: Mark Bonokoski
Page: 14

LEGIT WEED'S PRICE POINT

Buy low, sell high, and other dope on legalized pot

In the bull-bear world of stock-market traders, the smell of fear
ultimately tightens sphincter muscles and triggers sell-offs.

Within minutes of Justin Trudeau's Liberals tabling their pot
legislation, for example, the TSX began dumping some of its publicly
traded marijuana stocks.

The lack of clarity in the Liberals' spanking-new Cannabis Act got
speculative investors nervous, which led to a feeling of financial
uncertainty, which led to an unloading of stock.

Whether pot or pork bellies, a commodity is a commodity.

While the Liberals would love to say that the legalization of
recreational marijuana has everything to do with it being 2017, and
finally time to light up and lighten up, the reality is that it comes
down to what most decisions come down to.

And that's money. Big money.

But the government cannot get greedy.

Now dollars-for-doughnuts betting would likely have former Toronto
Police chief Bill Blair loathing being called the Trudeau's
government's "marijuana czar."

But, as an MP and parliamentary secretary to the justice minister, the
ex-top cop who spent a career hauling druggies off to court, including
"gangsters in a stairwell," providence now has him in charge of
untying the criminal tether of dope smokers.

A few days before the pot bill was tabled, the C.D. Howe Institute
wrote a memo to Blair outlining its concerns that the government must
choose either revenue or regulation.

It had to be one or the other.

At first blush, it would appear the Liberals' legislation is heavy on
regulation -- with age limits, stiff penalties for selling pot to
minors, restrictions on packaging, and heavy fines for non-compliance.

Details on cost and taxation, however, thus far don't exist.

So there is yet no price point.

According to C. D. Howe policy adviser Rosalie Wyonch, projections for
2018 will see 4.6 million Canadians consuming 655 metric tonnes of
marijuana.

"That's a lot of marijuana for both federal and provincial governments
to tax to generate a windfall of tax revenue," wrote Wyonch. "Due to
the existence of a prolific black market, however, there has to be a
trade-off.

"This means that governments much choose a regulated market or large
revenue generation -- but not both."

Heavy taxation, of course, will play into the black market that
currently has total dibs on marijuana sales, and will undermine the
government's efforts to take control.

Wyonch estimates that applying only HST -- the combined federal and
provincial sales tax -- to marijuana priced close to present street
levels will result in the government's control of 90% of the market
and approximately $675 million in annual tax revenues.

But, if the government wants bigger money, and pushes taxation to
bring in, say, $1 billion, it would lose half the market and
approximately 300 metric tonnes of consumption to organized crime.

It's all about price point, which is why governments are grappling
with a burgeoning contraband tobacco business where 200 cigarettes can
be purchased for as little as $20 instead of $110-plus for the same
number of smokes legally purchased at a convenience store.

"(Even) a one-dollar premium between legal and illegal weed will
result in about 35% of the market being unregulated," says Wyonch.
"This gives all the more reason for the government to be cautious
about levels and types of taxation."

In other words, if the Trudeau Liberals primary concern is squeezing
out organized crime from the marijuana market, they had better be
smart about pricing and taxation.

They must also realize organized crime is not stupid.

It undoubtedly already has a game plan -- as in cheaper, better, with
creative packaging, and with no ID ever required.

And all tax free.
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MAP posted-by: Matt