Pubdate: Tue, 20 Jun 2017
Source: Globe and Mail (Canada)
Copyright: 2017 The Globe and Mail Company
Contact:  http://www.theglobeandmail.com/
Details: http://www.mapinc.org/media/168
Author: Bill Curry
Page: A4

MORNEAU OUTLINES CANNABIS 'BACKUP PLAN'

The federal government is preparing a backup plan that would see it
regulate the distribution and taxation of legal marijuana in provinces
that are not ready in time for Ottawa's July, 2018, deadline.

Federal Finance Minister Bill Morneau outlined the plan Monday
following a two-day meeting with his provincial and territorial
counterparts. Some provinces are expressing concern with the federal
government's deadline for legalization, given that important details,
such as how the products will be taxed, have yet to be worked out.

Speaking with reporters, Mr. Morneau said a backup plan will be in
place that would see Ottawa regulate a legal cannabis market based on
mail delivery in provinces that have not yet established a regime to
regulate sales at the retail level.

"We accept that there's much more work to be done, but we've started
down that path and we are going to work to get to a conclusion by
July, 2018," he said. "We believe that it's entirely possible. And as
a backstop, the federal government will be able to assure the
provinces that we'll be able to - for instance, be the taxation regime
- - if they're not able to get there in time. We'll be able to be the
backstop in terms of how we actually distribute marijuana if they're
not able to get there on time. So we have an agenda. We have a
timeline and we have a backup plan."

With one year to go before the federal Liberals plan to deliver on a
campaign promise to legalize the recreational use of marijuana, many
questions remain as to how the products will be taxed and controlled.
Mr. Morneau said finance ministers reached agreement on general
principles, such as keeping taxes low to squeeze out the black market.
Officials will work on further details over the coming months, with
the goal of having a more detailed plan in place by December, when
finance ministers will meet again.

The federal deadline has clearly emerged as a point of contention with
some provinces.

"It seems rushed," Manitoba Finance Minister Cameron Friesen told CBC
News following the meeting.

Alberta Finance Minister Joe Ceci acknowledged that the timeline is an
issue for some of his colleagues; however, he said his province will
be ready in time for the deadline. Alberta's concern, he said, is that
it does not have a sales tax and will be seeking an arrangement to
ensure the province receives its share of related tax revenue.

"Alberta's working as quickly as we can to make sure we're prepared,"
Mr. Ceci said. "Without a provincial sales tax, we need to ensure that
we receive adequate monies to address the cost of having cannabis
available for distribution and sale in our province."

A federal task force report, released in December, provided an
in-depth analysis of the questions related to taxing marijuana.
Chaired by former justice minister and deputy prime minister Anne
McLellan, the task force recommended that taxes be kept low - at least
initially - and that most of the revenue should be primarily focused
on the protection and promotion of public health.

"Taxes should be high enough to limit the growth of consumption, but
low enough to compete effectively with the illicit market," the task
force said.

Generally, the task force recommended that the taxation of tobacco
should be used as a guide for taxing marijuana. One twist, however,
was a recommendation that marijuana taxes should rise in line with
potency. Citing current research, the report said today's marijuana
contains about 12 per cent to 15 per cent THC, which is the main
psychoactive component of marijuana. That's up from 3 per cent in the
1980s.

A report produced last November by the Parliamentary Budget Officer
estimated retail sales tax revenue resulting from legalization will
initially be modest, in the hundreds of millions of dollars rather
than in the billions. Using existing sales taxes as a guide, the PBO
estimated that about 60 per cent of sales tax revenue would go to
provincial governments and the remaining 40 per cent would go to the
federal government.

Mr. Morneau said Monday that it was too early to reach conclusions in
terms of how tax revenue would be shared. He also said taxing cannabis
based on its potency could be technically challenging and no decisions
have been made on that issue either.
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