Pubdate: Mon, 06 Nov 2017
Source: Globe and Mail (Canada)
Copyright: 2017 The Globe and Mail Company
Author: Daniel Leblanc
Page: 6


The federal government is moving on a number of fronts as it pushes
toward the legalization of cannabis by next summer, including
launching public consultations on the proposed excise tax of $1 a gram.

In addition, federal officials are putting the finishing touches on
complex regulations that will set the rules for the production and
distribution of cannabis "from seed to sale." Once they are made
public in coming weeks, the regulations will be the subject of
separate consultations, with the government seeking input of everyone
from producers to consumers to health experts.

All levels of government are getting ready for the new regime in which
adults will be able to legally consume cannabis across Canada. Bill
C-45 to legalize the drug has been studied by the health committee of
the House and will now return for debate and approval by MPs before
going to the Senate for further scrutiny.

At the same time, federal officials said the government is set to
launch public consultations on its proposed excise tax on cannabis,
the proceeds of which would be split evenly with the provinces. The
tax would be $1 per gram on purchases less than $10, and 10 per cent
on amounts more than $10.

The provinces have already complained that they should get more than
50 per cent of the excise tax to cover costs associated with
legalization, including policing and public education.

Federal officials, speaking about the coming negotiations on condition
of anonymity, said their proposal was a "starting point" and said the
final excise-tax framework is up for further debate.

It will be a key issue at the next meeting of federal and provincial
ministers of finance, scheduled for Dec. 10-11 in Ottawa.

"The heart of the matter will be the actual amount of the excise tax,
and the 50-50 split with the provinces," a senior federal official

Ottawa and the provinces have been in discussions for months on the
excise tax, with an overall agreement on the need for a co-ordinated
approach and a relatively low tax rate to ensure that legal cannabis
is competitive with illegal products.

The federal government will also impose sales taxes on

According to the Parliamentary Budget Officer, governments will have
little leeway to tax marijuana and remain competitive with unlicensed
producers. The PBO estimated in a report last year that legal cannabis
would cost about $7.50 a gram before taxes, compared with $8.80 for
illicit cannabis.

"The government may have little fiscal space to apply tax without
pushing the price of legal cannabis significantly above the illegal
market price," the PBO report said.

Still, a number of producers have said they can live with the proposed
excise tax.

Bruce Linton, co-founder and chief executive of Canopy Growth Corp.,
said his firm is capable of producing marijuana for $1.28 a gram,
making it competitive with illegal producers. However, he cautioned
that other costs, such as overhead, shipping and packaging, need to be
factored in.

"There is room for everybody to work in this, because the black market
isn't a bargain and it won't get cheaper if they face pressures from
law enforcement," he said.

Provincial governments are also working to adopt their own legislation
to determine how the product will be distributed and consumed. The
exercise is delicate as governments across Canada have been struggling
to find a consensus between those who are suspicious of legalization
and those who want free access to the drug.

Ottawa has insisted on the need for a highly regulated regime to
ensure that children don't have easy access to the drug. The
government announced last week $36-million in new funding over five
years to run education and public-awareness campaigns on the dangers
of cannabis and drug-impaired driving.

Experts said it will be easier to run public-awareness campaigns to
deter young Canadians from consuming marijuana once the product is

"The prohibition model currently in place in Canada has severely
hampered health promotion and harm-reduction efforts. The only message
we had at our disposal was, 'Just say no,' and clearly that has
failed," said Ian Culbert, executive director of the Canadian Public
Health Association.
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