Federal excise taxes on marijuana totaled more than a quarter billion dollars a year prior to the pandemic, according to Canada Revenue Agency tables..Cabinet pledged to initially limit its share of taxes to $100 million a year to aid provinces with enforcement expenses..Marijuana collections under the Excise Tax Act ballooned in the first two years of legalization according to the Revenue Agency document Net Excise Duty Assessed In Dollars On Cannabis. Excise taxes totaled $91.6 million the first full year of legalization in 2019 then nearly tripled to $256.7 million in 2020, the year cabinet licensed the sale of edible marijuana products..Blacklock's Reporter said figures do not include GST collections or provincial sales taxes. Cabinet forecast legal marijuana was worth about $400 million a year in total tax revenue..“The estimate we’ve made is based on what I think is a prudent careful estimate,” Liberal MP Bill Blair (Scarborough Southwest, ON.), then-parliamentary secretary for justice, testified at 2018 hearings of the Senate national finance committee..“It’s a little bit challenging to determine what the market is,” said Blair. “Organized crime does not share its data with us.”.“We know from self-reporting usage studies conducted in this country that generally the amount of usage we’re dealing with is a 400,000 kilogram estimate which would add up to the math of $400 million,” said Blair. “It’s a conservative estimate. It’s a careful, thoughtful estimate.”.Parliament in 2018 passed Bill C-74 the Budget Implementation Act that taxed legal cannabis at $1 per gram plus GST and provincial sales taxes..“The total taxation imposed is in the neighbourhood of 20 to 25 percent,” said Blair..Excise Tax Act figures were calculated as of last November 1. There were no estimates for 2021. The Revenue Agency at the time of legalization forecast a ten-fold increase in the number of cannabis wholesalers by 2023. However bankruptcy court records indicate since legalization 38 cannabis companies have filed for protection from creditors..“We must ensure the tax burden does not make legal cannabis (noncompetitive) vis-à-vis the illicit marketplace,” Allan Rewak, executive director of the Cannabis Council of Canada representing federally-licensed growers, testified at 2018 hearings of the Commons finance committee..“If we are to successfully defeat the illicit market we must be able to directly compete against them.”.Licensed marijuana growers from the outset were required to pay a $3277 application fee, $1654 security clearance fee, $610 fee to export cannabis for scientific research and up to 2.3 percent of annual revenue to recover costs of legalization..“Taken together this cascade of taxes represents an immense cost burden on an industry that requires very significant up-front capital outlays to begin and which is competing against an existent illicit market that is remarkably well-funded and quite adaptable,” said the Cannabis Council’s Rewak.
