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Canadian Govts Agree On Cannabis Revenue Sharing

by Mike Godfrey, Tax-News.com, Washington

12 December 2017


Canada's federal, provincial, and territorial governments have agreed upon a system for sharing the revenue that will be generated by sales of legalized cannabis.

The federal Government intends for sales of non-medical cannabis to be legalized by July 2018.

On December 11, finance ministers from across Canada agreed that, for the initial two years of legalization, the provincial and territorial governments will receive 75 percent of the tax revenue and the federal Government will receive the remaining 25 percent.

The federal portion of cannabis excise tax revenue will be capped at CAD100m (USD77.8m) annually. Any federal revenue in excess of CAD100m will be provided to the provinces and territories.

The proposed tax framework will impose an excise duty that is the higher of a flat rate – for example, an amount per gram – applied on the quantity of cannabis contained in a final product for sale, or a percentage – i.e. an ad valorem rate – of the federal licensee's sale price on the product it has packaged.

The aim is for the combined rate of federal and provincial-territorial taxes for cannabis flowering material contained in a final packaged product to be no more than CAD1 per gram, or 10 percent of the producer's final sale price, whichever is higher.

Finance ministers will review the implementation of the agreed revenue sharing program at their December 2018 meeting, to ensure that their objectives are being met.

TAGS: tax | excise duty | tax rates | Canada | revenue statistics

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