Pot Tax Would Reduce Profits, Allow Black Market to Thrive: Report

Article by Mike Hager, The Globe and Mail

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The parliamentary budget watchdog says Ottawa stands to generate hundreds of millions of dollars – not billions – from the first year of recreational marijuana sales, and that the black market will continue to bloom if the federal government applies much more than a sales tax on legal pot.

In a report released on Tuesday, the Office of the Parliamentary Budget Officer says sales tax revenue could be as low as $356-million and as high as $959-million, with a likely take of about $618-million based on legalized retail cannabis selling for $9 per gram – in line with current street prices.

Those government revenues will increase in future years for a variety of reasons, says the report, including more consumption and price competition among increasing numbers of licensed producers.

But Ottawa may not be able to tax cannabis in the same way as tobacco without pushing the price well beyond that of illegal pot, the report added.

Assistant budget officer Mostafa Askari, who helped with the report, said that overall “the message is that there really isn’t very much room for revenue over time.”

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