Alberta’s Provincial Vape Tax Gift to Black Market, Says Legal Cannabis Industry

Article by Bill Kaufmann, Growth Op

CANNABIS BUSINESS Provincial vape tax gift to black market, says legal cannabis industry By Bill Kaufmann A man uses a vape device in this file photo. Postmedia PSD called vaping an epidemic and began looking at ways to curb the habit in their schools.

Alberta’s incoming 20 per cent tax on vape cartridges poses a boon for a still strong black market, say legal cannabis retailers.

The UCP government announced the levy — that will impact both THC and nicotine vaping products — in its 2020-2021 budget unveiled last week, as a way to discourage use among minors.

But some of those in the province’s legal cannabis sector say it adds another layer of taxes on vaping products that will encourage consumers to turn to a much cheaper illicit market or stay loyal to black market suppliers.

“It’s significant; it means a 44.3 per cent combined excise tax — that’s 44.3 per cent that the black market is not paying,” said Nathan Mison, chairman of the Alberta Cannabis Council.

He said prices between illicit vape cartridges and legal ones — even without the new tax that’s to take effect in the fall — are “pretty stark.”

A typical price for a vape cartridge on the Alberta Gaming, Liquor and Cannabis online retail page is $45 for .5 grams, while black market websites offer .8-gram products for $50.

Many in the legal business insist illicit sellers still control the lion’s share of consumer spending, something recreational legalization was meant to destroy.

That grip will only be tightened by the 20 per cent tax and disrupt legal sales of the items that have proven brisk since becoming available in February, said Mack Andrews, owner of Aylmer Nelson Cannabis, 1309 – 9 Ave. S.E.

And he said it’s a step backwards for Albertans’ safety, given the most serious health consequences from vaping have come from unregulated products.

“The black market products are the ones linked to the significant health problems so it seems a little short-sighted,” said Andrews.

Alberta already imposes the steepest tax on those products among the provinces — 24.3 per cent — and an additional 20 per cent will mean an increase of almost $10 per sale of vape cartridges, said John Carle, executive director of the Alberta Cannabis Council.

And he agreed with Andrews about the dangers of redirecting consumers to the black market.

“The guys willing to put (toxic) vitamin E acetate into their products will have no qualms in selling it to 15-year-olds,” he said.

Read the full article here.

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