Federal Budget 2018: Everything you need to know about cannabis taxation

Canada’s plan to legalize cannabis has attracted a whole lot of hype, but until Tuesday, the exact tax details were still up in the air.

Now, with the February 27th release of Canada’s 2018 Budget, we’re getting a little more light on the subject.

An “excise duty framework” for marijuana products has been proposed, which mainly applies to products containing Tetrahydrocannabinol (THC), the primary psychoactive compound of cannabis.

Provinces and Municipalities Set to Benefit

Taxes will equate to $1 per gram or 10 percent of a product’s price (whichever is higher). That tax revenue will then be shared on a 75/25 basis, with 75 percent of duties going to provincial and territorial governments and the remaining 25 percent to the federal government.

Revenues for federal portion of cannabis excise duty revenue will be capped at $100 million annually for the first two years after legalization. Any federal revenue in excess of $100 million will be provided to provinces and territories.

The federal government also stated that they expect that “a substantial portion” of the revenues from this tax room provided to provinces and territories will be transferred to municipalities and local communities, who are “on the front lines of legalization”.

Products that contain low amounts of THC, as well as pharmaceutical products derived from cannabis will generally not be subject to the excise duty.

Tens of Millions for Cannabis Public Education

The federal budget also proposed an allocation of $62.5 million over five years, starting in 2018–19, for cannabis public education initiatives.

The funding is aimed to “support the involvement of community-based organizations and Indigenous organizations that are educating their communities on the risks associated with cannabis use,” according to the Budget.

Another $10 million of funding over five years is also proposed for both the Mental Health Commission of Canada and the Canadian Centre on Substance Use and Addiction. That money will help assess the impact of cannabis use on the mental health of Canadians, and  support research on cannabis use in Canada, respectively.

While initial reports stated July 1st 2018 would be the date of legalization of recreational cannabis in Canada, Prime Minister Trudeau has since denied that exact date, saying only that legalization would occur “next summer”.