Pot Legalization: $ 800 Million Tax Losses for Ottawa

Finance

Even before cannabis is legalized in Canada, a report by the CD Howe Institute is already predicting tax losses of about $ 800 million in the first year of legalization, due to a shortage of supplies that will benefit the country. black market.

In the report titled Cannabis Countdown: Estimating the Size of Illegal Markets and Lost Tax Revenue Post-Legalization – directed by Anindya Sen, professor of economics at the University of Waterloo, and Rosalie Wyonch, political analyst – it is stated that revenues generated by the sale of legal cannabis in the coffers of the two levels of government are estimated at between $ 300 and $ 600 million, which is significantly lower than the expected losses of $ 800 million.

The black market for cannabis sales will be more successful than the legal market in the first year of cannabis legalization in Canada, according to the report’s authors.

The goal of Prime Minister Justin Trudeau of Canada, which was to eliminate the black market and other criminal activities associated with the legalization of cannabis, is strongly compromised.

Shortage envisaged

“Regardless of any legal-illegal price gap, a black market will clearly flourish if the legal domestic supply is unable to meet the demand,” Sen said.

These tax losses are actually calculated in relation to the envisaged shortage of lawful cannabis. The authors of the report estimate that, depending on the current rate of production of legal cannabis, producers will be able to meet only 30 to 60% of the total demand in the country.

Health Canada’s slow to issue production licenses was put forward in the report.

Also, it is reported that the federal government and Health Canada should legalize and regulate edible and concentrated marijuana products, since they are already available on the black market, which is a significant competitive advantage.

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