Federal Finance Minister Bill Morneau holds a news conference after meeting with his provincial counterparts in Ottawa on Monday, Dec. 11, 2017.

Federal Finance Minister Bill Morneau holds a news conference after meeting with his provincial counterparts in Ottawa on Monday, Dec. 11, 2017.
Photo Credit: PC / Sean Kilpatrick

Ottawa agrees to give provinces 75 per cent of pot tax revenues

The federal government and the provinces struck a deal Monday on how they plan to share tax revenues from legalized marijuana, which Ottawa hopes to price at about $10 a gram to shut down the black market.

The agreement gives the provinces and territories a 75 per cent share of federal excise tax revenues from the sale of legalized pot for the first two years, a significant increase from the 50-50 split the federal government had proposed last month.

Federal Finance Minister Bill Morneau announced the new deal after a day-long meeting with his provincial and territorial counterparts.

Ottawa, which intends to legalize recreational cannabis on July 1, 2018, will retain the remaining 25 per cent.

Provinces and territories will in turn work with municipalities according to shared responsibilities towards legalization.

The federal portion of cannabis excise tax revenue will be capped at $100 million annually. Any federal revenue in excess of $100 million will be provided to provinces and territories, Morneau said.

Over the first couple of years, ministers predict legalized marijuana will involve significant startup costs, such as the creation of the new pot market itself, beefed up enforcement, public-awareness campaigns and additional health services.

Morneau said that in each of the first two years, he expects legalized pot to generate only about $400 million in excise tax revenues. That’s on top of the federal and provincial sales taxes collected on most purchases in Canada.

With files from The Canadian Press

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