Manitoba last province to hold out on pot proposal

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This article was published 11/12/2017 (2918 days ago), so information in it may no longer be current.

OTTAWA — Manitoba is once again the lone holdout in a federal deal, this time over a proposal to have the provinces take in more than three-quarters of tax revenue from legalized marijuana.

On Monday, federal Finance Minister Bill Morneau declared that all provinces and territories, except Manitoba, have opted for a $1-per-gram excise tax on cannabis products, with 25 per cent of that going to Ottawa until it hits an annual $100-million cap, and the rest going to the province where the product is sold.

For months, Manitoba was the last holdout in Ottawa’s health accord (a term the province still refuses to use), which slowed the growth of payments to provinces. In October, Manitoba proposed a carbon tax that falls short of Ottawa’s 2022 target. 

On the cannabis file, Manitoba officials have outstanding questions and will meet with the feds in the coming weeks to sort them out, according to provincial Finance Minister Cameron Friesen.

“We have more work to do. We simply need more time now to go back to our jurisdiction, to understand what this means,” he said, adding Manitoba will weigh the benefits of either joining Monday’s deal or crafting “a provincial, standalone framework.”

He said Manitoba is concerned the commitment for public awareness and advertising campaigns appears “inadequate,” as does details on border security, cross-border trade and addictions spending.

“There wasn’t a lock-dead date today (to commit to the pot deal); I made sure to test that with the federal finance minister.”

Friesen claimed not one province or territory has a clear sense of how much legalized marijuana will cost for public education and enforcement, nor whether they stand to make a profit.

“Today we stand at a point where we know some costs, and there are other costs that we simply do not know,” he said, but would not detail what those known costs actually are. “Listen, I can’t go line by line, because we simply don’t have detail.”

Morneau said provinces will have different societal costs based on what sales and distribution systems they choose.

The deal announced Monday would take effect for two years starting in July, with an interim meeting in December 2018 to assess how it’s working. Within that two-year time period, Morneau expects legalized pot to generate roughly $400 million in excise tax revenues.

That doesn’t include GST, which in Manitoba is charged alongside PST at a rate of 13 per cent. Under Monday’s deal, an $8 gram of cannabis would cost $10.17 after all taxes are factored in, because the excise tax would be applied at the point of manufacture, and that amount would then face GST and PST at point of sale. All three taxes will apply to all forms of cannabis, including medicinal pot, despite outcry from patient groups.

Last month, Ottawa had proposed a 50-50 profit split with the provinces. On Sunday evening, Friesen said he was pushing for the provinces to get 100 per cent of the cannabis-tax revenue.

The Federation of Canadian Municipalities asked that cities get a third of the excise tax, for policing and other costs; Ottawa says those decisions will be up to the provinces and territories, to Friesen’s approval.

“The province is best situated to broker those conversations and relationships with municipal leaders back home,” Friesen said. “I felt it was not the place to have those discussions, in the context of a provincial-territorial federal meeting.”

Friesen said Manitoba is reluctantly sticking with Ottawa’s July 1, 2018 deadline to legalize recreational cannabis. “It means what we need to do, we must do in more of a hurry, and we will pay a premium for that risk,” he warned.

“We’re fully engaged; this is not about dragging our feet.”

This July, after Manitoba Premier Brian Pallister spent months pushing for a later deadline, he convinced his fellow premiers to say they’d only respect the timeline if the federal Liberals clarified five issues, including road safety and the black market. It appears the provinces are now satisfied.

dylan.robertson@freepress.mb.ca