Feds, provinces end dispute on how to split pot tax revenues

Ottawa | Reuters –– The Canadian government and the 10 provinces on Monday settled a disagreement on how to split the revenues from a proposed federal tax on the sale of marijuana once the drug is legalized, Finance Minister Bill Morneau said.

Morneau told reporters that for an initial two years, 75 per cent of the money would go to the provinces and 25 per cent to Ottawa.

The federal government had initially suggested a 50-50 split, an idea the provinces rejected on the grounds it was not enough to help cover the extra costs of enforcing the new rules once they take effect next July.

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Morneau said he and his provincial counterparts also agreed to stick to Ottawa’s proposal for a tax on all cannabis products of $1 per gram, or 10 per cent of the retail price, whichever is higher.

Keeping the tax relatively low would help authorities keep the drug out of the hands of underage users and reduce related crime, he added. The Liberals plan to allow recreational marijuana across the entire country by July 2018, making it the first G-7 country to do so.

Morneau spoke after a two-day meeting with counterparts from the provinces as well as Canada’s three sparsely populated northern territories, which also agreed to the revenue split.

— Reporting for Reuters by David Ljunggren.

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