There is a provincial exemption for sales tax on recreational marijuana buried deep under dozens of pages in the Budget Implementation and Tax Statutes Amendment Act of the Progressive Conservative government. Selling cannabis legally will still come with a series of markups and fees, but a sales tax of eight percent is just not one of them.
Retailers will have to pay Manitoba Liquor and Lotteries 75 cents for every gram, plus an additional nine per cent for them to manage the distribution of weed from cultivators to sellers. Additionally, sellers will also have to pay six per cent of their total revenues to the government as a social responsibility fee. The idea is unique, socially helpful, and likely to keep pot prices down.
Ottawa plans to add an excise tax to pot, which it will split. The government will get 25 percent and the provinces will get 75 percent of all monies this generates. Both levels of government, being federal and provincial, agree over sharing the excise tax. However, until official signatures seal this pact, one cannot construe it as fact just yet. The paperwork still lacks any signatures on it.
For now, medical marijuana will remain subject to the province’s sales tax. On Wednesday, provincial officials briefed the media on the BITSA legislation. They explained to reporters that the PST exemption reflects all the unknowns currently associated with the legalization of weed, such as how the price will affect a landscape currently dominated by an illicit market that is conducting illegal sales.
“Right now, we want to get rid of the illicit market,” Scott Fielding, Families Minister, said on Wednesday. “That is what the important piece is. We think it is important to essentially price out the black market that is there.” However, Dougald Lamont, leader of the Liberal Party, dismissed that argument as invalid.
“It is kind of irrelevant that the PST is not being applied to it, because there are so many taxes already being applied to those things,” Lamont explained. Back in spring, when the talks to end the spring session of the Legislature broke down between the government and the Opposition NDP, the BITSA bill was a source of mystery and intrigue.
At the time, the Progressive Conservative government said that it was still busy working on a fee and tax structure for marijuana, and as such, it was not ready to publish the legislation for BITSA. Then, on Wednesday, Wab Kinew, leader of the Opposition NDP, decried what he calls the government’s “lack of a plan for cannabis.”
According to Kinew, the Tories missed their opportunity to share their plans for creating a social responsibility fund and distributing revenues among municipalities, neither of which ever made their way on to the bill for BITSA to begin with. “This government does not want to debate their ideas,” he said. “They went to great pains through the last sitting in the last session to prevent us from seeing this bill, even though it is proving to have been stuff that could have been introduced earlier.”