Cannabis tax revenue increases in Canada: Concerns over new distribution agreements

 

 

Tax revenue has increased significantly since the legalization of cannabis in Canada. At the same time, the federal government’s new fiscal agreements are raising concerns about maintaining revenue. According to the Canada Revenue Agency (CRA), cannabis tax revenue exceeded $1.8 billion in the 2022-23 fiscal year. It is also a major source of revenue for various provinces and territories across the country. However, reports indicate that the provinces are likely to see a decrease in revenue as cannabis excise duty distribution agreements come into effect for the next five years.

With the new distribution arrangements coming into effect, the federal government will receive a larger share of cannabis tax revenue. Currently, the provinces receive the majority of cannabis excise taxes (about 75%). However, this figure is likely to change as pressure from producers and efforts to maintain the growth of the legal cannabis market. There are concerns that this change could put a financial strain on provincial governments that rely on cannabis taxes to fund key areas such as healthcare and education. Experts also say that the cannabis tax structure needs to be made more attractive to attract more consumers to the legal market and eliminate the black market.